Exhibit 10.3
ALLEGHANY SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT dated as of March 12, 2003 between ALLEGHANY
CORPORATION, a Delaware corporation (the "Subordinated Creditor"), and UNION
BANK OF CALIFORNIA, N.A. (the "Collateral Agent"), as administrative agent and
collateral agent for the Banks (as hereinafter defined).
Reference is made to the Credit Agreement dated as of March 12, 2003,
as the same may hereafter be amended, supplemented, restated or otherwise
modified from time to time (the "Credit Agreement"), among Mineral Holdings
Inc., a Delaware corporation ("Holdings"), World Minerals Inc., a Delaware
corporation (the "US Borrower"), each Designated Subsidiary Borrower from time
to time party thereto (together with the US Borrower, the "Borrowers"), the
Banks (as defined therein), the Collateral Agent, as administrative agent and
collateral agent for the Banks and as an Issuing Bank, and the other parties who
may from time to time become signatories thereto, relating to a senior secured
credit facility (the "Facility") provided by the Banks to the Borrowers. The
Banks, the Issuing Bank, the Collateral Agent and the Administrative Agent are
hereinafter collectively referred to as the "Lender Parties."
As of the date hereof, each Borrower is wholly-owned, directly or
indirectly, by Holdings, which is in turn owned approximately 95% by the
Subordinated Creditor. In consideration of the Lender Parties' entering into the
Credit Agreement and in order to induce the Lender Parties to make loans, extend
credit and provide other financial accommodations to or for the benefit of the
Borrowers and their respective subsidiaries, or to grant such renewals or
extensions thereof as the Lender Parties may deem advisable, and to better
secure the Lender Parties with respect to the foregoing, the Subordinated
Creditor is entering into this Agreement to, among other things, subordinate its
right to be paid, and any right to any security it may have securing such right
to payment, certain amounts which now or may from time to time be owing or
otherwise payable as provided herein to the Subordinated Creditor from Holdings,
the Borrowers and their respective direct and indirect Subsidiaries (as defined
in the Credit Agreement).
ACCORDINGLY, in consideration of the premises and the mutual covenants
and agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency are hereby acknowledged, the parties
hereto hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. Capitalized terms used and not
otherwise defined in this Agreement have the meanings ascribed to them in the
Credit Agreement.
SECTION 2. SUBORDINATION; SUBROGATION. Except as otherwise specifically
provided in this Agreement, the Subordinated Creditor shall not ask, demand, xxx
for, take or receive from any of Holdings, any Borrower or any of their
respective Subsidiaries (collectively, the "Debtors"), by setoff or in any other
manner, all or any part of any Indebtedness which may now or hereafter be owing
or otherwise payable by any Debtor or any successor of any Debtor, including,
without limitation, a receiver, trustee or debtor-in-possession (the term
"Debtor" hereinafter including, with respect to any Debtor, any such successor
of such Debtor) to the Subordinated Creditor (whether such Indebtedness consists
of principal or interest, absolute or contingent) (all such liabilities and
obligations being referred to in this Agreement collectively as
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the "Subordinated Obligations"), including, without limitation, the taking of
any negotiable instruments evidencing the Subordinated Obligations, unless and
until all obligations, liabilities and indebtedness of such Debtor to the Lender
Parties arising under any Loan Document (including, without limitation, under
any interest rate hedge or foreign currency hedge entered into by the
Administrative Agent or any Bank in connection therewith) and whether now
existing or hereafter arising, or acquired outright, conditionally or as
collateral security from another Person by the Lender Parties (all such
obligations, indebtedness and liabilities of such Debtor to the Lender Parties
being referred to in this Agreement collectively as the "Obligations"), shall
have been fully and indefeasibly paid and satisfied and all financing
arrangements between such Debtor and the Lender Parties have been terminated.
