<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
ASTOR CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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<S> <C> <C>
DELAWARE 2999 13-3550228
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
--------------------------
CO-REGISTRANT
<TABLE>
<CAPTION>
(EXACT NAME OF
CO-REGISTRANT (STATE OR OTHER JURISDICTION
AS SPECIFIED IN ITS OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
CHARTER) INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
- ----------------------- ------------------------------ ---------------------------- -------------------
<S> <C> <C> <C>
ASTOR HOLDINGS II, INC. Delaware 2999 25-1766332
</TABLE>
8521 SIX FORKS ROAD
RALEIGH, NORTH CAROLINA 27615
(919) 846-8011
(Address, including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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<S> <C>
BOYD D. WAINSCOTT WITH A COPY TO:
Chief Executive Officer BRUCE D. MEYER, ESQ.
ASTOR CORPORATION CLAY A. HALVORSEN, ESQ.
8521 Six Forks Road Gibson, Dunn & Crutcher
Raleigh, North Carolina 27615 333 S. Grand Avenue
(919) 846-8011 Los Angeles, California 90071
(Name, Address, Including Zip Code, (213) 229-7000
and Telephone Number,
Including Area Code, of Agent for
Service)
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
--------------------------
If any of the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
10 1/2% Series B Senior Subordinated
Notes Due 2006....................... $110,000,000 99.5% 109,450,000 $33,167
Guarantee of 10 1/2% Series B Senior
Subordinated Notes Due 2006.......... -- -- -- None (2)
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f).
(2) Pursuant to Rule 457(n).
--------------------------
THE REGISTRANT AND THE CO-REGISTRANT HEREBY AMEND THIS REGISTRATION
STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT AND THE CO-REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE
AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 25, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
ASTOR CORPORATION
OFFER FOR ALL OUTSTANDING
10 1/2% SENIOR SUBORDINATED NOTES DUE 2006
IN EXCHANGE FOR
10 1/2% SERIES B SENIOR SUBORDINATED NOTES DUE 2006
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1996, UNLESS EXTENDED.
Astor Corporation, a Delaware corporation, hereby offers (the "Offer"), upon
the terms and subject to the conditions set forth herein and in the related
Letter of Transmittal, to exchange up to $110.0 million aggregate principal
amount of 10 1/2% Series B Senior Subordinated Notes Due 2006 (the "Notes") of
Astor Corporation for a like amount of the privately placed 10 1/2% Senior
Subordinated Notes Due 2006 (the "Old Notes") of Astor Corporation issued on
October 8, 1996, from the holders thereof (together with the holders of Notes,
"Holders").
The Notes are being offered hereunder in order to satisfy the obligations of
Astor Corporation under an Exchange and Registration Rights Agreement dated
October 8, 1996 (the "Registration Rights Agreement") by and among Astor
Corporation and Donaldson, Lufkin & Jenrette Securities Corporation and Chase
Securities Inc. (the "Initial Purchasers"). The Offer is designed to provide to
Holders an opportunity to acquire Notes which, unlike the Old Notes, are
expected to be freely transferable at all times, subject to state "blue sky" law
restrictions, PROVIDED that the Holder is not an "affiliate" of Astor
Corporation within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and represents that the Notes are being acquired in the
ordinary course of such Holder's business and the Holder is not engaged in, and
does not intend to engage in, a distribution of the Notes. With the exception of
the freely transferable nature of the Notes, the Notes are substantially
identical to the Old Notes. See "The Offer -- Purpose of the Offer."
Astor Corporation will accept for exchange any and all validly tendered Old
Notes on or prior to 5:00 P.M., New York time, on , 1996, unless
extended (the "Expiration Date"). Tenders of Old Notes made pursuant to the
Offer may be withdrawn at any time prior to the Expiration Date. In the event
Astor Corporation terminates the Offer and does not accept any Notes with
respect to the Offer, Astor Corporation will promptly return such Old Notes to
the Holders thereof. Astor Corporation will not receive any proceeds from the
Offer.
Interest on the Notes will be payable semi-annually on October 15 and April
15 of each year, commencing on April 15, 1997. The Notes will mature on October
15, 2006. Except as described below, the Notes will not be redeemable prior to
October 15, 2001. On or after October 15, 2001, the Notes may be redeemed at the
option of Astor Corporation, in whole or in part, at the redemption prices set
forth herein, together with accrued and unpaid interest, if any, to the date of
redemption. In addition, at any time on or prior to October 15, 1999, Astor
Corporation may, subject to certain requirements, redeem up to $35.0 million of
the aggregate principal amount of the Notes with the net cash proceeds of one or
more Public Equity Offerings (as defined herein), at a price equal to 109.5% of
the principal amount to be redeemed, together with accrued and unpaid interest,
if any, to the date of redemption. The Notes will not be subject to any sinking
fund requirement. Upon the occurrence of a Change of Control (as defined
herein), Astor Corporation will be required to make an offer to repurchase the
Notes at a price equal to 101% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of repurchase. See "Description
of Notes."
The Notes will be general unsecured obligations of Astor Corporation,
subordinated in right of payment to all Senior Debt (as defined herein) of Astor
Corporation. The Notes will be guaranteed (the "Guarantee") by Astor
Corporation's parent, Astor Holdings II, Inc. ("Astor Holdings II"). The
Guarantee will be a general obligation of Astor Holding II subordinated in right
of payment to all Senior Debt of Astor Holding II. The Notes will not be
guaranteed by Astor Corporation's existing subsidiaries, but will be guaranteed
by any future U.S. subsidiaries of Astor Corporation. Consequently, indebtedness
of Astor Corporation's existing subsidiaries and any future foreign subsidiaries
would be structurally senior to the Notes. The Indenture (as defined herein)
permits Astor Corporation, Astor Corporation's subsidiaries and Astor Holdings
II to incur additional indebtedness, including $50 million of Senior Debt under
Astor Corporation's Senior Bank Facility (as defined herein), subject to certain
limitations. See "Description of Notes." As of June 30, 1996, on a pro forma
basis after giving effect to the Transactions (as defined herein), the aggregate
amount of outstanding Senior Debt of Astor Corporation and its subsidiaries
would be $21.8 million.
