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SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
by and among
WISCONSIN & MICHIGAN STEAMSHIP COMPANY,
AS BORROWER,
AND
RAND FINANCE CORP.
AND
OGLEBAY NORTON MARINE SERVICES COMPANY, LLC,
AS PURCHASERS
August 1, 2006
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS..........................................................1
1.1 Certain Definitions................................................1
1.2 Principles........................................................10
1.3 Other Definitional Provisions; Construction.......................10
ARTICLE 2 ISSUE AND SALE OF NOTES.............................................10
2.1 Authorization and Issuance of the Notes...........................10
2.2 Sale and Purchase.................................................11
2.3 The Closing.......................................................12
ARTICLE 3 REPAYMENT OF THE NOTES..............................................12
3.1 Interest Rate and Interest Payments...............................12
3.2 Repayment of Notes................................................13
3.3 Optional Prepayment of Notes......................................13
3.4 Notice of Optional Prepayment.....................................13
3.5 Mandatory Prepayment on Change of Control or Event of Default.....13
3.6 Home Office Payment...............................................13
3.7 Taxes.............................................................13
3.8 Maximum Lawful Rate...............................................14
3.9 Certain Waivers...................................................15
ARTICLE 4 CONDITIONS..........................................................15
4.1 Conditions to the Purchase of Notes...............................15
4.2 Waiver............................................................17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BORROWER..........................17
5.1 Representations and Warranties of Borrower........................17
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5.2 Absolute Reliance on the Representations and Warranties...........22
ARTICLE 6 COVENANTS...........................................................22
6.1 Affirmative Covenants.............................................22
6.2 Negative Covenants................................................29
ARTICLE 7 EVENTS OF DEFAULT...................................................32
7.1 Events of Default.................................................32
7.2 Consequences of Event of Default..................................34
ARTICLE 8 MISCELLANEOUS.......................................................35
8.1 Successors and Assigns............................................35
8.2 Modifications and Amendments......................................35
8.3 No Implied Waivers; Cumulative Remedies; Writing Required.........36
8.4 Reimbursement of Expenses.........................................36
8.5 Holidays..........................................................36
8.6 Notices...........................................................36
8.7 Survival..........................................................37
8.8 Confidentiality...................................................37
8.9 Governing Law.....................................................38
8.10 Jurisdiction, Consent to Service of Process.......................38
8.11 Jury Trial Waiver.................................................39
8.12 Severability......................................................39
8.13 Headings..........................................................39
8.14 Indemnity.........................................................39
8.15 Environmental Indemnity...........................................39
8.16 Counterparts......................................................40
8.17 Integration.......................................................40
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8.18 Subordination.....................................................40
8.19 Noteholder Subordination Agreement................................41
SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT.........................42
ANNEX A INFORMATION RELATING TO PURCHASERS........................44
ANNEX B...........................................................47
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SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
$4,350,000 Aggregate Principal Amount of Senior Subordinated Notes
Due July 31, 2009
$1,650,000 Aggregate Principal Amount of Subordinated Capital Expenditure Notes
Due July 31, 2009
$2,700,000 Aggregate Principal Amount of Subordinated Make-Whole Notes
Due July 31, 2009
THIS SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT (this "Agreement"), dated
as of August 1, 2006, is by and among WISCONSIN & MICHIGAN STEAMSHIP COMPANY, a
Michigan corporation ("Borrower"), RAND FINANCE CORP., a Delaware corporation
("Rand"), OGLEBAY NORTON MARINE SERVICES COMPANY, LLC, a Delaware limited
liability company ("Oglebay"; together with Rand, each a "Purchaser" and
collectively, "Purchasers").
RECITALS
A. Borrower, Oglebay and Oglebay Norton Company, an Ohio corporation, have
entered into an Asset Purchase Agreement, dated as of August 1, 2006 (together
with all schedules, exhibits and annexes the "Acquisition Agreement") pursuant
to which Borrower will acquire the Vessels (as defined below (the
"Acquisition").
B. A portion of the purchase price for the Vessels shall be in the form of
a Senior Subordinated Note (hereinafter defined) issued by Borrower in favor of
Oglebay in the original principal amount of $2,200,000 (the "Seller Note").
C. Borrower has proposed selling additional Notes (as defined below) to
Rand in the aggregate amount of $6,500,000 for the purpose of partially
financing the Acquisition and for working capital purposes.
NOW, THEREFORE, the parties hereto, in consideration of the premises and
their mutual covenants and agreements herein set forth and, intending to be
legally bound hereby, covenant and agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions. In addition to other words and terms defined
elsewhere in this Agreement, the following words and terms shall have the
meanings set forth below (and such meanings shall be equally applicable to both
the singular and plural form of the terms defined, as the context may require):
"Affiliate" shall mean, with respect to any Person, (i) any Person that
directly or indirectly controls such Person, (ii) any Person which is controlled
by or is under common control with such controlling Person, (iii) each of such
Person's (other than, with respect to any Purchaser, any Purchaser's) officers
or directors and the spouses, parents, descendants and siblings of such officers
and directors. As used in this definition, the term "control" of a Person means
the possession, directly or indirectly, of the power to vote five percent (5%)
or more of any class of voting securities of such Person or to direct or cause
the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Notwithstanding the
foregoing, neither Rand, Oglebay, nor any Affiliate thereof shall be deemed an
Affiliate of Borrower.
"Acquisition" shall have the meaning assigned to such term in the recitals
hereto.
"Acquisition Agreement" shall have the meaning assigned to such term in
the recitals hereto.
"Agreement" shall mean this Senior Subordinated Note Purchase Agreement,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
"Bankruptcy Code" shall mean Title 11 of the United States Code, 11 U.S.C.
ss. 101 et. seq., as amended from time to time, or any successor statute.
"Borrower" shall have the meaning assigned to such term in the preamble
hereto.
"Business" shall mean the principal business of Borrower as set forth in
Section 5.1(b) hereof and as such shall continue to be conducted following the
Closing Date.
"Business Day" shall mean any day other than a Saturday, a Sunday or any
other day on which banking institutions in New York are authorized or required
by law to close.
"By-laws" shall mean the by-laws, partnership agreement, operating
agreement or analogous instrument or instruments governing the operations of
Borrower, as applicable, including all amendments and supplements thereto.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person for any fixed assets or improvements or for
replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.
"Capital Lease" of any Person, shall mean leases of (or other agreements
conveying the right to use) any property (whether real, personal or mixed) by
such Person as lessee that, in accordance with GAAP, either would be required to
be classified and accounted for as capital leases on a balance sheet of such
Person or would otherwise be disclosed as such in a note to such balance sheet.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. ss. 9604, et seq.), as amended, and rules,
regulations, standards, guidelines and publications issued thereunder.
"Change of Control" shall mean the occurrence of any of the following:
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(a) Parent shall cease to, directly own and control one hundred
percent (100%) of the outstanding equity interests of Borrower or (ii) that
percentage of the outstanding voting equity interests of Borrower necessary at
all times to elect a majority of the board of directors (or similar governing
body) of Borrower and to direct the management policies and decisions of
Borrower;
(b) Borrower shall cease to, directly or indirectly, own and control
one hundred percent (100%) of each class of the outstanding equity interests of
each Subsidiary (except as otherwise permitted herein);
(c) a sale, transfer or other disposition of fifty percent (50%) or
more of the assets of Borrower; or
(d) the initial public offering of securities by Borrower.
"Charter Documents" shall mean the Articles of Incorporation, Certificate
of Incorporation, certificate of limited partnership, certificate of limited
liability company, charter or analogous organic instrument filed with the
appropriate Governmental Authorities of Borrower, as applicable, including all
amendments and supplements thereto.
"Closing" shall have the meaning assigned to such term in Section 2.3
hereof.
"Closing Date" shall have the meaning assigned to such term in Section 2.3
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment" shall mean the commitment of any Purchaser to purchase Notes
hereunder as set forth on Annex A hereto.
"Contingent Obligations" shall mean, with respect to any Person, any
direct or indirect liability of such Person: (i) with respect to any debt,
lease, dividend or other obligation of another Person if the purpose or intent
of such Person incurring such liability, or the effect thereof, is to provide
assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreement relating thereto will be complied with, or
that any holder of such liability will be protected, in whole or in part,
against loss with respect thereto; (ii) with respect to any letter of credit
issued for the account of such Person or as to which such Person is otherwise
liable for the reimbursement of any drawing; (iii) under any Swap Contract (but
excluding any such liability to the extent constituting Debt); (iv) to make
take-or-pay or similar payments if required regardless of nonperformance by any
other party or parties to an agreement; or (v) for any obligation of another
Person pursuant to any agreement to purchase or otherwise acquire any obligation
or any property constituting security therefor, to provide funds for the payment
or discharge of such obligation or to preserve the solvency, financial condition
or level of income of another Person. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if not a fixed determinable amount, the maximum amount so
guaranteed or otherwise supported.
"Controlled Group" shall mean all members of a group of corporations and
all members of a group of trades or businesses (whether or not incorporated)
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under common control which, together with Borrower, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.
"Covered Taxes" shall have the meaning assigned to such term in Section
3.7(a) hereof.
"Debt" of a Person shall mean at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all non-contingent obligations of such Person to pay the deferred purchase price
of property or services, except trade accounts payable arising and paid in the
ordinary course of business, (iv) all Capital Leases of such Person, (v) all
non-contingent obligations of such Person to reimburse any bank or other Person
in respect of amounts paid under a letter of credit or similar instrument, (vi)
all equity securities of such Person subject to mandatory repurchase or
redemption prior to the date of the final principal installment under the Senior
Credit Agreement, (vii) all obligations secured by a Lien on any asset of such
Person, whether or not such obligation is otherwise an obligation of such Person
and (viii) all Debt of others Guaranteed by such Person.
"Default" shall mean any event or condition that, but for the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
"Default Rate" shall have the meaning assigned to such term in Section
7.2(c) hereof.
"Environmental Laws" shall mean any and all federal, state and local
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
codes, injunctions, permits, licenses, and governmental restrictions, whether
now or hereafter in effect, relating to the environment or human health or to
emissions, discharges or Releases of pollutants, contaminants, Hazardous
Materials or wastes into the environment, including ambient air, surface water,
ground water or land, or otherwise relating to the treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Materials or wastes
or the clean-up or other remediation thereof.
"Environmental Claims" means all claims asserted against Borrower by any
Governmental Authority or other Person alleging liability under or
responsibility for violation of any Environmental Laws, or for Release of any
Hazardous Materials into or damage to the environment, threats to public health,
property damage, natural resources damage, or otherwise alleging liability or
responsibility for damages (punitive or otherwise), cleanup, Removal, Remedial
or Response actions, restitution, civil or criminal penalties or injunctive
relief resulting from or based upon the presence, placement, discharge,
emission, or Release (including intentional and unintentional, negligent and non
negligent, sudden or non sudden, accidental or non accidental, placement,
spills, leaks, discharges, emissions, or releases) of any Hazardous Materials.
"Environmental Schedule" shall have the meaning assigned to such term in
Section 5.1(k) hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may from time to time be amended, and the rules and regulations of any
governmental agency or authority, as from time to time in effect, promulgated
thereunder.
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"ERISA Plan" means any "employee benefit plan", as such term is defined in
Section 3(3) of ERISA (other than a Multiemployer Plan), which Borrower
maintains, sponsors or contributes to, or, in the case of an employee benefit
plan which is subject to Section 412 of the Code or Title IV of ERISA, to which
Borrower or any member of the Controlled Group may have any liability, including
any liability by reason of having been a substantial employer within the meaning
of Section 4063 of ERISA at any time during the preceding five years, or by
reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.
"Event of Default" shall mean any of the events of default described in
Section 7.1 hereof.
"Fiscal Year" or "fiscal year" shall mean each twelve month period ending
on December 31st of each calendar year.
"Foreign Purchaser" shall have the meaning assigned to such term in
Section 3.7(b) hereof.
"GAAP" shall mean generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Governmental Authorities" shall mean any federal, state or municipal
court or other executive, legislative or judicial governmental department,
commission, board, bureau, agency or instrumentality, governmental or
quasi-governmental, domestic or foreign.
"Guarantee" or "Guaranty" by any Person shall mean any obligation,
contingent or otherwise, of such Person directly or indirectly guaranteeing any
Debt or other obligation of any other Person and, without limiting the
generality of the foregoing, 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 Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part), provided that the term Guarantee or Guaranty shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" or "Guaranty" used as a verb has a corresponding
meaning.
"Hazardous Materials" means (i) any "hazardous substance" and any
"pollutant or contaminant" as those terms are defined in CERCLA, (ii) asbestos,
(iii) polychlorinated biphenyls, (iv) petroleum, its derivatives, by-products
and other hydrocarbons, and (v) any other toxic, radioactive, caustic or
otherwise hazardous substance regulated under Environmental Laws.