Notwithstanding any right of the Subordinated Creditor to ask, demand, xxx for,
take or receive any payment with respect to the Subordinated Obligations of any
Debtor, all Liens of the Subordinated Creditor, whether now existing or
hereafter arising, on any assets of any Debtor or on any assets securing the
Obligations are hereby subordinated in all respects to all Liens and other
rights and interests of the Lender Parties in those assets, and the Subordinated
Creditor shall have no right to possession of any such asset or to foreclose
upon any such asset, whether by judicial action or otherwise, unless and until
all of the Obligations have been fully and indefeasibly paid and satisfied and
all financing arrangements between such Debtor and the Lender Parties have been
terminated. The Subordinated Creditor agrees that, regardless of whether the
Obligations of any Debtor are secured or unsecured, the Lender Parties shall be
subrogated to the rights of the Subordinated Creditor with respect to the
Subordinated Creditor's claims against such Debtor and the Subordinated
Creditor's Liens, if any, in such Debtor's assets and the proceeds thereof until
all of the Obligations have been fully and indefeasibly paid and satisfied and
all financing arrangements between such Debtor and the Lender Parties have been
terminated.
SECTION 3. PERMITTED PAYMENTS. Anything contained in this Agreement to
the contrary notwithstanding, the Subordinated Creditor may receive and retain
any payment from a Debtor on or with respect to the Subordinated Obligations of
such Debtor if and only if at the time such payment is made no Default or Event
of Default has occurred and is continuing.
SECTION 4. SUBORDINATED OBLIGATIONS OWED ONLY TO THE SUBORDINATED
CREDITOR. The Subordinated Creditor represents and warrants to the Lender
Parties that the Subordinated Creditor has not previously assigned any interest
in any of the Subordinated Obligations of any Debtor to any other Person and
that no other Person owns any interest in any of the Subordinated Obligations of
any Debtor to the Subordinated Creditor. The Subordinated Creditor agrees that
it shall not transfer, sell or assign to any other Person, or suffer or permit
any other Person to own or acquire, any interest in any Subordinated Obligations
of any of the Debtors.
SECTION 5. THE LENDER PARTIES' PRIORITY. In the event of any
distribution of the assets or readjustment of the liabilities of any Debtor,
whether by reason of liquidation, bankruptcy, receivership, assignment for the
benefit of creditors or any other action or proceeding involving the
readjustment of all or any of the liabilities of such Debtor, or the application
of the assets of such Debtor to the payment or liquidation thereof, the Lender
Parties shall be entitled to receive payment in full of all Obligations then
owing by such Debtor prior to the payment of all or any part of the Subordinated
Obligations of such Debtor, and in order to enable the Lender Parties to enforce
their rights hereunder in any such action or proceeding, the Collateral Agent is
hereby authorized and empowered, as attorney-in-fact of the Subordinated
Creditor, in the Collateral
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Agent's sole discretion to make and present for and on behalf of the
Subordinated Creditor such proofs of claims against such Debtor if the
Subordinated Creditor shall have failed to file such proofs of claims within
seven (7) days after the Collateral Agent has requested the Subordinated
Creditor to file such proofs of claim on account of the Subordinated Obligations
of such Debtor, as the Collateral Agent may deem expedient or proper, and to
vote such proofs of claims in any such proceeding and to receive and collect any
and all dividends or other payments or disbursements made thereon in whatever
form the same may be paid or issued and to apply the same on account of any of
the Obligations. Such agency is coupled with an interest and may not be revoked.
SECTION 6. GRANT OF AUTHORITY TO THE LENDER PARTIES. In the event of
any distribution, division or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the assets
of any Debtor or the proceeds thereof to the creditors of such Debtor or its
business, or upon the sale of all or substantially all of such Debtor's assets,
then, and in any such event, any payment or distribution of any kind or
character, either in cash, securities or other property, which shall be payable
or deliverable upon or with respect to any or all of the Subordinated
Obligations of such Debtor to the Subordinated Creditor shall be paid or
delivered directly to the Lender Parties for application to the Obligations,
whether or not due, until all Obligations have been fully paid and satisfied. In
the event that the Subordinated Creditor shall fail or refuse to take any action
that the Collateral Agent requests in writing that the Subordinated Creditor
take with respect to the Subordinated Obligations of any Debtor within thirty
(30) days of the Subordinated Creditor's receipt of such request, the
Subordinated Creditor hereby authorizes and empowers the Collateral Agent, as
its attorney-in-fact, to demand, xxx for, collect and receive every such payment
or distribution and give acquittance therefor and to file claims and take such
other proceedings, in the name of the Lender Parties or in the name of the
Subordinated Creditor or otherwise, as the Collateral Agent may deem necessary
or advisable for the enforcement of this Agreement, and the Subordinated
Creditor will execute and deliver to the Collateral Agent such powers of
attorney, assignments or other instruments or documents, as may be requested by
the Collateral Agent in order to enable the Collateral Agent to enforce any and
all claims upon or with respect to any or all of the Subordinated Obligations of
any Debtor and to collect and receive any and all payments or distributions
which may be payable or deliverable at any time upon or with respect to such
Subordinated Obligations, all for the Lender Parties' benefit.