There has been no public market for the Old Notes and no active public
market for the Notes is currently anticipated. Astor Corporation currently does
not intend to apply for the listing of the Notes on any securities exchange or
to seek approval for quotation through any automated quotation system. The
Initial Purchasers have advised Astor Corporation that each of the Initial
Purchasers currently intends to make a market in the Notes; however, neither is
obligated to do so and any market making may be discontinued by either Initial
Purchaser at any time without notice. Accordingly, no assurance can be given as
to the liquidity or the trading market for the Notes.
The Offer is not conditioned upon any minimum principal amount of Old Notes
being tendered for exchange. However, the Offer is subject to certain customary
conditions. See "The Offer." Old Notes may be tendered only in integral
multiples of $1,000.
--------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 15 HEREIN FOR A DISCUSSION OF CERTAIN RISKS
THAT HOLDERS OF OLD NOTES SHOULD CONSIDER IN CONNECTION WITH
THE OFFER.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>
AVAILABLE INFORMATION
Astor Corporation has filed with the Securities and Exchange Commission (the
"Commission") a registration statement relating to the Notes offered hereby
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement. Statements made in this Prospectus as to the contents of
any contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document filed
as an Exhibit to the Registration Statement, reference is made to such exhibit
for a more complete description thereof, and each such statement shall be deemed
qualifed in its entirety by such reference. The Registration Statement and the
exhibits and schedules thereto may be inspected without charge and copied at
prescribed rates at the Public Reference Section of the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at 7 World Trade Center, Suite 1300, New York, New York 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The Commission maintains a website that contains reports, proxy
and information statements and other information filed electronically with the
Commission at http:\\www.sec.gov.
Astor Holdings II is required under the terms of the indenture governing the
Notes and the Old Notes (the "Indenture") to file with the Commission and
furnish, without cost, to the Holders of the Notes and Old Notes the annual,
quarterly and current reports that Astor Holdings II would be required to file
with the Commission pursuant to Section 13(a), 13(c) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), if Astor Holdings II had
equity securities registered under the Exchange Act. Such information includes
annual reports containing consolidated financial statements and notes thereto,
together with an opinion thereon expressed by an independent public accounting
firm, management's discussion and analysis of financial condition and results of
operations, as well as quarterly reports containing unaudited consolidated
financial statements for the first three quarters of each calendar year. The
Company is also required to make such reports available to prospective
purchasers of the Notes and the Old Notes and to securities analysts upon their
request. In addition, the Company and Astor Holdings II have agreed to furnish
to Holders of the Notes and Old Notes and prospective purchasers and securities
analysts, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY.................................... 3
RISK FACTORS............................... 15
THE OFFER.................................. 18
PRO FORMA CAPITALIZATION................... 26
PRO FORMA FINANCIAL INFORMATION............ 27
SELECTED CONSOLIDATED FINANCIAL DATA....... 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS............................... 40
BUSINESS................................... 46
MANAGEMENT................................. 64
OWNERSHIP OF VOTING SECURITIES............. 73
CERTAIN TRANSACTIONS....................... 78
PRIOR REORGANIZATION....................... 79
SENIOR BANK FACILITY....................... 82
DESCRIPTION OF NOTES....................... 84
PLAN OF DISTRIBUTION....................... 114
LEGAL MATTERS.............................. 115
INDEPENDENT AUDITORS....................... 115
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS............................... F-1
</TABLE>
2
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS MEMORANDUM. THE ISSUANCE AND SALE OF THE