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"Hazardous Materials Contamination" means contamination (whether now
existing or hereafter occurring) of the improvements, buildings, facilities,
personalty, soil, groundwater, air or other elements in, at, on, under or
otherwise related to the relevant property by Hazardous Materials, or any
derivatives thereof, or on or of any other property as a result of Hazardous
Materials, or any derivatives thereof, generated on, emanating from or disposed
of in connection with the relevant property.
"Intellectual Property Schedule" shall have the meaning assigned to such
term in Section 5.1(q) hereof.
"Interest" shall have the meaning assigned to such term in Section 3.1(a)
hereof.
"IRS" shall mean the Internal Revenue Service and any governmental body or
agency succeeding to the functions thereof.
"Law" shall mean all U.S. and foreign federal, state or local statutes,
laws, rules, regulations, ordinances, codes, policies, rules of common law, and
the like, now or hereafter in effect, including any judicial or administrative
interpretations thereof, and any judicial or administrative orders, consents,
decrees or judgments.
"Lien" shall mean any security interest, pledge, bailment, mortgage,
hypothecation, deed of trust, conditional sales and title retention agreement
(including any lease in the nature thereof), charge, encumbrance or other
similar arrangement or interest in real or personal property, now owned or
hereafter acquired, whether such interest is based on common law, statute or
contract.
"Litigation Schedule" shall have the meaning assigned to such term in
Section 5.1(i) hereof.
"Management" shall mean generation, production, handling, distribution,
processing, use, storage, treatment, operation, transportation, recycling, reuse
and/or disposal, as those terms are defined in CERCLA, RCRA and other
Environmental Laws (including as those terms are further defined, construed, or
otherwise used in rules, regulations, standards, guidelines and publications
issued pursuant to, or otherwise in implementation of, such Environmental Laws).
"Material Adverse Change" shall mean any change that has a Material
Adverse Effect.
"Material Adverse Effect" shall mean with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, (a)
a material adverse change in, or a material adverse effect upon, any of the
financial condition, operations, business or properties of Borrower, (b) a
material impairment of the rights and remedies of Purchasers under any Purchase
Document, or the ability of Borrower to perform any of its obligations under any
Purchase Document to which it is a party, (c) a material adverse effect upon the
legality, validity or enforceability of any Purchase Document.
"Maturity Date" shall have the meaning assigned to such term in Section
3.2 hereof.
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"Multiemployer Plan" shall mean a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which Borrower or any member of the Controlled
Group may have any liability.
"Noteholder Subordination Agreement" shall have the meaning assigned to
such term in Section 8.19 hereof.
"Notes" shall have the meaning assigned to such term in Section 2.1(c)
hereof.
"Organization Schedule" shall have the meaning assigned to such term in
Section 5.1(a) hereof.
"Other Taxes" shall have the meaning assigned to such term in Section
3.7(a) hereof.
"Parent" shall mean Sand Products Corporation.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any other governmental agency,
department or instrumentality succeeding to the functions thereof.
"Pension Plan" means any ERISA Plan that is subject to Section 412 of the
Code or Title IV of ERISA.
"Permitted Contest" means a contest maintained in good faith by
appropriate proceedings promptly instituted and diligently conducted and with
respect to which such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made; provided that
compliance with the obligation that is the subject of such contest is
effectively stayed during such challenge.
"Permitted Lien" shall have the meaning assigned to such term in Section
6.2(b) hereof.
"Person" shall mean any individual, partnership, limited partnership,
corporation, limited liability company, association, joint stock company, trust,
firm, joint venture, unincorporated organization or governmental entity or
department, agency or political subdivision thereof.
"PIK Notes" shall have the meaning assigned to such term in Section 3.1(e)
hereof.
"Properties and Facilities" shall have the meaning assigned to such term
in Section 5.1(p) hereof.
"Properties Schedule" shall have the meaning assigned to such term in
Section 5.1(p) hereof.
"Proprietary Rights" shall mean all right, title, and interest in the
following intellectual property, including both statutory and common law rights:
(i) copyrights in published and unpublished works, and all applications,
registrations and renewals relating thereto; (ii) registered or unregistered
trademarks, service marks, domain names, logos, trade dress and other source or
business identifiers, and the goodwill associated therewith; (iii) patents,
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patent applications, and other patent or industrial property rights in any
country; and (iv) trade secrets, confidential or proprietary information,
inventions, ideas, designs, concepts, compilations of information, methods,
techniques, procedures, processes, and know-how, whether or not such are
registered with any Governmental Authorities, including applications therefor.
"Purchase Documents" shall mean this Agreement, the Notes, the
Subordination Agreement, the Noteholder Subordination Agreement and all other
agreements, instruments and documents delivered in connection therewith or
contemplated therein as any or all of the foregoing may be supplemented or
amended from time to time.
"Purchaser" shall have the meaning assigned to such term in the preamble
hereto.
"RCRA" shall mean the Resource Conservation and Recovery Act (42 U.S.C.
ss. 6901 et seq.), as amended, and all rules, regulations, standards,
guidelines, and publications issued thereunder.
"Release" means any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching,
escaping, placing, discarding, abandonment, or migration on or into the
environment or into or out of any property.
"Removal," "Remedial" and "Response" actions shall include the types of
activities covered by CERCLA, RCRA, and other comparable Environmental Laws,
with respect to the Release or threat of Release of any Hazardous Materials and
whether the activities are those that might be taken by a government entity or
those that a Governmental Authority or any other person might seek to require of
waste generators, handlers, distributors, processors, users, storers, treaters,
owners, operators, transporters, recyclers, reusers, disposers, or other persons
under "removal," "remedial," or other "response" actions.
"Reportable Event" shall mean any of the events that are reportable under
Section 4043 of ERISA and the regulations promulgated thereunder, other than an
occurrence for which the thirty (30) day notice contained in 29 C.F.R. ss.
2615.3(a) is waived.
"Responsible Officer" shall mean either the Chief Executive Officer or
Chief Financial Officer of Borrower.
"Restricted Distribution" shall mean as to any Person (i) any dividend or
other distribution on any equity interest in such Person (except those payable
solely in its equity interests of the same class) or (ii) any payment on account
of (a) the purchase, redemption, retirement, defeasance, surrender or
acquisition of any equity interests in such Person or any claim respecting the
purchase or sale of any equity interest in such Person or (b) any option,
warrant or other right to acquire any equity interests in such Person.
"SEC" shall mean the Securities and Exchange Commission and any
governmental body or agency succeeding to the functions thereof.
"Seller" shall have the meaning assigned to such term in the recitals
hereto.
"Seller Note" shall have the meaning assigned to such term in the recitals
hereto.
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"Senior Credit Agreement" shall mean that certain Credit and Security
Agreement between Borrower and National City Leasing Corporation, dated as of
the date hereof, as such may be amended or modified from time to time as
permitted hereunder.
"Senior Debt" shall mean all Debt, obligations and liabilities of Borrower
under or relating to the Senior Financing.
"Senior Financing" shall mean secured term credit facilities of Borrower
incurred pursuant to the Senior Credit Agreement, and any extension, renewal,
refunding or refinancing thereof from time to time; provided, that at no time
shall the principal amount of the Senior Financing exceed the amount of the
"Senior Indebtedness" (as defined in the Subordination Agreement).
"Senior Financing Documents" means the Senior Credit Agreement, all notes,
security agreements, pledge agreements, mortgages, guarantees and other
agreements, instruments and documents now or hereafter executed pursuant thereto
or in connection therewith.
"Senior Lender" shall mean National City Commercial Capital Company, LLC,
an Indiana limited liability company.
"Senior Subordinated Notes" shall have the meaning assigned to such term
in Section 2.1(a) hereof.
"Subordinated CapEx Notes" shall have the meaning assigned to such term in
Section 2.1(b) hereof.
"Subordinated Make Whole Notes" shall have the meaning assigned to such
term in Section 2.1(c) hereof.
"Subordination Agreement" shall have the meaning assigned to such term in
Section 8.18 hereof.
"Subsidiary" of any corporation shall mean any other corporation or
limited liability company of which the outstanding capital stock possessing a
majority of voting power in the election of directors (other than as the result
of a default) is owned or controlled by such corporation directly or indirectly
through Subsidiaries.
"Swap Contract" means any "swap agreement", as defined in Section 101 of
the Bankruptcy Code, that is intended to provide protection against fluctuations
in interest or currency exchange rates.
"Taxes" shall have the meaning assigned to such term in Section 3.7(a)
hereof.
"Time Charter Agreement" shall mean the Time Charter Agreement dated as of
August 1, 2006, by and between Borrower and Lower Lakes Transportation Company.
"Transactions" shall mean the incurrence of debt in connection with and as
contemplated by the Purchase Documents.
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"Vessels" shall mean, collectively, (A) the Xxxxx X. Xxxxxx, a documented
vessel of the United States bearing U.S. Official Number 549231 (B) the
Wolverine, a documented vessel of the United States bearing U.S. Official Number
560339 and (C) the Xxxx X. Xxxxxxx, a documented vessel of the United States
bearing U.S. Official Number 552395.
1.2 Principles. Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all accounting determinations hereunder
(including without limitation determinations made pursuant to the exhibits
hereto) shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with GAAP applied on a basis
consistent with the most recent audited financial statements of Borrower
delivered to Purchasers; it being understood, however, that (i) no financial
statement of the Seller required to be delivered hereunder (and none of the
accounting determinations based thereon) have been prepared in accordance with
GAAP and (ii) the first audited financial statements of Borrower prepared in
accordance with GAAP to be delivered hereunder will be for the period ended
December 31, 2006. If at any time any change in GAAP would affect the
computation of any financial ratio or financial requirement set forth in any
Purchase Document, and either Borrower or Purchasers shall so request,
Purchasers and Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of Purchasers); provided that, until so amended,
(i) such ratio or requirement shall continue to be computed in accordance with
GAAP prior to such change therein and (ii) Borrower shall provide to Purchasers
financial statements and other documents required under this Agreement which
include a reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP. All amounts used for
purposes of financial calculations required to be made herein shall be without
duplication.
1.3 Other Definitional Provisions; Construction. Whenever the context so
requires, neuter gender includes the masculine and feminine, the singular number
includes the plural and vice versa. The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not it any particular provision of this agreement, and
references to section, article, annex, schedule, exhibit and like references are
references to this Agreement unless otherwise specified. The words "includes" or
"including" shall mean "including without limitation". A Default or Event of
Default shall "continue" or be "continuing" until such Default or Event of
Default has been cured or waived by Purchasers. References in this Agreement to
any Persons shall include such Persons and the successors and permitted assigns
of such Persons. Other terms contained in this Agreement (which are not
otherwise specifically defined herein) shall have meanings provided in Article 9
of the New York Uniform Commercial Code on the date hereof to the extent the
same are used or defined therein.
ARTICLE 2
ISSUE AND SALE OF NOTES
2.1 Authorization and Issuance of the Notes.
(a) Senior Subordinated Notes. Borrower has duly authorized the
issuance of the Seller Note to Oglebay and the issuance and sale to Rand of
$2,150,000 in aggregate principal amount of Senior Subordinated Notes Due July
31, 2009 (the Seller Note and Senior Subordinated Notes issued to Rand are
10
collectively referred to as, the "Senior Subordinated Notes"), to be
substantially in the form of the Senior Subordinated Note attached hereto as
Exhibit A-1.
(b) Subordinated CapEx Notes. Borrower has duly authorized the
issuance and sale to Purchasers of $1,650,000 in aggregate principal amount of
Subordinated CapEx Notes Due July 31, 2009 (the "Subordinated CapEx Notes"), to
be substantially in the form of the Subordinated CapEx Note attached hereto as
Exhibit A-2.
(c) Subordinated Make Whole Notes. Borrower has duly authorized the
issuance and sale to Purchasers of $2,700,000 in aggregate principal amount of
Subordinated Make-Whole Notes Due July 31, 2009 (the "Subordinated Make Whole
Notes", and together with the Senior Subordinated Notes, the Subordinated CapEx
Notes, and the PIK Notes collectively, the "Notes"), to be substantially in the
form of the Subordinated Make Whole Note attached hereto as Exhibit A-3.
2.2 Sale and Purchase.
(a) Senior Subordinated Notes. Subject to the terms and conditions
and in reliance upon the representations, warranties and agreements set forth
herein, on the Closing Date, (i) Borrower shall sell to Rand, and Rand shall
purchase from Borrower, in an amount equal to the relative portion of the Senior
Subordinated Notes to be purchased by Rand as set forth on Annex B, the Senior
Subordinated Notes in the aggregate principal amounts set forth in Section
2.1(a) hereof for $2,150,000 in the aggregate, and (ii) Borrower shall issue to
Oglebay the Seller Note as partial payment for the Acquisition. Amounts repaid
by Borrower with respect to the Senior Subordinated Notes may not be reborrowed.