SECTION 7. PAYMENTS RECEIVED BY THE SUBORDINATED CREDITOR. Should any
payment or distribution, or any security therefor or proceeds thereof, be
received by the Subordinated Creditor upon or with respect to any Subordinated
Obligations or any other obligations of a Debtor to the Subordinated Creditor in
violation of any provision of this Agreement, the Subordinated Creditor shall
receive and hold the same as trustee in trust for the benefit of the Lender
Parties and shall forthwith deliver the same to the Collateral Agent in
precisely the form received (except for the endorsement or assignment (without
recourse, except as to title) of the Subordinated Creditor where necessary), for
application to the Obligations, whether or not then due. In the event of the
failure of the Subordinated Creditor to make any endorsement or assignment to
the Collateral Agent as required by the immediately preceding sentence, the
Collateral Agent is hereby irrevocably authorized to make the same.
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SECTION 8. INSTRUMENT LEGEND. Within 10 Business Days after the
execution of this Agreement, the Subordinated Creditor shall cause any
instrument evidencing all or any part of the Subordinated Obligations of a
Debtor to the Subordinated Creditor to be inscribed with a legend conspicuously
indicating that payment thereof is subordinated to the claims of the Lender
Parties pursuant to the terms of this Agreement and to cause each such
instrument to be delivered to the Collateral Agent upon request therefor upon
and after an Event of Default, if such original instrument is necessary in order
to enable the Lender Parties to take any action permitted hereunder, including,
without limitation, the filing of proofs of claim on behalf of the Subordinated
Creditor.
SECTION 9. CONTINUING NATURE OF THE SUBORDINATION. This Agreement is
irrevocable and shall continue until all the terms, covenants and conditions of
the Loan Documents have been fully and completely performed by each of the
Debtors party thereto or are otherwise discharged and released by the Lender
Parties, and the Subordinated Creditor shall not be released from any duty,
obligation or liability hereunder so long as there is any claim of the Lender
Parties against any Debtor arising out of the Loan Documents which has not been
performed, settled, discharged or satisfied in full. The Subordinated Creditor
shall not be released nor shall the Subordinated Creditor's obligations
hereunder be in any way diminished by (i) any extension of time for payment or
performance of the Obligations granted to any Debtor, (ii) any action taken
under the Loan Documents by or on behalf of the Lender Parties in the exercise
of any right thereby conferred or (iii) any delay, failure or omission on the
part of the Lender Parties to enforce any such right. The Lender Parties shall
have full power and authority, without notice to the Subordinated Creditor, to
grant any extensions of time for the payment or performance of the Obligations
as they may deem proper. In addition, the Lender Parties shall have the right to
refinance the Obligations, pursuant to the Credit Agreement or otherwise, and to
make loans and advances in excess of any credit limits contained in the Credit
Agreement, and the terms and conditions of this Agreement shall apply in full to
any such refinancing or loan or advance.
SECTION 10. ADDITIONAL AGREEMENTS BETWEEN THE LENDER PARTIES AND
DEBTORS. The Lender Parties may, at any time and from time to time, enter into
such agreements with the Debtors or any of them as the Lender Parties may deem
proper, extending the time of payment or performance of or renewing or otherwise
altering the terms of all or any part of the Obligations or affecting the
Collateral underlying all or any part of the Obligations, or exchange, sell,
release, surrender or otherwise deal with any such Collateral, without in any
way impairing or affecting this Agreement and the Subordinated Creditor's duties
and obligations hereunder.