OLD NOTES (THE "OFFERING"), THE CONSUMMATION OF THE ADCO ACQUISITION (AS DEFINED
HEREIN), THE FUNDING OF THE SENIOR BANK FACILITY AND THE REPAYMENT OF THE UBS
CREDIT FACILITY (AS DEFINED HEREIN) ARE COLLECTIVELY REFERRED TO IN THIS
MEMORANDUM AS THE "TRANSACTIONS." THROUGHOUT THIS MEMORANDUM, EXCEPT WHERE THE
CONTEXT OTHERWISE REQUIRES, "ASTOR" REFERS TO ASTOR CORPORATION AND ITS
SUBSIDIARIES, "ADCO" REFERS TO ADCO TECHNOLOGIES, INC. AND ITS SUBSIDIARY PRIOR
TO THE ADCO ACQUISITION, THE "PARENT" REFERS TO ASTOR HOLDINGS, INC., THE SOLE
STOCKHOLDER OF ASTOR HOLDINGS II, AND THE "COMPANY" REFERS COLLECTIVELY TO ASTOR
AND ADCO ON A COMBINED BASIS AFTER GIVING EFFECT TO THE TRANSACTIONS. REFERENCES
HEREIN TO A PARTICULAR FISCAL YEAR ARE TO THE TWELVE MONTH PERIOD ENDING MARCH
31 OF SUCH YEAR.
THE COMPANY
The Company is a leading global developer, producer and marketer of a wide
variety of value-added specialty chemical products. Its principal products are
(i) a broad range of specialty waxes, which represented approximately 70% of pro
forma sales for the 1996 fiscal year, and (ii) an extensive line of
technologically advanced adhesives and sealants, which represented approximately
30% of pro forma sales for the 1996 fiscal year. These products are sold to a
diverse base of over 4,000 customers in more than 50 countries worldwide, with
35.4% of 1996 pro forma sales made to customers outside of the U.S., and are
used in numerous industrial and commercial applications. In the 1996 fiscal
year, no single customer of the Company accounted for more than 5% of the
Company's pro forma sales, and the top ten customers accounted for approximately
21% of the Company's pro forma sales. During the twelve months ended June 30,
1996, the Company had pro forma revenues and EBITDA (as defined herein) of
$210.1 million and $28.3 million, respectively. The Company's sales of specialty
waxes and adhesives and sealants grew on a pro forma basis from $159.4 million
in fiscal year 1994 to $206.2 million in fiscal year 1996, or at a compound
annual rate of 13.7%, and its EBITDA grew on a pro forma basis from $14.1
million in fiscal year 1994 to $27.3 million in fiscal year 1996, or at a
compound annual rate of 39.1%.
The Company focuses on developing value-added products to satisfy customers'
unique product demands and exacting specifications by conducting extensive
applied research and product development, often in conjunction with its
customers. The Company's product development has led to a variety of new
products and patented technologies for the Company. The Company's position is
further strengthened by its numerous technical customer approvals and the
value-added nature of its products, which generally represent a relatively small
percentage of an end-use product's total cost. These factors contributed to the
high contribution margins (defined as sales less raw material costs) which have
been achieved by the Company in recent periods. In fiscal 1996, pro forma
contribution margins for specialty waxes and for adhesives and sealants were
approximately 38.8% and 48.6%, respectively.
In 1994, Mr. Boyd Wainscott, an experienced multinational chemical company
manager, joined Astor to lead it in developing and implementing a strategic
business plan. This plan included improving marketing functions and product
distribution, developing more higher-margin, value-added products, improving
manufacturing operations and increasing manufacturing capacity, and pursuing
acquisition opportunities in the consolidating specialty chemicals industry. As
part of this strategic plan, in June 1995, the current business and structure of
Astor were created through the combination of Astor Corporation and Associated
British Industries Limited ("ABI"), a manufacturer of specialty waxes and
adhesives and sealants based in the U.K. (the "ABI Acquisition"). The ABI
Acquisition improved Astor's in-house marketing and packaging capabilities,
resulting in improved product distribution, and improved Astor's product
development capabilities, allowing for the development of higher-valued
products. Concurrent with the consummation of the Offering, Astor acquired ADCO,
a leading U.S. manufacturer and marketer of adhesives and sealants. Through the
acquisition of ADCO, Astor added significant depth to its product lines, global
marketing and manufacturing networks and product development capabilities.
SPECIALTY WAXES. Management of the Company believes that the Company is the
largest developer, producer and marketer of specialty waxes in North America,
and one of the largest producers of specialty waxes in the world, based on
sales. During 1993, the most recent year for which statistics are available,
approximately two billion pounds of specialty and other waxes were consumed in
the U.S., representing over $500 million in revenues, and over seven billion
pounds of specialty and other waxes were consumed
3
<PAGE>
worldwide, according to Wax Data, an industry publication, and a study by Kline
& Company, a leading industry consultant. During the last ten years, wax demand
has grown at approximately 3.3% per annum in the U.S., according to Wax Data.
However, certain end-use products have experienced significantly higher growth
rates, such as the PVC pipe market which grew at a rate of 10.0% from 1993 to
1994, according to Modern Plastics, an industry publication. Due to the lack of
cost-effective wax substitutes, management believes that wax demand will be
driven by the growth of its end-use products. Specialty waxes, like the
Company's products, are distinguished by their melt point, hardness, color and
other performance characteristics, as well as their consistent qualities and
custom specifications, and are used as an essential, value-added component in
hundreds of products and applications. The primary applications of the Company's
products include use as a protective component in packaging and tires, as a fuel
in candles and synthetic firelogs, and as a lubricant in PVC extrusion. The
Company produces one of the most extensive lines of customized waxes in the
industry and currently has over 3,000 different wax formulations in its
proprietary database.
The Company had $143.7 million of pro forma sales of specialty waxes in
fiscal 1996. Over the past three fiscal years, the Company's sales of specialty
waxes have grown on a pro forma basis at a compound annual rate of 10.9%, well
in excess of the wax industry's growth rate, primarily due to the Company's
focus on high-growth niche markets. The Company's specialty wax products are
manufactured in the U.S., the U.K. and Belgium, and are sold both directly and
through independent agents to customers worldwide. During the 1996 fiscal year,
40.0%, or $57.5 million, of the Company's pro forma specialty wax sales were in
non-U.S. markets.
ADHESIVES AND SEALANTS. The Company is a leading developer, producer and
marketer of an extensive line of adhesives and sealants for a variety of
specialized niche applications. According to Chemical Week, an industry
publication, in 1995, sales of adhesives and sealants reached approximately
$15.4 billion worldwide and $9.4 billion in North America. Adhesives are used to
bond various materials under numerous temperature and moisture conditions, and
sealants are used to prevent the passage of air, water and noise between two
surfaces. The primary markets for the Company's adhesives and sealants are new
and replacement commercial roofing, transportation aftermarket, transportation
OEM, insulated window manufacturing for new and replacement construction,
concrete pipe and vaults, and new and rehab building construction. The Company
currently offers more than 1,650 proprietary adhesives and sealants to its
customers.
The Company had $62.5 million of pro forma sales of adhesives and sealants
in fiscal 1996. Over the past three fiscal years, the Company's sales of
adhesives and sealants have grown on a pro forma basis at a compound annual rate
of 21.3%, well in excess of the adhesives and sealants industry's growth rate of
5.0%-6.0% as reported by Chemical Week, primarily due to the Company's
aggressive development of and the commercial acceptance of its new products. The
Company's adhesives and sealants are manufactured in both the U.S. and the U.K.,
and are sold both directly and through independent agents to customers
worldwide. During the 1996 fiscal year, 24.6%, or $15.4 million, of the
Company's pro forma adhesives and sealants sales were in non-U.S. markets.