(b) Subordinated CapEx Note. Subject to the terms and conditions and
in reliance upon the representations, warranties and agreements set forth
herein, Borrower shall sell to Purchasers, and Purchasers shall purchase from
Borrower, in an amount equal to the relative portion of the Subordinated CapEx
Notes to be purchased by each Purchaser as set forth on Annex B, the
Subordinated CapEx Notes in the aggregate principal amounts set forth in Section
2.1(b) hereof for an amount up to $1,650,000 in the aggregate at any time or
times prior to July 31, 2009. Amounts repaid by Borrower with respect to the
Subordinated CapEx Notes may not be reborrowed. Borrower may give Purchasers
notice, no later than 11:00 a.m. New York time on Business Day prior to the
purchase and sale of a Subordinated CapEx Note, by submitting a notice of
borrowing, in which notice Borrower shall (A) specify the amount of the proposed
borrowing and the proposed borrowing date, and such amount shall be in an amount
of at least $50,000 (unless otherwise permitted by Purchasers), and (B) be
accompanied by an executed Subordinated CapEx Note and valid invoices for
Capital Expenditures; provided, however, that no such request may be made at a
time when there exists a Default or an Event of Default.
(c) Subordinated Make Whole Notes. Subject to the terms and
conditions and in reliance upon the representations, warranties and agreements
set forth herein, Borrower shall sell to Purchasers, and Purchasers shall
purchase from Borrower, in an amount equal to the relative portion of the
Subordinated Make Whole Notes to be purchased by each Purchaser as set forth on
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Annex B, the Subordinated Make Whole Notes in the aggregate principal amounts
set forth in Section 2.1(c) hereof for an amount up to $2,700,000 in the
aggregate at any time or times prior to October 1, 2008. Any draw by Senior
Lender against Rand's funds on deposit with Senior Lender in the Blocked Account
(as defined in the Senior Credit Agreement) shall be deemed a notice of
borrowing by Borrower under this Section 2.2(c) in the amount of such draw by
Senior Lender and Borrower shall furnish Rand with an executed Subordinated Make
Whole Note in the amount of such draw. Amounts repaid by Borrower with respect
to the Subordinated Make Whole Notes may not be reborrowed.
2.3 The Closing. Delivery of the Notes and the other Purchase Documents
and payment for the Senior Subordinated Notes issued to Rand (the "Closing")
shall be made at the offices of Xxxxxx Xxxxxx Xxxxxxxx LLP, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, commencing at 10:00 a.m., local time, on the date of
this Agreement (the "Closing Date.") The Notes shall be issued in such name or
names and in such permitted denomination or denominations, numbers and amounts
as set forth in Annex B or as Purchasers may request in writing.
ARTICLE 3
REPAYMENT OF THE NOTES
3.1 Interest Rate and Interest Payments.
(a) The outstanding principal amount of the Notes shall bear
interest at the rate of ten percent (10%) per annum, payable in kind pursuant to
Section 3.1 (e) below.
(b) Senior Subordinated Notes. Borrower covenants and agrees to make
payments to Purchasers of accrued interest on the outstanding principal amount
of the Senior Subordinated Notes on the last day of each calendar quarter in
arrears during the term of the Senior Subordinated Notes commencing on September
30, 2006.
(c) Subordinated CapEx Notes. Borrower covenants and agrees to make
payments to Purchasers of accrued interest on the outstanding principal amount
of each Subordinated CapEx Note on the last day of each calendar quarter in
arrears during the term of any Subordinated CapEx Note commencing with the last
day of the calendar quarter subsequent to the date of the purchase and sale of a
Subordinated CapEx Note pursuant to Section 2.1(b).
(d) Subordinated Make Whole Notes. Borrower covenants and agrees to
make payments to Purchasers of accrued interest on the outstanding principal
amount of each Subordinated Make Whole Note on the last day of each calendar
quarter in arrears during the term of any Subordinated Make Whole Note
commencing with the last day of the calendar quarter subsequent to the date of
the purchase and sale of any Subordinated Make Whole Note pursuant to Section
2.1(c).
(e) PIK Interest. Interest on the outstanding principal amount of
the Notes, including interest on the PIK Notes shall be payable in kind on the
last day of each calendar quarter. Borrower shall execute and deliver to
Purchasers PIK Notes in the form of Exhibit A-4 to this Agreement ("PIK Notes")
to evidence such interest paid in kind. Purchasers' determination of the amount
of Notes outstanding at any time shall be conclusive and binding, absent
manifest error.
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(f) Computation of Interest. Interest on the Notes will be computed
on the basis of a year within three hundred sixty (360) days composed of twelve
(12) thirty (30) day months, and the actual number of days elapsed. For purposes
of illustration, interest for a month shall equal: (actual number of days
elapsed in a month/30) x (applicable interest rate/12) x outstanding principal
balance on a Note.
3.2 Repayment of Notes. Borrower covenants and agrees to repay to
Purchasers the unpaid balance of the Notes in full, together with all the
accrued and unpaid interest, fees and other amounts due hereunder on July 31,
2009 ("Maturity Date").
3.3 Optional Prepayment of Notes. Subject to the terms of this Section
3.3, Borrower may prepay to Purchasers the outstanding principal amount of the
Notes in whole or in part in multiples of $100,000, or such lesser amount as is
then outstanding, plus the unpaid accrued interest, if any, on the principal
amount so prepaid, to the date set for prepayment; provided, however, that no
prepayment may be made with respect to any Notes held by Rand until the Seller
Note has been paid in full. All such prepayments shall be applied by Purchasers
to the outstanding principal after application of such prepayment to any accrued
interest.
3.4 Notice of Optional Prepayment. If Borrower shall elect to prepay any
Notes pursuant to Section 3.3 hereof, Borrower shall give notice of such
prepayment (which notice may be withdrawn at option of Borrower without penalty)
to each holder of the Notes to be prepaid not less than five (5) Business Days
prior to the date fixed for prepayment, specifying (i) the date on which such
prepayment is to be made, (ii) the principal amount of such Notes to be prepaid
on such date, and (iii) the accrued interest applicable to the prepayment. Such
notice shall be accompanied by a certificate of a Responsible Officer that such
prepayment is being made in compliance with Section 3.3.
3.5 Mandatory Prepayment on Change of Control or Event of Default. The
Notes shall be prepaid in full, together with all interest, fees and expenses,
as if such prepayment were a voluntary prepayment, in the event of a Change of
Control or upon such Notes becoming due as a consequence of an Event of Default
pursuant to Section 7.2.
3.6 Home Office Payment. Borrower will pay all sums becoming due on any
Note for principal and interest to Purchasers by the method and at the address
specified for such purpose in Annex A, or by such other method or at such other
address as Purchasers shall have from time to time specified to Borrower in
writing for such purpose, without the presentation or surrender of such Note or
the making of any notation thereon, except that upon written request of Borrower
made concurrently with or reasonably promptly after payment or prepayment in
full of any Note, each holder of such Note shall surrender their respective Note
for cancellation, reasonably promptly after such request, to Borrower at its
principal executive office.
3.7 Taxes.
(a) Any and all payments by Borrower hereunder or under the other
Purchase Documents that are made to or for the benefit of Purchasers shall be
made free and clear of and without deduction for any and all present or future
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taxes, levies, imposts, deductions, charges or withholdings and penalties,
interests and all other liabilities with respect thereto (collectively,
"Taxes"), excluding taxes imposed on Purchasers' net income or capital and
franchise taxes imposed on any of them by the jurisdiction under the laws of
which any of them is organized or conducts business or any political subdivision
thereof (all such nonexcluded Taxes being hereinafter referred to as "Covered
Taxes"). Subject to the provisions of Section 3.7(b) hereof, Borrower shall be
required by law to deduct any Covered Taxes from or in respect of any sum
payable hereunder or under any Notes or other Purchase Documents to Purchasers
the sum payable shall be increased as may be necessary so that after making all
required deductions of Covered Taxes (including deductions of Covered Taxes
applicable to additional sums payable under this paragraph), each Purchaser
receives an amount equal to the sum it would have received had no such
deductions been made. Borrower shall make such deductions and Borrower shall pay
the full amount so deducted to the relevant taxation authority or other
authority in accordance with applicable Law. In addition, Borrower agrees to pay
any present or future stamp, documentary, excise, privilege, intangible or
similar levies that arise at any time or from time to time from any payment made
under any and all Purchase Documents or from the execution or delivery by
Borrower or from the filing or recording or maintenance of, or otherwise with
respect to, the exercise by Purchasers of their respective rights under any and
all Purchase Documents (collectively, "Other Taxes"). Subject to the provisions
of Section 3.7(b) hereof, Borrower will indemnify Purchasers for the full amount
of Covered Taxes imposed on or with respect to amounts payable hereunder and
Other Taxes, and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. Payment of this indemnification shall
be made within thirty (30) days from the date Purchasers provide Borrower with a
certificate certifying and setting forth in reasonable detail the calculation of
the amount and type of such Taxes requiring indemnification. Any such
certificates submitted by Purchasers in good faith to Borrower shall, absent
manifest error, be final, conclusive and binding on all parties. The obligation
of Borrower under this Section 3.7 shall survive the payment of the Notes and
the termination of this Agreement. Within thirty (30) days after Borrower having
received a receipt for payment of Covered Taxes and/or Other Taxes, Borrower
shall furnish to Purchasers the original or certified copy of a receipt
evidencing payment thereof.
(b) Each Purchaser that (i) is organized under the laws of a
jurisdiction other than the United States of America and (ii) is a party hereto
on the Closing Date (each such Purchaser, a "Foreign Purchaser") shall execute
and deliver to Borrower and Purchasers one or more (as Borrower or Purchasers
may reasonably request) IRS Form W-8ECI, W-8BEN, W-8IMY (as applicable) or other
applicable form, certificate or document prescribed by the IRS certifying as to
such Foreign Purchaser's entitlement to a complete exemption from withholding or
deduction of Taxes. Borrower shall not be required to pay additional amounts to
any Purchaser pursuant to this Section 3.7 to the extent that the obligation to
pay such additional amounts would not have arisen but for the failure of such
Foreign Purchaser to comply with this Section 3.7.
3.8 Maximum Lawful Rate. The Purchase Documents are hereby limited by this
Section 3.8. In no event, whether by reason of acceleration of the maturity of
the amounts due hereunder or otherwise, shall interest and fees contracted for,
charged, received, paid or agreed to be paid to Purchasers exceed the maximum
amount permissible under such applicable Law. If, from any circumstance
whatsoever, interest and fees would otherwise be payable to Purchasers in excess
of the maximum amount permissible under applicable Law, the interest and fees
14
shall be reduced to the maximum amount permitted under such applicable Law. If
from any circumstance whatsoever, Purchasers shall have received anything of
value deemed interest by applicable Law in excess of the maximum lawful amount
permitted under applicable Law, an amount equal to any such excess shall be
applied to the reduction of the principal amount of the Notes, in such manner as
may be determined by Purchasers, and not to the payment of fees or interest, or
if such excess exceeds the unpaid balance of the principal amount of the Notes,
such excess shall be refunded to Borrower.
3.9 Certain Waivers. Borrower unconditionally waives (i) any rights to
presentment, demand, protest or (except as expressly required hereby) notice of
any kind, and (ii) any rights of recission, setoff, counterclaim or defense to
payment under the Notes or otherwise that Borrower may have or claim against any
Purchaser.
ARTICLE 4
CONDITIONS
4.1 Conditions to the Purchase of Notes. The obligation of Rand to
purchase and pay for the Notes being purchased by it and Oglebay to accept the
Seller Note is subject to the satisfaction, prior to or at the Closing, of the
following conditions:
(a) Representations and Warranties True. The representations and
warranties contained in Article 5 hereof shall be true and correct in all
material respects at and as of the Closing Date as though then made, except to
the extent of changes caused by the transactions expressly contemplated herein.
(b) Material Adverse Change. There shall have been no Material
Adverse Change since June 30, 2006.
(c) Subordination Agreement. Purchasers, the Senior Lender and
Borrower shall have executed the Subordination Agreement among the Senior
Lender, Purchasers and Borrower.
(d) Noteholder Subordination Agreement. Purchasers and Borrower
shall have executed the Noteholder Subordination Agreement among Purchasers and
Borrower.
(e) Closing Documents. Borrower will have delivered or caused to be
delivered to Purchasers all of the following documents in form and substance
satisfactory to Purchasers:
(i) the Notes (as designated by Purchasers pursuant to Section
2.1 and Annex A hereof) in aggregate original principal amounts as set
forth in Section 2.1, duly completed and executed by Borrower;
(ii) certificates of good standing dated as of a recent date
for Borrower issued by its jurisdiction of organization and each
jurisdiction where it is qualified to operate as a foreign corporation, or
its equivalent;
15
(iii) a copy of the Charter Documents of Borrower, certified
by the appropriate governmental official of the jurisdiction of its
organization as of a recent date;
(iv) a copy of the By-laws of Borrower, certified as of the
Closing Date by the secretary or assistant secretary of Borrower;
(v) a certificate of the secretary or assistant secretary of
Borrower, certifying as to the names and true signatures of the officers
or other authorized person of Borrower authorized to sign this Agreement
and the other documents to be delivered by Borrower hereunder;
(vi) copies of the resolutions duly adopted by Borrower's
board of directors or other governing body, authorizing the execution,
delivery and performance by Borrower of this Agreement and each of the
other agreements, instruments and documents contemplated hereby to which
Borrower is a party to, and the consummation of all of the other
Transactions, certified as of the Closing Date by the secretary or
assistant secretary of Borrower;
(vii) certificates of insurance evidencing the existence of
all insurance required to be maintained by Borrower pursuant to Section
6.1(e), and Purchasers shall be satisfied with the type and extent of such
coverage;
(viii) a certificate dated as of the Closing Date from an
officer of Borrower attaching true, correct and complete copies of the
Senior Financing Documents;
(ix) such other documents relating to the Transactions
contemplated by this Agreement as Purchasers or their counsel may
reasonably request.