SECTION 11. SUBORDINATED CREDITOR'S ACKNOWLEDGMENTS AND WAIVERS. The
Subordinated Creditor specifically acknowledges and agrees that the Lender
Parties have made no warranties or representations with respect to the
execution, legality, validity, completeness or enforceability of this Agreement,
the Loan Documents or any other related agreements, or with respect to the
collectibility of the Obligations, and that the Lender Parties shall be entitled
to manage and supervise their loans to the Debtors in accordance with their
usual practices, modified from time to time as they may deem appropriate under
the circumstances without regard to the existence of any rights that the
Subordinated Creditor may now or hereafter have against any Debtor or in or to
any of its assets, and that the Lender Parties shall have no liability to the
Subordinated Creditor for, and the Subordinated Creditor waives any claim which
it may
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now or hereafter have against the Banks arising out of, any and all actions
which the Lender Parties, in good faith, may take or omit to take with respect
to the Loan Documents or any other related agreements or with respect to the
collection of the Obligations or the valuation, use, protection or release of
the assets of the Debtors (including, without limitation, actions with respect
to (i) the creation, perfection or continuation of Liens in any of the assets of
the Debtors, (ii) the occurrence of an Event of Default, (iii) the foreclosure
upon, sale, release or depreciation of or failure to realize upon any of the
assets of the Debtors and (iv) the collection of any claim for all or any part
of the Obligations from any account debtor, guarantor or any other Person).
SECTION 12. CONSENT. The Subordinated Creditor hereby consents to any
and all extensions or postponements of the time of payment or performance of the
Obligations or to any other indulgence with respect thereto, to any
substitution, exchange or release of Collateral which may at any time secure the
Obligations and/or to the addition or release of any other Person primarily or
secondarily liable therefor.
SECTION 13. APPLICATION OF PAYMENTS. The Subordinated Creditor agrees
that all payments received by the Lender Parties may be applied and reapplied,
in whole or in part, to any of the Obligations, as any of the Lender Parties, in
its sole discretion, deems appropriate.
SECTION 14. GOVERNING LAW; CONSENT TO JURISDICTION.
(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO
CONFLICTS OF LAWS PRINCIPLES.
(b) For all purposes of this Agreement, and for all purposes
of any suit or proceeding arising out of or relating to the transactions
contemplated hereby or for recognition or enforcement of any judgment, the
Subordinated Creditor hereby submits to the personal jurisdiction of the courts
of the State of California and the federal courts of the United States for the
Central District of California, and any appellate court from any such state or
federal court, and hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
California court or, to the extent permitted by law, in such federal court. The
Subordinated Creditor hereby agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in any other jurisdiction by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that any Lender Party may otherwise have to
bring any action or proceeding relating to this Agreement or any related matter
against the Subordinated Creditor or its properties in the courts of any
jurisdiction.
(c) The Subordinated Creditor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, (i) any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
or any related matter in any California State or the courts of the United States
of America for the Central District of California, and appellate courts from any
thereof and (ii) the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
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(d) The Subordinated Creditor irrevocably consents to service
of process by registered United States mail, return receipt requested, as
provided in Section 18. of this Agreement. Nothing in this Agreement will affect
the right of any party to this Agreement to serve process in any other manner
permitted by law.
SECTION 15. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 16. NO WAIVER BY COLLATERAL AGENT OR LENDER PARTIES. No failure
on the part of the Lender Parties to exercise, and no delay in exercising and no
course of dealing with respect to, any right or power under this Agreement or
the Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise by the Lender Parties of any right or power under this
Agreement or the Loan Documents, or any abandonment or discontinuance of steps
to enforce such right or power, preclude any other or further exercise thereof
or the exercise of any other right or power. The rights of the Lender Parties in
this Agreement and the Loan Documents are cumulative and are not exclusive of
any other rights or remedies available to the Lender Parties at law or in
equity. No notice to or demand on the Subordinated Creditor in any case shall
entitle the Subordinated Creditor to any other or further notice or demand in
similar or other circumstances.