COMPETITIVE STRENGTHS. The Company believes that it benefits from the
following competitive strengths:
DIVERSE GLOBAL END-USE MARKETS AND PRODUCTS. The Company serves numerous
end-use markets with over 4,650 products. This wide variety of products is sold
to a diverse global base of over 4,000 customers. In the 1996 fiscal year, no
single customer of the Company accounted for more than 5% of the Company's pro
forma sales, and the top ten customers accounted for approximately 21% of the
Company's pro forma sales. This diversity of products, markets and customers
minimizes the Company's exposure to any particular customer, economic cycle or
geographic market and provides a broad base from which to grow sales through
continued development of core technologies and new applications.
LEADING MARKET POSITIONS. The Company enjoys substantial market shares in
many niche markets because of its product design capabilities, reputation,
quality and service. In addition, the names -- Astor Stag, Astor Wax and ADCO --
are established and trusted in their respective industries and provide brand
name recognition for the introduction and development of new products and
markets.
GLOBAL MARKETING AND MANUFACTURING CAPABILITIES. The Company sells its
products in over 50 countries worldwide through a global marketing network and
maintains manufacturing facilities in the U.S., the U.K.
4
<PAGE>
and Belgium. In fiscal 1996, the Company's pro forma sales of specialty waxes
and adhesives and sealants outside of the U.S. totaled $72.9 million, or 35.4%
of total sales. The Company's international marketing and manufacturing
capabilities provide a platform for the introduction of existing and new
products throughout the world and allow the Company to better serve its
customers' needs on a worldwide basis.
CUSTOMER-DRIVEN PRODUCT DEVELOPMENT. The Company focuses on developing
value-added products with its customers by utilizing its extensive product
development expertise and manufacturing process capabilities. The Company's
sales, technical service and development staff work with customers to identify
specific needs and develop innovative, superior performance solutions. New
developments resulting from this process can often be profitably applied to
other high-margin niche markets. Additionally, many of the Company's products
are sold to customers following an often rigorous technical approval process.
The Company has obtained numerous valuable customer approvals which it believes
provide it with a competitive advantage.
LOW FIXED-COST AND FLEXIBLE MANUFACTURING CAPABILITIES. The Company has
engineered its manufacturing facilities to be capable of producing batches of
specialty products on an as needed basis with a minimum of fixed costs, which
were 20% of total pro forma costs in the 1996 fiscal year. This just-in-time
focus and relatively low fixed-cost structure enables the Company to respond
rapidly to changing customer specifications and reduces the impact on
profitability during periods of decreased customer demand.
EXPERIENCED MANAGEMENT TEAM. Since 1994, Astor's management team has
substantially improved operating efficiencies and achieved significant cost
savings. Additional efficiencies and savings were achieved by Astor following
the acquisition of ABI in June 1995. The ADCO Acquisition further enhances
managerial expertise with the addition of several new senior managers. The
resulting management team has extensive wax and specialty chemical industry
experience.
BUSINESS STRATEGY. The Company's business strategy includes the following
key elements:
FOCUS ON DIVERSE, HIGH-MARGIN NICHE MARKETS. The Company intends to
continue to aggressively expand its diverse line of high-margin products for
niche markets. New product development will be achieved through customer
solution engineering and the extension of existing technologies to new
applications. The Company believes that increasing the breadth and diversity of
its product offerings will further reduce the Company's already limited exposure
to fluctuations in any single market.
CONTINUE CUSTOMER-DRIVEN PRODUCT DEVELOPMENT. The Company intends to
continue its strong commitment to applied research and product development. The
Company's focus on solutions for the customer fosters a collaborative effort
between its experienced technical and sales personnel and its customers. This
product development effort serves to enhance customer loyalty and is the genesis
for many new products.
FURTHER GLOBAL EXPANSION. The Company intends to continue to grow in new
geographic markets by selling existing and new products to its current global
customers as they move manufacturing capacity to new geographic regions. Once
established in a new region, the Company intends to open sales offices and
develop marketing alliances to target new customers. Through the combination of
ADCO's product line and Astor's global distribution network, the Company will
have the ability to further develop global adhesives and sealants market
opportunities. Additionally, the strong product development, manufacturing and
distribution base of ADCO in the U.S. will enable Astor to more aggressively
introduce and market its adhesives and sealants in the U.S.
PURSUE STRATEGIC ACQUISITIONS. The Company intends to selectively pursue
complementary acquisitions which can be integrated into the Company's existing
businesses. As a result of global consolidation trends and the fragmented nature
of the specialty wax and the adhesives and sealants industries, management
believes many opportunities exist for the Company to make strategic
acquisitions. The Company intends to pursue acquisitions which will diversify
its product lines, enhance its product development capabilities, improve its
global marketing reach and lower its costs.
The principal executive offices of the Company are located at 8521 Six Forks
Road, Raleigh, North Carolina 27615, and the Company's telephone number is (919)
846-8011. Astor and PurFlex are registered trademarks of the Company.
5
<PAGE>
THE TRANSACTIONS
ACQUISITION OF ADCO. Concurrent with the consummation of the Offering on
October 8, 1996, Astor acquired all of the outstanding capital stock and all of
the issued but unexercised options of ADCO, a publicly traded Nasdaq National
Market manufacturer and marketer of adhesives and sealants, for an aggregate
consideration of $54.4 million (the "ADCO Acquisition"). Through the acquisition
of ADCO, Astor added significant depth to its product lines, global marketing
and manufacturing networks and product development capabilities. Management
believes that these strengths will enable Astor to improve significantly the
penetration of its existing adhesives and sealants in the U.S. and provide Astor
the opportunity to market ADCO's products outside of the U.S. Management
believes that the ADCO Acquisition will also serve as an excellent platform from
which to pursue complementary acquisitions in the highly fragmented adhesives
and sealants industry.