(f) Purchaser's Fees and Expenses. On the Closing Date, Borrower
shall have paid the out of pocket fees and expenses, including legal fees and
expenses, of Rand, payable by Borrower pursuant to Section 8.4 hereof (and
Borrower hereby authorizes Rand to deduct all such amounts from the aggregate
proceeds of the sale of the Notes by Borrower to Rand, all such amounts).
(g) Legal Investment. On the Closing Date, Purchasers' purchases of
the Notes shall not be prohibited by any applicable Law, rule or regulation of
any Governmental Authority (including, without limitation, Regulations T, U or X
of the Board of Governors of the Federal Reserve System) as a result of the
promulgation or enactment thereof or any changes therein, or change in the
interpretation thereof by any Governmental Authority, subsequent to the date of
this Agreement.
(h) Proceedings. All proceedings taken or required to be taken in
connection with the transactions contemplated hereby to be consummated at or
prior to the Closing and all documents incident thereto will be satisfactory in
form and substance to Purchasers and their special counsel.
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(i) Consummation of Acquisition. The Acquisition shall have been
consummated accordance with the terms and conditions of the Acquisition
Agreement and the other agreements and documents executed in connection
therewith, and Purchasers shall have been provided copies of all agreements,
instruments and documents delivered in connection therewith.
(j) Consummation of Senior Financing. The Senior Financing shall
have been consummated in form and substance satisfactory to Purchasers in
Purchasers' reasonable discretion and Purchasers shall have been provided copies
of all agreements, instruments and documents in connection therewith.
4.2 Waiver. Any condition specified in this Article 4 may be waived by
Purchasers; provided that no such waiver will be effective against Purchasers
unless it is set forth in a writing executed by Purchasers.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BORROWER
5.1 Representations and Warranties of Borrower. As a material inducement
to Purchasers to enter into this Agreement and purchase the Notes, Borrower
hereby represents and warrants to Purchasers as follows:
(a) Organization and Power. Borrower is a Michigan corporation duly
organized, validly existing and in good standing under the laws of its state of
formation. Borrower has all requisite corporate or other organizational power
and authority and all material licenses, permits, approvals and authorizations
necessary to own and operate its properties, to carry on its businesses as now
conducted and presently proposed to be conducted and to carry out the
Transactions, and is qualified to do business in the jurisdictions listed on the
"Organization Schedule" attached hereto as Schedule 5.1(a), which includes every
jurisdiction where the failure to so qualify would have a Material Adverse
Effect. Borrower has its principal place of business as set forth on the
"Organization Schedule". The copies of the Charter Documents and By-Laws of
Borrower that have been furnished to Purchasers reflect all amendments made
thereto at any time prior to the date of this Agreement and are correct and
complete in all respects.
(b) Principal Business. Borrower is primarily engaged in the
ownership and charter of the Vessels (the "Business").
(c) Financial Statements. The pro forma balance sheet of Borrower as
of the Closing Date, copies of which have been delivered to Purchasers, fairly
and accurately presents, in all material respects, the financial position of
Borrower as of such date, adjusted to give effect (as if such events had
occurred on such date) to (1) the transactions contemplated by the Purchase
Documents including, without limitation the sale of the Notes, (2) the
transactions contemplated by the Senior Credit Agreement, including without
limitation, the Senior Financing, (3) the application of the proceeds therefrom
as contemplated by the Purchase Documents and (4) the payment of all legal,
accounting and other fees related thereto to the extent known at the time of the
17
preparation of such balance sheet. As of the date of such balance sheet,
Borrower (after giving effect to the pro forma adjustments) has no any material
liabilities of a type required to be recorded on a balance sheet in accordance
with GAAP which are not recorded on such pro forma balance sheet.
(d) Capitalization and Related Matters.
(i) As of the Closing Date, the authorized capital stock of
Borrower and the number and ownership of all outstanding capital stock of
Borrower is set forth on the Organization Schedule. As of the Closing
Date, Borrower will not have outstanding any stock or securities
convertible into or exchangeable for any shares of its capital stock (or
as otherwise disclosed on the Organization Schedule) and none will have
outstanding any rights or options to subscribe for or to purchase its
respective capital stock or any stock or securities convertible into or
exchangeable for its respective capital stock (or as otherwise disclosed
on the Organization Schedule). As of the Closing Date, Borrower will not
be subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its respective capital stock,
except as set forth herein and in the Equity Holders Agreement. As of the
Closing, all of the outstanding shares of Borrower's capital stock will be
validly issued, fully paid and nonassessable. Borrower has not violated
any applicable federal or state securities laws or any of its Charter
Documents in connection with the offer, sale or issuance of any of its
capital stock. There are no agreements among Borrower's stockholders with
respect to the voting or transfer of Borrower's capital stock other than
as contemplated herein.
(e) Subsidiaries. Borrower does not own, or hold any rights to
acquire, any shares of stock or any other security or interest in any other
Person, and Borrower has no Subsidiaries, except in each case as set forth on
the Organization Schedule.
(f) Authorization; No Breach. The execution, delivery and
performance of this Agreement, the other Purchase Documents and all other
agreements contemplated hereby and thereby to which Borrower is a party, and the
consummation of the Transactions have been duly authorized by Borrower. The
execution and delivery by Borrower of the Purchase Documents and the
consummation of the Transactions do not and will not (i) conflict with or result
in a breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in the creation of any Lien upon Borrower's capital stock or
assets pursuant to, (iv) give any third party the right to accelerate any
obligation under, (v) result in a violation of, or (vi) require any
authorization, consent, approval, exemption or other action by or notice to any
Governmental Authority pursuant to, the Charter Documents of Borrower, or any
law, statute, rule or regulation to which Borrower is subject, or any agreement,
instrument, order, judgment or decree to which Borrower is a party or to which
they or their assets are subject, except for such conflicts, acceleration
rights, violations, breaches or defaults as would not have a Material Adverse
Effect.
(g) Enforceability. This Agreement constitutes, and each of the
other Purchase Documents when duly executed and delivered by Borrower will
constitute, legal, valid and binding obligations of Borrower enforceable in
accordance with their respective terms.
18
(h) No Material Adverse Change. Since June 30, 2006, there has been
no Material Adverse Change.
(i) Litigation. Except as described in the "Litigation Schedule"
attached hereto as Schedule 5.1(i), there are no actions, suits or proceedings
at law or in equity or by or before any arbitrator or any Governmental Authority
now pending or, to the knowledge of Borrower's management after due inquiry,
threatened against or filed by or affecting Borrower or any of its directors or
officers or the businesses, assets or rights of Borrower which could have a
Material Adverse Effect or which in any manner draws into question the validity
of any of the Purchase Documents.
(j) Compliance with Laws. Borrower is not in violation in any
material respect of any applicable Law, except for violations which would not
have an Material Adverse Effect. Borrower is not in default with respect to any
judgment, order, writ, injunction, decree, rule or regulation of any
Governmental Authority, except for defaults which would not have a Material
Adverse Effect.
(k) Compliance with Environmental Requirements; No Hazardous
Materials. Except as described in the "Environmental Schedule" attached hereto
as Schedule 5.1(k):
(i) No Hazardous Materials are located in, at, on or under any
properties now owned, leased or operated by Borrower or have been Released
into the environment, or deposited, discharged, placed or disposed of in,
at, on or under any of such properties in a manner that would require the
taking of any action under any Environmental Law or which could reasonably
be expected to have a Material Adverse Effect. No portion of any such
property is being used, or has been used at any previous time, for the
disposal, storage, treatment, processing or other handling of Hazardous
Materials in violation of any Environmental Law nor is any such property
affected by any Hazardous Materials Contamination.
(ii) No underground storage tanks are located at any
properties now or previously owned, leased or operated by Borrower, or
were located at any such property and subsequently removed or filled.
(iii) No written notice, notification, demand, request for
information, complaint, citation, summons, investigation, administrative
order, consent order and agreement, litigation or settlement with respect
to Hazardous Materials or Hazardous Materials Contamination has been
received or threatened with respect to or in connection with the operation
of any properties now or previously owned, leased or operated by Borrower.
There is no condition, operation, activity or circumstance in connection
with any such properties which is in violation of any Environmental Laws,
and Borrower has not received any written communication from or on behalf
of any Governmental Authority that any such condition, operation, activity
or circumstance exists.
(iv) There has been no environmental investigation, study,
audit, test, review or other analysis conducted of which Borrower has
knowledge in relation to the current or prior business of Borrower or any
property, facility now owned, leased or operated by Borrower which has not
been delivered to Purchasers.
19
(v) Borrower has not received any written Environmental Claims
except for such Environmental Claims which could not be reasonably
expected to have a Material Adverse Effect.
(vi) For purposes of this Section 5.1(k), Borrower shall not
be deemed to include any business or business entity (including a
corporation) which is, in whole or in part, a predecessor of Borrower.
(l) Use of Proceeds. Borrower will use the proceeds from the sale of
the Notes to partially pay the purchase consideration in connection with the
Acquisition and fees, costs and expenses incurred in connection therewith.
Borrower is not engaged in the business of extending credit for the purpose of
purchasing or carrying any "margin stock" or "margin security" (within the
meaning of Regulations T, U or X issued by the Board of Governors of the Federal
Reserve System), and no proceeds of the sale of the Notes will be used to
purchase or carry any margin stock or margin security or to extend credit to
others for the purpose of purchasing or carrying any margin stock or margin
security.
(m) Taxes. Except to the extent subject to a Permitted Contest, all
Federal and [material] state and local tax returns, reports and statements
required to be filed by or on behalf of Borrower have been filed with the
appropriate governmental agencies in all jurisdictions in which such returns,
reports and statements are required to be filed, and all material Taxes
(including real property Taxes) and other material charges shown to be due and
payable in respect thereof have been timely paid prior to the date on which any
fine, penalty, interest, late charge or loss may be added thereto for nonpayment
thereof. Except to the extent subject to a Permitted Contest, all material state
and local sales and use Taxes required to be paid by Borrower have been paid.
Except to the extent subject to a Permitted Contest, all Federal and material
state returns have been filed by Borrower for all periods for which returns were
due with respect to material employee income tax withholding, social security
and unemployment taxes, and the amounts shown thereon to be due and payable have
been paid in full or adequate provisions therefor have been made.
(n) Labor and Employment. Except where failure to comply would not
have a Material Adverse Effect, Borrower is and each of its Pension Plans are in
compliance with those provisions of ERISA, the Code, the Age Discrimination in
Employment Act, and the regulations and published interpretations thereunder
that are applicable to Borrower or any such Pension Plan. As of the date hereof,
no Reportable Event has occurred with respect to any Plan as to which Borrower
is or was required to file a report with the PBGC. No Plan has any material
amount of unfunded benefit liabilities (within the meaning of Section
4001(a)(18) of ERISA) or any accumulated funding deficiency (within the meaning
of Section 302(a)(2) of ERISA), whether or not waived, and neither Borrower nor
any member of the Controlled Group has incurred or expects to incur any material
withdrawal liability under Subtitle E of Title IV of ERISA to a Multiemployer
Plan. Except where failure to comply would not have a Material Adverse Effect,
Borrower is in compliance with all labor and employment laws, rules, regulations
and requirements of all applicable domestic and foreign jurisdictions. To the
Borrower's knowledge, there are no pending or threatened labor disputes, work
stoppages or strikes.
20
(o) Investment Company Act; Public Utility Holding Company Act.
Borrower is not (i) an "investment company" or "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as amended, or
(ii) 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.
(p) Properties. Borrower has good and marketable title to, or valid
leasehold interests in, all of the material assets and properties used or useful
by Borrower in the Business (collectively, the "Properties and Facilities") and
good and marketable title to the Vessels, subject to no Liens except for
Permitted Liens. All of the Properties and Facilities are in good repair,
working order and condition and all such assets and properties are owned by
Borrower free and clear of all Liens except for Permitted Liens. The Properties
and Facilities constitute all of the material assets, properties and rights of
any type used in or necessary for the conduct of the Business. All real estate
and all vessels owned or leased by Borrower are listed on the "Properties
Schedule," attached hereto as Schedule 5.1(p).
