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Exhibit 10.3
SUBORDINATION AGREEMENT dated as
of March 17, 1999, among ALLEGHANY
CORPORATION, a Delaware corporation (the
"Subordinated Creditor"), and THE CHASE
MANHATTAN BANK, a New York banking
corporation (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 17,
1999, 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 "Borrower"), 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 Borrower. The Banks, the Issuing Bank, the Collateral Agent
and the Administrative Agent are hereinafter collectively referred to as the
"Lender Parties".
The Borrower is wholly-owned 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 Borrower and its 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 Borrower 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, the Borrower and 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
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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 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 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 or will occur as a result of such
payment.
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
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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 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
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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.
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
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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 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 NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS.
(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 submits to the personal jurisdiction of the courts of the State of New
York and the federal courts of the United States sitting in New York City, and
any appellate court from any such state or federal court, and hereby irrevocably
and unconditionally agrees that all claims with respect to any such action or
proceeding may be heard and determined in such New York court or, to the extent
permitted by law, in such federal court. The Subordinated Creditor 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
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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 New York State
or federal court located in New York and (ii) the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(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
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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.
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:
The Chase Manhattan Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx Xxxxxx,
Vice President
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
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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 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
--------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
THE CHASE MANHATTAN BANK,
as administrative agent and collateral
agent for the Banks
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