Pursuant to the terms of a definitive merger agreement between the parties,
Astor paid $10.25 per share for the 5.15 million ADCO shares outstanding, plus
an aggregate of $1.6 million representing the aggregate net spread on ADCO's
outstanding stock options. In addition, ADCO caused its subsidiary to redeem
approximately $3.9 million of outstanding preferred stock of such subsidiary and
pay the dividends accrued thereon as of the date of redemption. See "Acquisition
of ADCO."
SENIOR BANK FACILITY. Astor Corporation has entered into a Senior Secured
Credit Agreement (the "Senior Bank Facility") with The Chase Manhattan Bank (the
"Bank") providing for a six-year term loan (the "Bank Term Loan") denominated in
eurosterling in an amount not exceeding the U.S. dollar equivalent of $20.0
million and a six-year revolving credit facility (the "Revolving Credit
Facility") in an amount not exceeding the U.S. dollar equivalent of $30.0
million (subject to borrowing base limitations), which will be available in U.S.
dollars or eurosterling on a revolving basis.
The Bank Term Loan was made in a single drawing concurrent with the closing
of the Transactions and all of the proceeds were lent by Astor Corporation to
Astor Stag Ltd. and used to repay to Union Bank of Switzerland ("UBS") existing
indebtedness of Astor Stag Ltd. and ABI Acquisition 2 plc, both of which are
foreign subsidiaries of Astor Corporation based in the U.K. The note evidencing
the intercompany loan (the "Intercompany Term Loan") by Astor Corporation to
Astor Stag Ltd. is secured by substantially all the assets of Astor Stag Ltd.
and pledged in favor of the Lenders (as defined herein). The Bank Term Loan is
repayable in 21 quarterly installments of varying amounts, beginning in October
31, 1997, with the final maturity being October 31, 2002. The Intercompany Term
Loan is repayable on demand.
Subject to the satisfaction of customary conditions and meeting certain
borrowing base requirements, advances under the Revolving Credit Facility may be
made at any time prior to October 31, 2002 (the "Termination Date"), to be used
(i) to finance permitted acquisitions, (ii) to refinance existing indebtedness
of Astor Corporation, ABI Acquisition 2 plc and Astor Stag Ltd. and (iii) to
finance the working capital needs of Astor Corporation and its subsidiaries. Up
to $10.0 million of the Revolving Credit Facility will be available for letters
of credit. Proceeds from revolver advances to be used by subsidiaries in Europe
will be lent by Astor Corporation to Astor Stag Ltd. and the note evidencing
such intercompany advances (the "Intercompany Advances") will be secured and
pledged on the same basis as the note evidencing the Intercompany Term Loan. The
Intercompany Advances will be repayable on demand.
The Senior Bank Facility is secured by a first priority security interest in
all assets of Astor Corporation, all of the capital stock of Astor Corporation's
direct and indirect U.S. subsidiaries, 65% of the voting capital stock and 100%
of the non-voting capital stock of ABI Acquisition 2 plc and all of the capital
stock of Astor Corporation. The obligations of Astor Corporation under the
Senior Bank Facility are guaranteed on a senior secured basis by each of Astor
Corporation's existing and future U.S. subsidiaries. See "Senior Bank Facility."
The indebtedness under the Senior Bank Facility is subject to prepayment with
designated percentages of proceeds of asset sales, issuances of equity and debt
and excess cash flow. See "Senior Bank Facility."
6
<PAGE>
THE OFFER
<TABLE>
<S> <C>
Securities Offered........... Up to $110,000,000 principal amount of 10 1/2% Series B
Senior Subordinated Notes Due October 15, 2006 (the
"Notes").
The Offer.................... The Notes are being offered in exchange for a like principal
amount of the Company's Old Notes. Old Notes may be
exchanged only in integral multiples of $1,000. The issuance
of the Notes is intended to satisfy the obligataions of the
Company under the terms of the Registration Rights
Agreement.
Tenders; Expiration Date;
Withdrawal.................. The Offer will expire at 5:00 P.M. New York City time on
, 1996, or such later date and time to which it
is extended by the Company (the "Expiration Date"). Tenders
of Old Notes pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date. In the event the Company
terminates the Offer and does not accept for exchange any
Old Notes pursuant to the Offer, the Company will promptly
return such Old Notes to the Holders thereof.
Accrued Interest on the
Notes....................... The Notes will bear interest from and including the date of
issuance of the Old Notes. Accordingly, Holders who receive
Notes in exchange for Old Notes will forego accrued but
unpaid interest on their exchanged Old Notes for the period
from and including the date of issuance of the Old Notes to
the date of exchange, but will be entitled to such interest
under the Notes.
Conditions of the Offer...... The Offer is subject to certain customary conditions, any or
all of which may be waived by the Company. The Company
currently expects that each of the conditions will be
satisfied and that no waivers will be necessary. See "The
Offer -- Conditions to the Offer."
Procedures for Tendering Old
Notes....................... Each Holder wishing to accept the Offer must complete and
sign the Letter of Transmittal, in accordance with the
instructions contained therein, and submit the Letter of
Transmittal to the Exchange Agent identified below. See "The
Offer -- Procedures for Tendering."