(q) Intellectual Property; Licenses. Borrower possesses all
Proprietary Rights material to/necessary for the conduct of the Business as
heretofore conducted or as proposed to be conducted by it. All Proprietary
Rights registered in the name of Borrower and applications therefor filed by
Borrower are listed on the "Intellectual Property Schedule," attached hereto as
Schedule 5.1(q). No event has occurred that permits, or after notice or lapse of
time or both would permit, the revocation or termination of any of the
foregoing, which taken in isolation or when considered with all other such
revocations or terminations could have a Material Adverse Effect. To Borrower's
Knowledge, none of the Proprietary Rights owned by or used under license by
Borrower infringes, misappropriates or conflicts with any Proprietary Rights or
other rights of any other Person; no products or services sold by Borrower in
connection with the Business is infringing on, misappropriating or making any
unlawful or unauthorized use of any Proprietary Rights or other rights of
another Person; and no other Person is infringing upon, misappropriating or
making any unlawful or unauthorized use of any Proprietary Rights of Borrower;
except with respect to each of the foregoing, for infringements,
misappropriations, conflicts and unlawful and unauthorized uses which, would not
have a Material Adverse Effect.
(r) Side Agreements. Neither Borrower nor any Affiliate of Borrower
nor any director, officer or employee of Borrower or any of their Affiliates,
respectively, has entered into, as of the date hereof, any side agreement,
either oral or written, with any individual or business, pursuant to which the
director, officer, employee, Borrower or Affiliate agreed to do anything beyond
the requirements of the formal, written contracts executed by Borrower and
disclosed to Purchasers herein.
(s) Broker's or Finder's Commissions. No broker's or finder's or
placement fee or commission will be payable to any broker or agent engaged by
Borrower or any of its officers, directors or agents with respect to the
issuance and sale of the Notes or the transactions contemplated by this
Agreement, including without limitation the Transactions. Borrower agrees to
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indemnify Purchasers and to hold them harmless from and against any claim,
demand or liability for broker's or finder's or placement fees or similar
commissions, whether or not payable by Borrower, alleged to have been incurred
in connection with such transactions, other than any broker's or finder's fees
payable to Persons engaged by Purchasers without the knowledge of Borrower.
(t) Absence of Undisclosed Liabilities. Except as set forth on
Schedule 5.1(v), Borrower has no material liabilities or obligations, either
accrued, absolute, contingent or otherwise, except:
(i) those liabilities or obligations set forth on the
Financial Statements and not heretofore paid or discharged,
(ii) liabilities arising in the ordinary course of business
under any agreement, contract, commitment, lease or plan specifically
disclosed on the schedules or not required to be disclosed because of the
term or amount involved or otherwise, and
(iii) those liabilities or obligations incurred, consistently
with past business practice, in or as a result of the normal and ordinary
course of business.
(u) Vessels. Each of the Vessels is duly documented in the name of
Borrower under the law and flag of the United States and is entitled to engage
in the coastwise trade of the United States.
(v) Accuracy of Information. None of the Purchase Documents nor any
other information furnished to any of Purchasers by or on behalf of Borrower and
any of its Affiliates in connection with the Transactions contains any untrue
statement of material fact or omits to state any material fact necessary to make
the statements contained therein not misleading.
5.2 Absolute Reliance on the Representations and Warranties. All
representations and warranties contained in this Agreement and any financial
statements, instruments, certificates, schedules or other documents delivered in
connection herewith, shall survive the execution and delivery of this Agreement,
regardless of any investigation made by Purchasers or on Purchasers' behalf.
ARTICLE 6
COVENANTS
6.1 Affirmative Covenants. Borrower covenants that, so long as all or any
of the principal amount of the Notes or any interest thereon shall remain
outstanding, Borrower shall:
(a) Financial Statements; Reports. Maintain a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in accordance with GAAP and to
provide the information required to be delivered to Purchasers hereunder, and
will deliver to Purchasers:
(i) Interim Financial Statements. As soon as practicable and
in any event within forty five (45) days after the end of each fiscal
quarter (including the last fiscal quarter of Borrower's Fiscal Year), a
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balance sheet of Borrower and its Subsidiaries as at the end of such month
and the related statements of operations and cash flows for such fiscal
quarter, and for the portion of the Fiscal Year ended at the end of such
fiscal quarter setting forth in each case in comparative form the figures
for the corresponding periods of the previous Fiscal Year and the figures
for such fiscal quarter and for such portion of the Fiscal Year ended at
the end of such fiscal quarter set forth in the annual operating and
capital expenditure budgets and cash flow forecast delivered pursuant to
Section 6.1(a)(v), in each case all in reasonable detail and certified by
a Responsible Officer as fairly presenting, in all material respects, the
financial condition and results of operations of Borrower, and as having
been prepared in accordance with GAAP applied on a basis consistent with
the audited financial statements of Borrower, subject to changes resulting
from audit and normal year-end adjustments and the absence of footnote
disclosures.
(ii) Annual Financial Statements. As soon as available and in
any event within ninety (90) days after the end of each Fiscal Year, a
balance sheet of Borrower as of the end of such Fiscal Year and the
related statements of operations, stockholders' equity and cash flows for
such Fiscal Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year and the figures for such Fiscal Year
set forth in the annual operating and capital expenditure budgets and cash
flow forecast delivered pursuant to Section 6.1(a)(v), certified (solely
with respect to such statements) without qualification by an independent
public accounting firm reasonably acceptable to Purchasers.
(iii) Accountant Statements. Together with each delivery of
financial statements pursuant to Section 6.1(a)(ii) above, a written
statement by the independent public accountants giving the report thereon
stating that their audit examination has included a review of the terms of
this Agreement as it relates to accounting matters.
(iv) Accountant Reports. Promptly upon receipt thereof, copies
of all reports submitted to Borrower by independent public accountants in
connection with each annual, interim or special audit of the financial
statements of Borrower made by such accountants, including the comment
letter submitted by such accountants to management in connection with
their annual audit.
(v) Operating Plans and Projections. Within thirty (30) days
after the conclusion of each Fiscal Year, Borrower's annual operating
plans, operating and capital expenditure budgets, and financial forecasts,
including cash flow projections covering proposed fundings, repayments,
additional advances, investments and other cash receipts and
disbursements, each for the following Fiscal Year presented on a monthly
basis for the next Fiscal Year and annually for the two (2) subsequent
Fiscal Years, all of which shall be in a format reasonably consistent with
projections, budgets and forecasts theretofore provided to Purchasers, and
promptly following the preparation thereof, updates to any of the
foregoing from time to time prepared by management of Borrower.
(vi) Additional Information. Promptly, from time to time, such
other information regarding the compliance by Borrower with the terms of
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this Agreement and the other Purchase Documents or the affairs, operations
or condition (financial or otherwise) of Borrower as Purchasers may
reasonably request and that is capable of being obtained, produced or
generated by Borrower or of which Borrower has knowledge.
(b) Other Reports and Notices. Give Purchasers written notice of the
following:
(i) Litigation; Defaults. Promptly upon any officer of
Borrower obtaining knowledge (i) of the existence of any Event of Default
or Default, or becoming aware that the holder of any Debt of Borrower in
excess of $100,000 has given any notice or taken any other action with
respect to a claimed default thereunder, (ii) of any change in Borrower's
certified accountant or any resignation, or decision not to stand for
re-election, by any member of Borrower's board of directors (or comparable
body), (iii) that any Person has given any notice to Borrower or taken any
other action with respect to a claimed default under any material
agreement or instrument (other than the Purchase Documents) to which
Borrower is a party or by which any of its assets is bound or (iv) of the
institution of any litigation or arbitration involving an alleged
liability of Borrower equal to or greater than $100,000 or any adverse
determination in any litigation or arbitration involving a potential
liability of Borrower equal to or greater than $100,000, a certificate of
a Responsible Officer specifying the nature and period of existence of any
such condition or event, or specifying the notice given or action taken by
such holder or Person and the nature of such claimed default (including
any Event of Default or Default), event or condition, and what action
Borrower has taken, is taking or proposes to take with respect thereto.
(ii) ERISA. Promptly upon any officer of Borrower obtaining
knowledge of any of the following if the same would have a Material
Adverse Effect: (i) the institution of any steps by any member of the
Controlled Group or any other Person to terminate any Pension Plan, (ii)
the failure of any member of the Controlled Group to make a required
contribution on a timely basis to any ERISA Plan or to any Multiemployer
Plan, (iii) the taking of any action with respect to a Pension Plan which
results in the requirement that Borrower or any Subsidiary furnish a bond
or other security to the PBGC or such Pension Plan, (iv) the occurrence of
a reportable event under Section 4043 of ERISA (for which a reporting
requirement is not waived) with respect to any Pension Plan, (v) the
occurrence of any event with respect to any Pension Plan or Multiemployer
Plan which results in the incurrence by any member of the Controlled Group
of any material liability, fine or penalty (including any claim or demand
for withdrawal liability or partial withdrawal from any Multiemployer
Plan), (vi) any material increase in the contingent liability of Borrower
or any Subsidiary with respect to any post-retirement welfare plan benefit
or (vii) any notice that any Multiemployer Plan is in reorganization, that
increased contributions may be required to avoid a reduction in
Multiemployer Plan benefits or the imposition of an excise tax, that any
such Multiemployer Pension Plan is or has been funded at a rate less than
that required under Section 412 of the Code, that any such Multiemployer
Plan is or may be terminated, or that any such plan is or may become
insolvent, a certificate of a Responsible Officer specifying the nature
and period of existence of any such condition or event, or specifying the
notice given or action taken by such holder or Person, and what action
Borrower has taken, is taking or proposed to take with respect thereto.
24
(iii) Environmental Matters. Promptly upon any officer of
Borrower obtaining knowledge of any of the following if the same would
have a Material Adverse Effect: any complaint, order, citation, notice or
other written communication from any Person delivered to Borrower with
respect to, or if any officer of Borrower becomes aware of (x) the
existence or alleged existence of a violation of any Environmental Law or
the incurrence of any Environmental Claim, obligation, loss, damage, cost,
expense, fine, penalty or sanction or the requirement to commence any
Removal, Remedial or Response action resulting from or in connection with
any air emission, water discharge, noise emission, Hazardous Material or
any other environmental, health or safety matter in, at, on, under or
within any of the properties now or previously owned, leased or operated
by Borrower, or due to the operations or activities of Borrower or any
other Person on or in connection with any such property or any part
thereof, or (y) any Release in, at, on, under or within any of such
properties of Hazardous Materials in a quantity that is reportable under
any applicable Environmental Law, a certificate of a Responsible Officer
specifying the nature and period of existence of any such condition or
event, or specifying the notice given or action taken by such holder or
Person, and what action Borrower has taken, is taking or proposes to take
with respect thereto.
(iv) Intellectual Property. Promptly upon any officer of
Borrower obtaining knowledge that Borrower has either (x) registered or
applied to register any Proprietary Rights material to its business as
then conducted with the U.S. government, any foreign government or any
agency or department thereof, or (y) acquired any interest in real
property (including leasehold interests in real property, whether owned or
leased) which has a value of more than $100,000, a certificate of a
Responsible Officer describing such Proprietary Rights and/or such real
property in such detail as Purchasers shall reasonably require.
(v) Taxes. Copies of any reports or notices related to any
material taxes and any other material reports or notices received by
Borrower from, or filed by Borrower with, any Governmental Authority.
(c) Payment and Performance of Obligations. Borrower (i) will pay
and discharge, and cause each Subsidiary to pay and discharge, at or before
maturity, all of their respective obligations and liabilities, including tax
liabilities, except for such obligations and liabilities, the nonpayment or
nondischarge of which could not reasonably be expected to have a Material
Adverse Effect, (ii) will maintain, and cause each Subsidiary to maintain, in
accordance with GAAP, appropriate reserves for the accrual of all of their
respective obligations and liabilities and (iii) will not breach or permit any
Subsidiary to breach, or permit to exist any default under, the terms of any
lease, commitment, contract, instrument or obligation to which it is a party, or
by which its properties or assets are bound, except for such breaches or
defaults which could not reasonably be expected to have a Material Adverse
Effect.
(d) Conduct of Business and Maintenance of Existence. At all times
will continue, and will cause each Subsidiary to continue, to engage in the
Business as presently conducted and reasonable extensions thereof and will
25
preserve, renew and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and effect their respective
existence and their respective rights, privileges and franchises necessary or
desirable in the normal conduct of business.
(e) Maintenance of Property; Insurance.
(i) Borrower will keep, and will cause each Subsidiary to
keep, all property useful and necessary in its business in good working
order and condition, ordinary wear and tear excepted.
(ii) Borrower will maintain, and will cause each Subsidiary to
maintain, (i) physical damage insurance on all real and personal property
on an all risks basis (including the perils of flood and quake), covering
the repair and replacement cost of all such property and consequential
loss coverage for business interruption and public liability insurance
(including products/completed operations liability coverage) in each case
of the kinds and in amounts maintained by Borrower on the Closing Date and
(ii) such other insurance coverage in such amounts and with respect to
such risks as Purchasers may reasonably request. All such insurance shall
be provided by insurers having an A.M. Best policyholders rating
reasonably acceptable to Purchasers.