SECTION 17. SUBROGATION. Subject to the indefeasible payment in full in
cash of the Obligations, the Subordinated Creditor shall be subrogated to the
rights of the Lender Parties to receive payments or distributions of assets of
the Debtors made on the Obligations; and, for the purposes of such subrogation,
payments or distributions to the Lender Parties, for their respective accounts,
of any cash, property or securities to which the Subordinated Creditor would be
entitled except for the provisions of this Agreement shall, as between the
Debtors and their respective creditors other than the Lender Parties and the
Subordinated Creditor, be deemed to be a payment by the Debtors to or on account
of Subordinated Obligations, it being understood that the provisions of this
Agreement are, and are intended solely, for the purpose of defining the relative
rights of the Subordinated Creditor, on the one hand, and the Lender Parties, on
the other hand. Nothing contained in this Agreement is intended to or shall
impair, as between the Debtors and the Subordinated Creditor, the obligations of
the Debtors to pay the Subordinated Obligations in accordance with their
respective terms. Nor is any provision of this Agreement intended to subordinate
the Subordinated Obligations to any indebtedness other than the Obligations.
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SECTION 18. NOTICES. All notices, demands and requests of any kind to
be delivered in connection with this Agreement shall be deemed to have been duly
given and received if delivered personally or if sent by nationally-recognized
overnight courier or by first class, registered or certified mail, return
receipt requested, address as follows:
(i) if to the Subordinated Creditor to:
Alleghany Corporation
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxx,
Senior Vice President, General Counsel
and Secretary
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(ii) if to any Debtor, to the address of such Debtor set
forth in the Credit Agreement; and
(iii) if to the Collateral Agent, to:
Union Bank of California, N.A.
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Any such notice, demand or request so delivered shall be deemed to have
been received (a) on the day of actual delivery in the case of personal
delivery, (b) on the next business day after the date when sent in the case of
delivery by nationally-recognized overnight courier, or (c) on the fifth
business day after the date of deposit in the U.S. mail in the case of mailing.
Any party hereto may from time to time by notice in writing served upon the
other as aforesaid designate a different mailing address or a different person
to which all such notices, demands or requests thereafter are to be addressed.
SECTION 19. SUCCESSORS AND ASSIGNS. This Agreement is for the benefit
of the Lender Parties and their successors and assigns, and in the event of an
assignment of all or any of the Obligations, the rights hereunder, to the extent
applicable to the Obligations so assigned, may be transferred with such
Obligations. This Agreement shall be binding on the Subordinated Creditor and
its successors. The successors of the Subordinated Creditor shall include,
without limitation, any receiver, trustee or debtor-in-possession. The
Subordinated Creditor shall not assign any of its interest under this Agreement
without the prior written consent of the Collateral Agent. Any purported
assignment inconsistent with this provision shall be null and void.
SECTION 20. AMENDMENTS AND WAIVERS. Any provision of this Agreement may
be amended or waived, but only if such amendment or waiver is in writing and is
signed by the
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party to be charged with such waiver, or, in the case of any amendment, by the
Subordinated Creditor and the Collateral Agent.
SECTION 21. SEVERABILITY. In the event any one or more of the
provisions of this Agreement should be held invalid, illegal or unenforceable in
any respect in any jurisdiction, such provision or provisions shall be
automatically deemed amended, but only to the extent necessary to render such
provision or provisions valid, legal and enforceable in such jurisdiction, and
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
SECTION 22. SECTION HEADINGS. Section headings used in this Agreement
are for convenience only and are not to affect the construction of or be taken
into consideration in interpreting this Agreement.
SECTION 23. COUNTERPARTS. This Agreement may be executed in any number
of identical counterparts, each of which shall be deemed an original for all
purposes and all of which constitute collectively one agreement; but, in making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart. Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.
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IN WITNESS WHEREOF, this Subordination Agreement has been duly executed
by each of the parties as of the date first written above.
ALLEGHANY CORPORATION
By /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Senior Vice President and
Chief Financial Officer
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UNION BANK OF CALIFORNIA, N.A.,
as administrative agent and collateral
agent for the Banks
By /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------------
Title: Vice President
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