Guaranteed Delivery
Procedures.................. Holders of Old Notes who wish to tender their Old Notes and
whose Old Notes are not immediately available or who cannot
deliver their Old Notes and Letter of Transmittal and any
other documents required by the Letter of Transmittal to the
Exchange Agent prior to the Expiration Date, must tender
their Old Notes according to the guaranteed delivery
procedures set forth in "The Offer -- Guaranteed Delivery
Procedures."
Acceptance of Old Notes and
Delivery of Notes........... The Company will accept for exchange any and all Old Notes
which are properly tendered in the Offer prior to 5:00 P.M.
New York City time on the Expiration Date. See "The Offer --
Acceptance of Old Notes for Exchange; Delivery of Notes."
Certain Federal Income Tax
Considerations.............. The exchange of Old Notes for Notes pursuant to the Offer
will not be a taxable event for federal income tax purposes.
See "The Offer -- Certain Federal Income Tax Consequences."
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Rights of Dissenting
Holding..................... Holders of Old Notes do not have any appraisal or
dissenters' rights under the Delaware General Corporation
Law in connection with the Offer.
Exchange Agent............... State Street Bank and Trust Company; telephone (617)
664-5344. See "The Offer -- Exchange Agent."
Use of Proceeds.............. There will be no cash proceeds to the Company from exchanges
made pursuant to the Offer.
</TABLE>
CONSEQUENCES OF EXCHANGING OLD NOTES PURSUANT TO THE OFFER
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, Holders of Old Notes (other than any
holder who is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act) who exchanged their Old Notes for Notes pursuant to the
Offer generally may offer such Notes for resale, resell such Notes and otherwise
transfer such Notes without compliance with the registration and prospectus
delivery provisions of the Securities Act provided such Notes are acquired in
the ordinary course of the holder's business and such holder has no arrangement
with any person to participate in a distribution of such Notes. Each
broker-dealer that receives Notes for its own account in exchange for Old Notes
must acknowledge that it will deliver a prospectus in connection with any resale
of such Notes. See "Plan of Distribution." In addition, to comply with the
securities laws of certain jurisdictions, if applicable, the Notes may not be
offered or sold unless they have been registered or qualifed for sale in such
jurisdiction or an exemption from registration or qualification is available and
the conditions thereto have been met. The Company has agreed, pursuant to the
Registration Rights Agreement and subject to certain specified limitations
therein, to register or qualify the Notes for offer or sale under the securities
or blue sky laws of such jurisdictions as any Holder of the Notes or the Old
Notes reasonably requests in writing. If a holder of Old Notes does not exchange
such Old Notes for Notes pursuant to the Offer, such Old Notes will continue to
be subject to the restrictions on transfer contained in the legend thereon. In
general, the Old Notes may not be offered or sold, unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. See "The
Offer -- Purposes of the Offer" and "Resales of Notes."
TERMS OF THE NOTES
The Terms of the Notes are substantially identical in all material respects
to the terms of the Old Notes, except that the Notes are expected to be freely
transferable as described under "The Offer -- Resales of Notes."
<TABLE>
<S> <C>
Maturity..................... October 15, 2006.
Interest Payment Dates....... October 15 and April 15 of each year, commencing on April
15, 1997.
Optional Redemption.......... Except as described below, the Notes will not be redeemable
by Astor Corporation prior to October 15, 2001. On or after
that date, the Notes may, subject to certain requirements,
be redeemed at the option of Astor Corporation, in whole or
in part, at the redemption prices set forth herein, together
with accrued and unpaid interest and Liquidated Damages (as
defined herein) thereon, if any, to the date of redemption.
In addition, at any time on or prior to October 15, 1999,
Astor Corporation may, subject to certain requirements,
redeem up to $35.0 million of the aggregate principal amount
of the Notes with the net cash proceeds of one or more
Public Equity Offerings (as defined herein) at a price equal
to 109.5% of the principal amount to be redeemed, together
with accrued and unpaid interest, if any, to the redemption
date; PROVIDED, that immediately following such redemption
not less than $75.0 million aggregate principal amount of
the Notes remains outstanding.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
Mandatory Redemption......... None, except as set forth under "Description of Notes --
Change of Control" and "Description of Notes -- Certain
Covenants -- Asset Sales and Sales of Subsidiary Stock."
Guarantee.................... The Notes will be unconditionally guaranteed on a
subordinated basis by Astor Holdings II and future U.S.
subsidiaries, if any, of Astor Corporation.
Ranking...................... The Notes will be senior subordinated obligations of Astor
Corporation, subordinated in right of payment to all
existing and future Senior Debt of Astor Corporation,
including indebtedness pursuant to the Senior Bank Facility.
The Notes will be structurally subordinated
to all indebtedness and liabilities of Astor Corporation's
existing subsidiaries and any future non-U.S. subsidiary.
The Guarantee of Astor Holdings II and any future U.S.
subsidiary of Astor Corporation which guarantees the Notes
will be subordinated to the prior payment in full of all
Senior Debt of Astor Holdings II and such subsidiaries. As
of June 30, 1996, on a pro forma basis after giving effect
to the Transactions, Astor Corporation and its subsidiaries
would have had Senior Debt outstanding of $20.0 million plus
$1.8 million of letters of credit, and Astor Holdings II
would have had no Senior Debt outstanding.
Change of Control............ Upon the occurrence of a Change of Control, Astor
Corporation will be required to make an offer to repurchase
the Notes at a price equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon to the date of purchase.
Astor Corporation may be prohibited in certain circumstances
from making such repurchase. See "Risk Factors -- Control of
the Company; Change of Control Put."