(iii) On or prior to the Closing Date, Borrower will cause
each Purchaser to be named as an additional insured on each liability
insurance policy required to be maintained pursuant to this Section 6.1(e)
pursuant to endorsements in form and content acceptable to Purchasers.
Borrower will deliver to Purchasers (i) on the Closing Date, a certificate
from Borrower's insurance broker dated such date showing the amount of
coverage as of such date, and that such policies will include effective
waivers (whether under the terms of any such policy or otherwise) by the
insurer of all claims for insurance premiums against all additional
insureds and all rights of subrogation against all additional insureds,
and that if all or any part of such policy is canceled, terminated or
expires, the insurer will forthwith give notice thereof to each additional
insured that no cancellation, reduction in amount or material change in
coverage thereof shall be effective until at least thirty (30) days after
receipt by each additional insured of written notice thereof, (ii) upon
the reasonable request of any Purchaser through Purchasers from time to
time full information as to the insurance carried, (iii) within five (5)
days of receipt of notice from any insurer, a copy of any notice of
cancellation, nonrenewal or material change in coverage from that existing
on the date of this Agreement and (iv) forthwith, notice of any
cancellation or nonrenewal of coverage by Borrower.
(f) Compliance with Laws. Borrower will comply, and will cause each
Subsidiary to comply, with the requirements of all applicable laws, ordinances,
rules, regulations, and requirements of Government Authorities (including
Environmental Laws and ERISA and the rules and regulations thereunder), except
for such noncompliance that would not have a Material Adverse Effect.
(g) Inspection of Property, Books and Records. Borrower will keep,
and will cause each Subsidiary to keep, proper books of record and account in
accordance with GAAP in which full, true and correct entries shall be made of
26
all dealings and transactions in relation to its business and activities; and
will permit, and will cause each Subsidiary to permit, at the sole cost of
Borrower or any applicable Subsidiary, (it being agreed that, without limiting
the number of visits or inspections permitted below, Borrower and its
Subsidiaries shall be responsible for the cost of only one (1) such visit or
inspection per Purchaser per Fiscal Year so long as no Event of Default exists)
representatives of any Purchaser to visit and inspect any of their respective
properties, to examine and make abstracts or copies from any of their respective
books and records and to discuss their respective affairs, finances and accounts
with their respective officers, employees and independent public accountants as
often as may reasonably be desired; provided, however that Purchasers shall
agree to keep all information that is subject to a confidentiality agreement
involving Borrower or any of their respective Subsidiaries of Affiliates
confidential to the extent required pursuant to Section 8.8. In the absence of
an Event of Default, any Purchaser exercising any rights pursuant to this
Section 6.1(g) shall give Borrower or any applicable Subsidiary commercially
reasonable prior written notice (which in any event shall not be less than two
(2) Business Days prior written notice) of such exercise. No notice shall be
required during the existence and continuance of any Event of Default.
(h) Purchasers' Meetings. At any Purchaser's request, Borrower will
conduct a meeting of Purchasers once during each Fiscal Year to discuss the
prior Fiscal Year's results and the financial condition of Borrower and the
Subsidiaries at which shall be present a Responsible Officer and such officers
of Borrower as may be reasonably requested to attend by any Purchaser, such
request or requests to be made within a reasonable time prior to the scheduled
date of such meeting. Such meetings shall be held at a time and place convenient
to any Purchaser wishing to attend and to Borrower.
(i) Hazardous Materials; Remediation. Provide Purchasers, within
thirty (30) days after demand therefor, financial assurance to the reasonable
satisfaction of Purchasers that sufficient funds are available to pay the cost
of removing, treating, transporting and disposing of any Hazardous Materials or
Hazardous Materials Contamination and discharging any Lien which may be
established on any property as a result thereof, such demand to be made, if at
all, upon Purchasers' reasonable business determination that the failure to
remove, treat, transport or dispose of any Hazardous Materials or Hazardous
Materials Contamination, or the failure to discharge any such Lien, could
reasonably be expected to have a Material Adverse Effect.
(j) Vessels.
(i) Borrower shall maintain the documentation of the Vessels
under the laws of the United States of America and shall maintain the
qualification of the Vessels to operation in the US Coastwise trade.
Borrower will maintain all proper licenses and permits in force at all
times, and no do or permit anything to be done which might affect such
documentation, registration or qualification.
(ii) Borrower shall at all times preserve, repair and keep in
thoroughly good and seaworthy repair and good order and condition the
Vessels and all machinery and equipment and appurtenances thereto up to a
modern standard of usage, and maintain the same consistently with the best
practices in respect of similar vessels; and in any event, Borrower will
maintain each Vessel in such condition as will entitle her to be
classified "+ 100 A1" by Lloyds Register of Shipping or an equivalent
27
classification by The American Bureau of Shipping or by another
classification society acceptable to Purchasers, and will furnish to
Purchasers, upon request, the certificate evidencing such classification;
and at all times upon reasonable notice allow Purchasers or their
representatives access to each Vessel in order to view the state of
repair.
(iii) Borrower shall not at any time suffer or permit the
Vessels to be used or navigated in any manner inconsistent with any of the
marine insurance policies thereon, and it shall comply and shall require
the master, officers and engineers of the Vessels from time to time and at
all times to comply in all material respects with all statutory rules,
regulations, by-laws and ordinances relating to the operation and
navigation of the Vessels or which from time to time may be in force and
applicable thereto.
(iv) Borrower shall warrant and defend the title to the
Vessels and its possession thereof for the benefit of Purchasers against
the claims and demands of all Persons whomsoever.
(v) Borrower shall pay and discharge, upon the due date
thereof, all debts, damages and liabilities which have given rise or may
give rise to maritime or possessory liens on the Vessels or to claims
enforceable by action in rem against any thereof or to any similar process
so as to keep the Vessels free from arrest or detention, and, in the event
of arrest or detention of a Vessel being threatened or effected, it will
forthwith notify Purchasers and shall take all steps and make all payments
necessary to obtain the release thereof forthwith and no later than
fifteen (15) days from the date of receiving notice of any such arrest or
detention.
(vi) Except as contemplated by the Senior Credit Agreement,
Borrower shall not sell, mortgage or transfer any Vessels or any share or
interest therein, in any manner, or agree to any charter of any Vessel,
without the prior written consent of both Purchasers, and any such written
consent to any one mortgage, transfer or charter shall not be construed a
waiver of this provision in respect of any subsequent mortgage, transfer
or charter.
(vii) Borrower shall provide Purchasers promptly with such
information as may be requested by any Purchaser regarding the Vessels,
their location and employment, the particulars of all tonnages, salvages
and copies of all charters and contracts.
(viii) Borrower will pay or cause to be paid, upon the due
dates thereof, all taxes, rates, fees, levies, fines, tolls, charges,
duties, penalties, excises, assessments, disbursements and all other
outgoings payable in respect of the Vessels and their use, ownership,
documentation, registration and maintenance and, when requested by
Purchasers, produce all relevant receipts therefor.
28
(ix) Borrower shall permit Purchasers or their authorized
representatives, whenever requested by Purchasers, at the expense of
Purchasers, to review the survey files and/or to survey each Vessels.
(x) Borrower shall promptly give notice to Purchasers of (A)
any notice of expropriation of a Vessel or action or proceeding which it
believes might have a Material Adverse Effect on the financial condition
of it or the Business, (B) all claims, proceedings or litigation in
respect of a Vessel, whether or not any such claim, proceeding or
litigation is covered by insurance, (C) any violation of any law, statute,
rule or regulation which does or may have a Material Adverse Effect on the
operation of a Vessel, (D) any Lien registered against a Vessel (other
than Liens in favor of the Senior Lender), and (E) any material change
proposed to be made in the structure, type or speed of a Vessel and
Borrower shall not permit such material change proposed to be made if such
change could reasonably expected to prejudice the interests of Purchasers.
(xi) Borrower shall, upon request, provide Purchasers with
information relating to the refitting, winter work or dry dock surveying
of the Vessels including information as to the progress, timing and cost
thereof.
(k) Further Assurances. At its own cost and expense, cause to be
promptly and duly taken, executed, acknowledged and delivered all such further
acts, documents and assurances as may from time to time be necessary or as
Purchasers may from time to time reasonably request in order to carry out the
intent and purposes of the Purchase Documents and the transactions contemplated
thereby.
6.2 Negative Covenants. Borrower covenants that, so long as all or any
part of the principal amount of the Notes or any interest thereon shall remain
outstanding:
(a) Debt. Borrower will not, and will not permit any Subsidiary to,
directly or indirectly, create, incur, assume, guarantee or otherwise become or
remain directly or indirectly liable with respect to, any Debt, except for:
(i) Debt under the Purchase Documents;
(ii) Debt under the Senior Financing, to which payment under
the Notes will be subordinated on terms reasonably acceptable to
Purchasers;
(iii) Debt or such contingent obligations outstanding on the
date of this Agreement as set forth in Schedule 6.2(a)(iii);
(iv) Debt incurred or assumed for the purpose of financing all
or any part of the cost of acquiring any asset (including through Capital
Leases), in an aggregate principal amount at any time outstanding not
greater than $100,000; and
(v) net obligations to a counterparty under any Swap Contract
permitted or required pursuant to the terms of this Agreement or the
Senior Credit Agreement.
29
(b) Liens. Borrower will not, and will not permit any Subsidiary to,
directly or indirectly, create, assume or suffer to exist any Lien on any asset
now owned or hereafter acquired by it, except the following (each instance, a
"Permitted Lien"):
(i) Liens created by the Senior Financing Documents;
(ii) Liens existing on the date of this Agreement as set forth
on Schedule 6.2(b)(ii);
(iii) Liens for taxes or other governmental charges not at the
time delinquent or thereafter payable without penalty or the subject of a
Permitted Contest;
(iv) Liens arising in the ordinary course of business (i) in
favor of carriers, warehousemen, mechanics and materialmen, and other
similar Liens imposed by law and (ii) in connection with worker's
compensation, unemployment compensation and other types of social security
(excluding Liens arising under ERISA) or in connection with surety bonds,
bids, performance bonds and similar obligations) for sums not overdue or
the subject of a Permitted Contest and not involving any deposits or
advances or borrowed money or the deferred purchase price of property or
services and, in each case, for which it maintains adequate reserves as
required by GAAP;
(v) attachments, appeal bonds, judgments and other similar
Liens, for sums not exceeding $100,000 in the aggregate arising in
connection with a Permitted Contest;
(vi) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering with the
ordinary conduct of the business of Borrower;
(vii) any interest or title of a lessor, sublessor, licensor,
or sublicense under any lease or license permitted by this Agreement;
(viii) Liens arising from the filing of UCC-1 financing
statements to perfect any Permitted Liens or from precautionary UCC
financing statements filed under any lease or license permitted by this
Agreement; and
(ix) Liens arising under statutory or common law for banker's
liens and rights as to deposit accounts or other funds maintained with a
depository institution.
(c) Contingent Obligations. Borrower will not, and will not permit
any Subsidiary to, directly or indirectly, create, assume, incur or suffer to
exist any Contingent Obligations, except for:
(i) Contingent Obligations arising in respect of the Debt
under the Purchase Documents;
(ii) Contingent Obligations arising in respect of the Debt
under the Senior Financing Documents;
30
(iii) Contingent Obligations resulting from endorsements for
collection or deposit in the ordinary course of business;
(iv) Contingent Obligations arising under Swap Contracts and
so long as there exists no Event of Default both immediately before and
immediately after giving effect to any such transaction, Contingent
Obligations existing or arising under any other Swap Contract, provided
that such obligations are (or were) entered into by Borrower or its
Subsidiaries in the ordinary course of business for the purpose of
directly mitigating risks associated with liabilities, commitments,
investments, assets, or property held or reasonably anticipated by such
Person and not for purposes of speculation;
(v) Contingent Obligations outstanding on the date of this
Agreement as set forth on Schedule 6.2(c)(v); and
(vi) Contingent Obligations incurred in the ordinary course of
business with respect to surety and appeal bonds, performance bonds and
other similar obligations not to exceed $100,000 in the aggregate at any
time outstanding.
(d) Restricted Distributions. Borrower will not, and will not permit
any Subsidiary to, directly or indirectly, declare, order, pay, make or set
apart any sum for any Restricted Distribution; provided that the foregoing shall
not restrict or prohibit Borrower or its Subsidiaries from making any Restricted
Distributions at such times and in such amounts as are necessary to permit
Restricted Distributions permitted by the Senior Credit Agreement as in effect
on the date hereof.
(e) Restrictive Agreements. Borrower will not, and will not permit
any Subsidiary to, directly or indirectly (i) enter into or assume any agreement
(other than the Purchase Documents and the Senior Financing Documents)
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired or (ii) create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind (except as provided by the Purchase Documents and the
Senior Financing Documents) on the ability of any Subsidiary to: (1) pay or make
Restricted Distributions to Borrower or any other Subsidiary; (2) pay any Debt
owed to Borrower or any other Subsidiary; (3) make loans or advances to Borrower
or any other Subsidiary; or (4) transfer any of its property or assets to
Borrower or any other Subsidiary.
(f) Consolidations, Mergers and Sales of Assets. Borrower will not,
and will not permit any Subsidiary to, directly or indirectly (i) consolidate or
merge with or into any other Person or (ii) sell, lease, license or otherwise
transfer, directly or indirectly, substantially all of its assets.
(g) Purchase of Assets. Borrower will not, and will not permit any
Subsidiary to, directly or indirectly acquire any assets, other than (i)
acquisitions of inventory and fixed assets in the ordinary course of business
and (ii) the Acquisition.
(h) Transactions with Affiliates. Except (i) as expressly permitted
by this Agreement, (ii) as otherwise disclosed in Schedule 6.2(h), and (iii) for
transactions that are disclosed to Purchasers in writing and which contain terms
that are no less favorable to Borrower or any of its Subsidiaries, as the case
31
may be, than those which might be obtained from a third party not an Affiliate
of Borrower, Borrower will not, and will not permit any Subsidiary to, directly
or indirectly, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of Borrower.
(i) Modification of Charter Documents. Borrower will not, and will
not permit any Subsidiary to, directly or indirectly amend or otherwise modify
any Charter Documents of such Person in a manner adverse to Purchasers.
(j) Fiscal Year. Borrower will not, and will not permit any
Subsidiary to, change its Fiscal Year.
(k) Conduct of Business. Borrower will not, and will not permit any
Subsidiary to, directly or indirectly, engage in any line of business other than
those businesses engaged in on the Closing Date and businesses reasonably
related thereto.
(l) Investor Fees. Except as permitted pursuant to Section 6.2(d) of
this Agreement, Borrower will not, and will not permit any Subsidiary to,
directly or indirectly, pay or become obligated to pay any management,
consulting or similar advisory fees or other amounts (other than all out of
pocket expenses reasonably incurred).
(m) Bank Accounts. Borrower will not, and will not permit any
Subsidiary to, directly or indirectly, establish any new bank account without
prior written notice to Purchasers. Borrower will promptly deliver to Purchasers
the name, address and telephone number of the bank where any new account is
opened and the complete account number therefor.
(n) Salt Water Operation. Borrower shall not operate the Vessels in
(i) any manner contrary to the provisions of Section 6.1(j)(xi) hereof, and (ii)
in salt water for any period of time without the consent of Purchasers.
(o) Time Charter Agreement. Borrower shall not terminate the Time
Charter Agreement or agree to amend its terms in any manner which would be
unfavorable from the perspective of Borrower, without the prior consent of
Purchasers, which shall not be unreasonably withheld.
(p) Capital Structure. Borrower shall not make any changes in its
capital or corporate structure which would result in it failing to be a citizen
of the United States under Section 2 of the Shipping Act of 1916, as amended,
for purposes of owning an operating a vessel in the US coastwise trade.
ARTICLE 7
EVENTS OF DEFAULT
7.1 Events of Default. An "Event of Default" shall mean the occurrence of
one or more of the following described events:
32
(a) Borrower shall default under the terms and provisions of the
Senior Financing Documents and, as a result, the Senior Debt shall have become
immediately due and payable under the term of the Senior Financing Documents;
(b) Borrower shall default in the payment of principal or interest
on any Note when due, whether at maturity, upon notice of prepayment in
accordance with Sections 3.3 or 3.4, upon any scheduled payment date, a
mandatory prepayment date in accordance with Section 3.5 or by acceleration or
otherwise;
(c) any representation or warranty herein made by Borrower, or any
certificate or financial statement furnished pursuant to the provisions hereof,
shall prove to have been false or misleading in any material respect as of the
time made or furnished or deemed made or furnished;
(d) Borrower shall default in the performance of any covenant,
condition or provision of Section 6.1(g) or 6.2;
(e) a default or event of default shall occur under any other
Purchase Document (other than defaults described in Section 7.1(d)) or any
Senior Financing Document beyond any applicable notice or cure period;
(f) Borrower shall default in the performance of any other covenant,
condition or provision of this Agreement, any Note or any other Purchase
Document (other than occurrences described in other provisions of this Section
7.1 for which a different grace or cure period is specified or which constitute
immediate Events of Default), and such default shall not be remedied to
Purchasers' satisfaction within a period of twenty (20) days after the earlier
of (i) written notice from Purchasers of such default or (ii) actual knowledge
by Borrower of such default;
(g) a proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect of
Borrower in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Borrower or for any substantial part of its property, or for the
winding-up or liquidation of their affairs, and such proceeding shall remain
undismissed or unstayed and in effect for a period of sixty (60) days;
(h) Borrower shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of Borrower or for any substantial part of their property, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay their debts as they become due, or shall take any action in
furtherance of any of the foregoing;
(i) (1) institution of any steps by any Person to terminate a
Pension Plan if as a result of such termination Borrower or any member of the
Controlled Group is required to make a contribution to such Pension Plan, or
incurs a liability or obligation to such Pension Plan, in excess of $100,000,
33
(2) a contribution failure occurs with respect to any Pension Plan sufficient to
give rise to a Lien under Section 302(f) of ERISA, or (3) there shall occur any
withdrawal or partial withdrawal from a Multiemployer Pension Plan and the
withdrawal liability (without unaccrued interest) to Multiemployer Pension Plans
as a result of such withdrawal (including any outstanding withdrawal liability
that Borrower or any member of the Controlled Group have incurred on the date of
such withdrawal) exceeds $100,000;
(j) a final judgment that with other undischarged final judgments
against Borrower, exceeds an aggregate of $100,000 (excluding judgments to the
extent Borrower is fully insured or the deductible or retention limit does not
exceed $100,000 and with respect to which the insurer has assumed responsibility
in writing), shall have been entered against Borrower if, within thirty (30)
days after the entry thereof, such judgment shall not have been discharged or
execution thereof stayed pending appeal, or if, within thirty (30) days after
the expiration of any such stay, such judgment shall not have been discharged;
(k) Borrower shall be prohibited or otherwise materially restrained
from conducting the business theretofore conducted by it by virtue of any labor
strike or any determination, ruling, decision, decree or order of any court or
regulatory authority of competent jurisdiction or any other event and such labor
strike remains in effect for any period of forty-five (45) days or such
determination, ruling, decision, decree, order or other event remains unstayed
and in effect for any period of twenty (20) days;
(l) (1) the failure of Borrower to pay when due or within any
applicable grace period any principal, interest, net obligation or other amount
on, or with respect to, any Debt or any Swap Contract (other than the Senior
Debt) having an individual principal amount or net obligation due, as
applicable, in excess of $100,000 or having an aggregate principal amount and/or
net obligation due in excess of $100,000 or (2) the occurrence of any breach,
default, condition or event with respect to any Debt or any Swap Contract (other
than the Senior Debt), if (in the case of each of the foregoing clauses (1) and
(2)) the effect of such failure or occurrence is to cause or to permit the
holder or holders of any such Debt, or the counterparty under any Swap
Contracts, to cause such Debt or Swap Contract having an individual principal
amount or net obligation due, as applicable, in excess of $100,000 or having an
aggregate principal amount and/or net obligation due, as applicable, in excess
of $100,000 to become or be declared due prior to its stated maturity and, in
each case described in clauses (1) and (2) above, the holder of such Debt or
Swap Contract shall have accelerated the maturity of such Debt or Swap Contract;
(m) any of the Purchase Documents shall for any reason fail to
constitute the valid and binding agreement of any party thereto, or Borrower
shall so assert in writing, and any such failure would result in a Material
Adverse Effect; or
(n) a Change of Control shall have occurred.
7.2 Consequences of Event of Default.
(a) Bankruptcy or Acceleration of Senior Debt. If an Event of
Default specified in Section 7.1(g) or 7.1(h) hereof shall occur, the unpaid
balance of the Notes and interest accrued thereon and all other liabilities of
34
Borrower to the holders thereof hereunder and thereunder shall be immediately
due and payable, without presentment, demand, protest or (except as expressly
required hereby) notice of any kind, all of which are hereby expressly waived.
(b) Other Defaults. If any Event of Default shall occur other than
as specified in Section 7.1(g) or 7.1(h) hereof, Purchasers may, upon election
of the holders of not less than 51% of the Commitments, at their option, by
written notice to Borrower, declare the entire unpaid balance of the Notes,
interest accrued thereon and all other liabilities of Borrower hereunder and
thereunder to be forthwith due and payable, and the same shall thereupon become
immediately due and payable, without presentment, demand, protest or (except as
expressly required hereby) notice of any kind, all of which are hereby expressly
waived.
(c) Penalty Interest. Following the occurrence and during the
continuance of any Event of Default, the holders of the Notes shall be entitled
to receive, to the extent permitted by applicable law, interest on the
outstanding principal of, and premium and overdue interest, if any, on, the
Notes at a rate per annum equal to the interest rate thereon (determined as
provided in Section 3.1) plus the greater of (i) two hundred (200) basis points,
or (ii) the amount in excess of the rate otherwise applicable to the obligations
under Senior Financing Documents upon the occurrence of an Event of Default (as
defined therein) (the "Default Rate").
(d) Board Rights. In the event the Senior Subordinated Notes are not
repaid in full on the Maturity Date, Oglebay shall be entitled to have an
observer on its behalf attend all meetings of the board of directors of
Borrower.
(e) Purchase of Senior Debt. In the event either Parent or Rand or
any Affiliate of either thereof acquires the Senior Debt from Senior Lender, the
Senior Subordinated Notes held by Oglebay shall become pari passu in right of
payment and security with the Senior Debt and Borrower and Rand or Parent or
such Affiliate, as applicable, shall execute any and all security documents and
intercreditor and other agreements to secure the Senior Subordinated Notes on a
pari passu basis with the Senior Debt in all property of Borrower or other
Persons securing the Senior Debt.
ARTICLE 8
MISCELLANEOUS
8.1 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that (i) Borrower may not assign or transfer its rights
hereunder or any interest herein or delegate its duties hereunder and (ii) No
Purchaser may assign or transfer its rights hereunder or any interest under the
Notes, in whole or in part, without the consent of the non-transferring
Purchaser.
8.2 Modifications and Amendments. The provisions of this Agreement may be
modified, waived or amended, but only by a written instrument signed by Borrower
and the holders of not less than 51% of the Commitments; provided, that the
consent of all holders of Notes shall be required to (i) amend the maturity date
of the Notes, (ii) amend the interest rate under the Notes, (iii) amend the time
of payment of principal or interest under the Notes, or (iv) change the
35
definition of "Change of Control" or waive any Event of Default arising as a
consequence of any Change of Control, or (v) amend any covenant contained in
Sections 6.2(a), (b) or (f) of this Agreement.
8.3 No Implied Waivers; Cumulative Remedies; Writing Required. No delay or
failure in exercising any right, power or remedy hereunder shall affect or
operate as a waiver thereof; nor shall any single or partial exercise thereof or
any abandonment or discontinuance of steps to enforce such a right, power or
remedy preclude any further exercise thereof or of any other right, power or
remedy. The rights and remedies hereunder are cumulative and not exclusive of
any rights or remedies that Purchasers or any holder of Notes would otherwise
have. Any waiver, permit, consent or approval of any kind or character of any
breach or default under this Agreement or any such waiver of any provision or
condition of this Agreement must be in writing and shall be effective only to
the extent in such writing specifically set forth.
8.4 Reimbursement of Expenses. Borrower agrees to pay or reimburse
Purchasers upon demand for all out of pocket fees and expenses incurred or
payable by Purchasers (including, without limitation, reasonable fees and
expenses of special counsel for any Purchaser and charges for services performed
for Purchasers' by internal auditing staff), from time to time (i) arising in
connection with the negotiation, preparation and execution of this Agreement,
the Notes, the other Purchase Documents and all other instruments and documents
to be delivered hereunder or thereunder, (ii) relating to any amendments,
waivers or consents pursuant to the provisions hereof or thereof, and (iii)
arising in connection with the enforcement of this Agreement or collection of
any Note.
8.5 Holidays. Whenever any payment or action to be made or taken hereunder
or under the Notes shall be stated to be due on a day that is not a Business
Day, such payment or action shall be made or taken on the next following
Business Day, and such extension of time shall be included in computing interest
or fees, if any, in connection with such payment or action.