Certain Covenants............ The indenture governing the Notes (the "Indenture") contains
certain covenants that impose limitations on, among other
things, (i) the incurrence of additional indebtedness by
Astor Corporation, any Restricted Subsidiary (as defined
herein) and Astor Holdings II, (ii) the issuance of
Disqualified Stock (as defined herein), (iii) the making of
certain Restricted Payments (as defined herein), (iv) the
imposition of restrictions on the payment of dividends and
other payment restrictions affecting subsidiaries, (v)
anti-layering, (vi) the incurrence of liens, (vii)
transactions with affiliates and (viii) the consummation of
certain mergers, consolidations or sales of assets.
Absence of a Public Market
for the Notes............... There has been no public market for the Old Notes and no
active public market for the Notes is currently anticipated.
The Company currently does not intend to apply for the
listing of the Notes on any securities exchange or to seek
approval for quotation through any automated quotation
system. The Initial Purchasers have advised the Company that
each of the Initial Purchasers currently intends to make a
market in the Notes; however, neither is obligated to do so
and any market making may be discontinued by either Initial
Purchaser at any time without notice. Accordingly, no
assurance can be given as to the liquidity or the trading
market for the Notes.
</TABLE>
RISK FACTORS
For a discussion of certain matters that should be considered by prospective
investors in connection with the Offering, see "Risk Factors" beginning on page
15.
9
<PAGE>
SUMMARY PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table presents summary pro forma consolidated financial
information of Astor Holdings II derived from the Consolidated Financial
Statements of each of Astor Holdings II, ABI and ADCO, and other data as of the
dates and for the periods indicated. In the opinion of management of the
Company, all unaudited financial data used herein include all adjustments,
consisting only of normal adjustments, necessary for a fair presentation of the
results for the periods presented. Astor Holdings II is the parent corporation
of Astor Corporation, has guaranteed the obligations of Astor under the Notes
and has no material operating assets, liabilities or operations other than its
ownership of the outstanding common stock of Astor Corporation, the outstanding
$1.7 million (liquidation preference) of preferred voting ordinary stock of ABI
Acquisition 1 plc, a subsidiary of Astor Corporation, a subordinated
intercompany note payable to the Parent in the amount of $5.7 million and a
corresponding subordinated intercompany note receivable from ABI Acquisition 1
plc in the amount of $5.7 million. See "Risk Factors -- Absence of Guarantees
from Subsidiaries; Limitations on Payments to the Company."
The summary pro forma consolidated financial data for the fiscal year ended
March 31, 1996 have been derived from the consolidated audited financial
statements of Astor Holdings II for the fiscal year ended on such date, the
consolidated audited financial statements of ADCO for the fiscal year ended
December 31, 1995 and the consolidated unaudited financial statements of ABI for
the period from April 1, 1995 to June 28, 1995.
The summary pro forma consolidated financial data for the three months ended
June 30, 1996 have been derived from the unaudited consolidated financial
statements of each of Astor Holdings II and ADCO for the three months ended June
30, 1996. The results for the three months ended June 30, 1996 are not
necessarily indicative of the results to be expected for the full year.
The summary pro forma consolidated financial data for the twelve months
ended June 30, 1996 have been derived from the consolidated audited financial
statements of Astor Holdings II for the fiscal year ended March 31, 1996, the
consolidated audited financial statements of ADCO for the fiscal year ended
December 31, 1995, the unaudited consolidated financial statements of Astor
Holdings II for the three months ended June 30, 1996 and the unaudited
consolidated financial statements of ADCO for the six months ended June 30,
1996.
The summary pro forma consolidated financial data are provided for
informational purposes only and do not purport to represent the financial
position or the results of operations of Astor Holdings II had the Transactions
or the Prior Transactions (as defined herein) occurred on or as of the dates
indicated nor do such data purport to project the results of Astor Holdings II
for any future period.
The summary pro forma consolidated financial data should be read in
conjunction with "Selected Consolidated Financial Data," "Pro Forma Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Consolidated Financial Statements and the related
notes thereto for each of Astor Holdings II, ABI and ADCO included elsewhere in
this Memorandum.
10
<PAGE>
ASTOR HOLDINGS II
SUMMARY PRO FORMA CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
PRO FORMA
FISCAL YEAR PRO FORMA PRO FORMA
ENDED TWELVE MONTHS THREE MONTHS
MARCH 31, ENDED JUNE 30, ENDED JUNE 30,
1996 (1) 1996 (2) 1996 (3)
----------- -------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF INCOME DATA:
Sales:
Specialty waxes.................... $143,661 $146,702 $39,383
Adhesives and sealants............. 62,539 63,376 17,834
----------- -------------- -------
Total sales...................... 206,200 210,078 57,217
Gross profit before depreciation..... 48,546 50,000 14,041
Selling, general and administrative
expenses............................ 21,624 22,111 5,931
Depreciation and amortization........ 9,233 9,343 2,268
Non-recurring items.................. 2,040 1,223 --
Operating income..................... 15,649 17,323 5,842
Interest expense..................... 13,911 13,911 3,478
Provision for (benefit from) income
taxes............................... (2,567) (2,410) 1,168
Net income, before extraordinary
items............................... $ 4,688 $ 6,235 $ 1,436
OTHER DATA:
EBITDA (4)........................... $ 27,305 $ 28,302 $ 8,350
EBITDA margin (5).................... 13.2% 13.5% 14.6%
Capital expenditures................. $ 6,551 $ 6,913 $ 1,197
EBITDA to interest expenses, net..... 2.0x 2.0x 2.4x
Total debt to EBITDA (6)............. 5.0x 4.9x 4.1x
Ratio of earnings to fixed charges
(7)................................. 1.1x 1.3x 1.7x
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
AS OF JUNE 30,
1996 (3)
--------------
<S> <C>
BALANCE SHEET DATA:
Current assets.................................................. $ 63,867
Total assets.................................................... 214,783
Total debt...................................................... 137,357
Stockholder's equity............................................ 34,129
</TABLE>
(See footnotes on following page)
11
<PAGE>
ASTOR HOLDINGS II
NOTES TO SUMMARY PRO FORMA CONSOLIDATED FINANCIAL DATA
(1) The pro forma consolidated financial data for the year ended March 31, 1996
reflects the Transactions and the Prior Transactions as if each had occurred
on April 1, 1995. For purposes of this pro forma financial information, the
ABI Acquisition and the ADCO Acquisition are treated as purchases. See "Pro
Forma Financial Information," "Acquisition of ADCO," "Senior Bank Facility"
and "Prior Reorganization."