8.6 Notices. All notices and other communications given to or made upon
any party hereto in connection with this Agreement shall, except as otherwise
expressly herein provided, be in writing (including telecopy, but in such case,
a confirming copy will be sent by another permitted means) and mailed via
certified mail, telecopied or delivered by guaranteed overnight parcel express
service or courier to the respective parties, as follows:
to Borrower:
Wisconsin & Michigan Steamship Company
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxx 00000
Attn: President
Facsimile: (000) 000-0000
36
with a copy to:
Xxxxxxxxx Xxxxxx PLLC
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. High
Facsimile: (000) 000-0000
to Purchasers:
As set forth on Annex A
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective upon delivery if delivered by
courier or overnight parcel express service; in the case of certified mail,
three (3) Business Days after the date sent; or in the case of telecopy, when
received.
8.7 Survival. All representations, warranties, covenants and agreements of
Borrower contained herein or made in writing in connection herewith shall
survive the execution and delivery of this Agreement and the purchase of the
Notes and shall continue in full force and effect so long as any Note is
outstanding and until payment in full of all of Borrower's obligations hereunder
or thereunder. All obligations relating to indemnification hereunder shall
survive any termination of this Agreement and shall continue for the length of
any applicable statute of limitations.
8.8 Confidentiality. In handling any confidential information of Borrower,
each Purchaser shall exercise the same degree of care that it exercises with
respect to its own proprietary information of the same type to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Agreement, except that disclosure of such information may be
made (i) to their respective agents, employees, Subsidiaries, Affiliates,
attorneys, auditors, professional consultants, rating agencies, insurance
industry associations and portfolio management services (provided that (a) with
respect to any rating agency, insurance industry association or portfolio
management services, notice is given to such Persons that they are to keep such
information confidential on the terms set forth in this Section 8.8 and (b) with
respect to any other Person, commercially reasonable efforts are made to have
such Person agree that they are to keep such information confidential on the
terms set forth in this Section 8.8), (ii) to prospective transferees or
purchasers of any interest in the Notes, provided that such transferees have
agreed to be bound by the provisions of this Section 8.8, (iii) as required by
Law and in connection with any litigation upon prior written notice to Borrower
to the extent reasonably practicable and not prohibited by Law, so that Borrower
may, at its sole cost and expense, contest such disclosure or seek confidential
treatment thereof, and (iv) as may be required in connection with the
examination, audit or similar investigation of such Person. Confidential
information shall include only such information identified as such at the time
provided to Purchasers and shall not include information that either: (i) is in
the public domain, or becomes part of the public domain after disclosure to such
Person through no fault of such Person, or (ii) is disclosed to such Person by a
Person other than Borrower, provided Purchasers does not have actual knowledge
37
that such third party is prohibited from disclosing such information.
Notwithstanding the foregoing, in no event shall any Purchaser disclose in any
tombstone, advertisement, pitch book, presentation or any other marketing
material the purchase price paid by Borrower to the Seller pursuant to the
Acquisition Agreement; provided, that Purchasers are permitted to issue press
releases related to the Transactions so long as such press releases do not
disclose the purchase price under the Acquisition Agreement. The obligations of
Purchasers under this Section 8.8 shall supersede and replace the obligations of
Purchasers under any confidentiality agreement in respect of this financing
executed and delivered by any Purchaser prior to the date hereof.
8.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES.
8.10 Jurisdiction, Consent to Service of Process .
(a) BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE
COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN THE CITY OF
NEW YORK, THE STATE OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES
OR ANY OTHER PURCHASE DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL CLAIMS IN RESPECT OF
ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK 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 SHALL AFFECT ANY
RIGHT THAT PURCHASERS MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER PURCHASE DOCUMENT AGAINST
BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(b) BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT THEY MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION 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, THE NOTES OR ANY OTHER PURCHASE
DOCUMENT IN ANY NEW YORK OR FEDERAL COURT. 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.
38
(c) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 8.6 HEREOF. NOTHING IN
THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
8.11 Jury Trial Waiver. BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS
UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR (II) ARISING FROM ANY DISPUTE OR
CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS AGREEMENT AND AGREES THAT ANY
SUCH ACTION OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
8.12 Severability. Whenever possible, each provision of this Agreement
shall 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 prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Agreement.
8.13 Headings. Article, section and subsection headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
8.14 Indemnity. Borrower hereby agrees to indemnify, defend and hold
harmless Purchasers and their officers, directors, employees, agents and
representatives, and their respective successors and assigns in connection with
any losses, claims, damages, liabilities and expenses, including reasonable
attorneys' fees, to which any Purchaser may become subject (other than as a
result of the gross negligence or willful misconduct of any such Person as
determined by a court of competent jurisdiction), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
by reason of any investigation, litigation or other proceedings related to or
resulting from any act of, or omission by, Borrower or its Affiliates or any
officer, director, employee, agent or representative of Borrower or its
Affiliates with respect to the Transactions, the Notes, Charter Documents, the
By-laws or any agreements entered into in connection with any such agreements,
instruments or documents and to reimburse Purchasers and each such Person and
Affiliate, upon demand, for any legal or other expenses incurred in connection
with investigating or defending any such loss, claim, damage, liability, expense
or action. To the extent that the foregoing undertakings may be unenforceable
for any reason, Borrower agrees to make the maximum contribution to the payment
and satisfaction of indemnified liabilities set forth in this Section 8.14 that
is permissible under applicable Law.
8.15 Environmental Indemnity. Borrower, and its successors and assigns,
hereby release and discharge, and agree to defend, indemnify and hold harmless
Purchasers and their Affiliates (including their partners, subsidiaries,
customers, guests, and invitees, and the successors and assigns of all of the
foregoing, and their respective officers, employees and agents) from and against
any and all Environmental Claims, whenever and by whomever asserted, to the
extent that such Environmental Claims are based upon, or otherwise relate to:
(i) any condition at any time in, at, on, under, a part of, involving or
otherwise related to the Properties and Facilities and the Vessels (including
any of the properties, materials, articles, products, or other things included
in or otherwise a part of the Properties and Facilities and the Vessels); (ii)
any action or failure to act of any Person, including any prior owner or
39
operator of the Properties and Facilities and the Vessels (including any of the
properties, materials, articles, products, or other things included in or
otherwise a part of the Properties and Facilities and the Vessels), involving or
otherwise related to the Properties and Facilities, the Vessels or operations of
Borrower; (iii) the Management of any Hazardous Materials, material, article or
product (including Management of any material, article or product containing any
Hazardous Materials) in any physical state and at any time, involving or
otherwise related to the Properties and Facilities, the Vessels or any property
covered by clause (iv) (including Management either from the Properties and
Facilities, the Vessels or from any property covered by clause (iv), and
Management to, at, involving or otherwise related to the Properties and
Facilities, the Vessels or any property covered by clause (iv)); (iv)
conditions, and actions or failures to act, in, at, on, under, a part of,
involving or otherwise related to any property other than the Properties and
Facilities and the Vessels, which property was, at or prior to the Closing Date,
(I) acquired, held, sold, owned, operated, leased, managed, or divested by, or
otherwise associated with, (A) Borrower, (B) any of Borrower's Affiliates, or
(C) any predecessor or successor organization of those identified in (A) or (B);
or (II) engaged in any tolling, contract manufacturing or processing, or other
similar activities for, with, or on behalf of Borrower; (v) any violation of or
noncompliance with or the assertion of any Lien under the Environmental Laws,
(vi) the presence of any Hazardous Materials in, at, on, under or from the past
or present properties, facilities and vessels, including, without limitation,
human exposure thereto; (vii) any spill, Release, discharge or emission
affecting the past or present properties and facilities or vessels, whether or
not the same originates or emanates from such properties, facilities or vessels,
or from any contiguous real estate, including, without limitation, any loss of
value of such properties, facilities or vessels as a result thereof; or (viii) a
misrepresentation in any representation or warranty or breach of or failure to
perform any covenant made by Borrower in this Agreement. This indemnity and
agreement to defend and hold harmless shall survive any termination or
satisfaction of the Notes or the sale, assignment or foreclosure thereof or the
sale, transfer or conveyance of all or part of the past and present properties,
facilities and vessels or any other circumstances that might otherwise
constitute a legal or equitable release or discharge, in whole or in part, of
Borrower under the Notes.
8.16 Counterparts. This Agreement may be executed in any number of
counterparts and by either party hereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute one and the same instrument.
8.17 Integration. This Agreement and the other Purchase Documents set
forth the entire understanding of the parties hereto with respect to all matters
contemplated hereby and supersede all previous agreements and understandings
among them concerning such matters. No statements or agreements, oral or
written, made prior to or at the signing hereof, shall vary, waive or modify the
written terms hereof.
8.18 Subordination. The obligations evidenced hereby and by the Notes are
subordinate in the manner and to the extent set forth in that certain
Subordination Agreement (the "Subordination Agreement") dated as of the date
hereof by and among the Senior Lender, Purchasers and Borrower, to the Senior
40
Indebtedness (as defined in the Subordination Agreement) owed by Borrower under
and pursuant to the Senior Credit Agreement and each related "Loan Document" (as
defined therein), and Purchasers, by their acceptance hereof, acknowledge and
agree to be bound by the provisions of the Subordination Agreement.
8.19 Noteholder Subordination Agreement. The obligations to Rand evidenced
hereby and by the Notes are subordinate in the manner and to the extent set
forth in that certain Noteholder Subordination Agreement (the "Noteholer
Subordination Agreement") dated as of the date hereof by and among the Rand,
Oglebay and Borrower, to the obligations of Borrower to Oglebay evidenced hereby
and by the Notes and Rand, by its acceptance hereof, acknowledges and agrees to
be bound by the provisions of the Noteholder Subordination Agreement.
* * *
41
SIGNATURE PAGE TO
NOTE PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
BORROWER:
WISCONSIN & MICHIGAN STEAMSHIP COMPANY
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
PURCHASERS:
RAND FINANCE CORP.
By: /s/ Xxxxxxxx X. Xxxx
Name: Xxxxxxxx X. Xxxx
Title: Vice President
OGLEBAY NORTON MARINE SERVICES COMPANY, LLC
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
42
ANNEX
Annex A Purchasers and Payment Information
Annex B Purchaser Allocations of Notes
SCHEDULES
"Organizational Schedule" (Schedule 5.1(a))
"Litigation Schedule" (Section 5.1(i))
"Environmental Schedule" (Section 5.1(k))
"Properties Schedule" (Section 5.1(p))
"Intellectual Property Schedule" (Section 5.1(q))
"Absence of Undisclosed Liabilities Schedule" (Section 5.1(v))
"Permitted Debt Schedule" (Section 6.2(a)(iii))
"Permitted Lien Schedule" (Section 6.2(b)(ii))
"Contingent Obligations Schedule" (Section 6.2(c)(v))
"Affiliate Transactions Schedule" (Section 6.2(h))
EXHIBITS
EXHIBIT A-1 Form of Senior Subordinated Note
EXHIBIT A-2 Form of Subordinated CapEx Note
EXHIBIT A-3 Form of Subordinated Make-Whole Note
EXHIBIT A-4 Form of PIK Note
43
ANNEX A
INFORMATION RELATING TO PURCHASERS
Name and Address
of Purchasers
X. XXXX FINANCE CORP.
Commitments:
Senior Subordinated Notes $2,150,000
Subordinated CapEx Notes $1,650,000
Subordinated Make Whole Notes $2,700,000
RAND FINANCE CORP.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
(1) All payments:
If by wire:
Bank:
-----------------------------
ABA#:
-----------------------------
Account Name:
---------------------
Account #:
------------------------
If by mail:
Rand Finance Corp.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
with sufficient information
to identify the source and
application of such funds.
** All checks should be made payable to "[Rand Finance Corp.]"
(2) All notices of payments and
written confirmations of
such wire transfers:
44
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: President
Facsimile:
------------------
(3) All other communications:
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: President
Facsimile:
------------------
X. XXXXXXX XXXXXX MARINE SERVICES COMPANY, LLC
Commitments:
Senior Subordinated Notes $2,200,000
Subordinated CapEx Notes $0
Subordinated Make Whole Notes $0
OGLEBAY NORTON MARINE SERVICES COMPANY, LLC
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: President and CEO
(1) All payments:
If by wire:
Bank:
-----------------------------
ABA#:
-----------------------------
Account Name:
---------------------
Account #:
------------------------
If by mail:
Oglebay Norton Marine Services Company, LLC
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: President and CEO
with sufficient information
to identify the source and
application of such funds.
** All checks should be made payable to "[Oglebay Norton Marine Services
Company, LLC]"
45
(2) All notices of payments and
written confirmations of
such wire transfers:
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: President and CEO
Facsimile: (000) 000-0000
(3) All other communications:
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: President and CEO
Facsimile: (000) 000-0000
46
ANNEX B
Senior Subordinated Notes Allocation
----------------------------- ----------
Purchaser: Rand Finance Corp. 49.4252%
Purchaser: Oglebay Norton Marine Services Company, LLC 50.5747%
Subordinated CapEx Notes Allocation
----------------------------- ----------
Purchaser: Rand Finance Corp. 100%
Subordinated Make Whole Notes Allocation
----------------------------- ----------
Purchaser: Rand Finance Corp. 100%