(2) The pro forma consolidated financial data for the twelve months ended June
30, 1996 reflects the Transactions as if each had occurred on April 1, 1995.
The pro forma balance sheet at June 30, 1996 is prepared assuming the
Transactions had occurred at that date. For purposes of this pro forma
financial information, the ABI Acquisition and the ADCO Acquisition are
treated as purchases. See "Pro Forma Financial Information," "Acquisition of
ADCO," "Senior Bank Facility" and "Prior Reorganization."
(3) The pro forma consolidated financial data for the three months ended June
30, 1996 reflects the Transactions as if each had occurred on April 1, 1995.
For purposes of this pro forma financial information, the ABI Acquisition
and the ADCO Acquisition are treated as purchases. See "Pro Forma Financial
Information," "Acquisition of ADCO," "Senior Bank Facility" and "Prior
Reorganization."
(4) EBITDA represents earnings before interest expense, income tax expense,
depreciation and amortization expense, extraordinary items and non-recurring
items. Information concerning EBITDA is included as it is used by certain
investors as a measure of a company's ability to service its debt. EBITDA
should not be used as an alternative to, or be construed as more meaningful
than, operating income or cash flows or as an indicator of the operating
performance or liquidity of Astor Holdings II.
(5) EBITDA margin is the ratio of EBITDA to sales, expressed as a percentage.
(6) For the purposes of calculating total debt to EBITDA, (i) total debt for all
periods shown is pro forma total debt at June 30, 1996, (ii) EBITDA for the
period ended March 31, 1996 and June 30, 1996 reflects the twelve months
ended on such date and (iii) EBITDA for the three months ended June 30, 1996
has been annualized.
(7) For the purposes of determining the ratio of earnings to fixed charges,
earnings consist of income before income taxes, extraordinary items and
fixed charges. Fixed charges consist of interest expense, amortization
expense of deferred debt financing costs and the interest component of rent
expense.
12
<PAGE>
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The following sets forth summary consolidated historical financial data
derived from the Consolidated Financial Statements for each of Astor Holdings
II, ABI and ADCO, and other data as of the dates and for the periods indicated.
In the opinion of management of the Company, all unaudited financial data used
herein include all adjustments, consisting only of normal adjustments, necessary
for a fair presentation of the results for the periods presented. The
comparability of the summary consolidated historical financial data has been
significantly impacted by the ABI Acquisition. The information presented below
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Selected Consolidated Financial
Data" and the Consolidated Financial Statements and the related notes thereto
for each of Astor Holdings II, ABI and ADCO included elsewhere in this
Memorandum.
ASTOR HOLDINGS II
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
--------------------------------
1994 1995 1996 (1)
--------- --------- ----------
<S> <C> <C> <C>
Sales........................................................................... $ 54,665 $ 61,852 $ 135,418
EBITDA (2)...................................................................... 107 3,170 14,440
EBITDA margin (3)............................................................... 0.2% 5.1% 10.7%
</TABLE>
ABI (4)
<TABLE>
<CAPTION>
YEARS ENDED MARCH
31, APRIL 1 TO
-------------------- JUNE 28,
1994 (5) 1995 1995
--------- --------- -----------
<S> <C> <C> <C>
Sales............................................................................ $ 77,215 $ 89,049 $ 24,451
EBITDA (2)....................................................................... 9,364 11,423 3,537
EBITDA margin (3)................................................................ 12.1% 12.8% 14.5%
</TABLE>
ADCO
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
Sales............................................................................ $ 31,345 $ 38,749 $ 47,411
EBITDA (2)....................................................................... 4,613 6,851 8,925
EBITDA margin (3)................................................................ 14.7% 17.7% 18.8%
</TABLE>
- ------------------------
(1) Represents Astor Holdings II's consolidated results of operations for the
fiscal year ended March 31, 1996, which includes ABI's results of operations
for the approximately nine months following ABI's acquisition on June 28,
1995.
(2) EBITDA represents earnings before interest expense, income tax expense,
depreciation and amortization expense, extraordinary items and non-recurring
items. Information concerning EBITDA is included as it is used by certain
investors as a measure of a company's ability to service its debt. EBITDA
should not be used as an alternative to, or be construed as more meaningful
than, operating income or cash flows or as an indicator of the operating
performance or liquidity of Astor Holdings II.
(3) EBITDA margin is the ratio of EBITDA to sales, expressed as a percentage.
(4) Reflects ABI's results of operations for the fiscal years ended March 31,
1994 and March 31, 1995 and for the period from April 1, 1995 to June 28,
1995 based upon the pounds sterling to dollar exchange rates of L1.00 to
$1.51, L1.00 to $1.56 and L1.00 to $1.60, respectively.
(5) Reflects ABI's results of operations derived from unaudited financial
statements for the year ended March 31, 1994.
13
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION SET FORTH ELSEWHERE IN THIS MEMORANDUM,
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS PRIOR
TO PURCHASING THE NOTES OFFERED HEREBY. THIS MEMORANDUM CONTAINS FORWARD-LOOKING
STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH IN THE
FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS MEMORANDUM.
LEVERAGE
The Company is highly leveraged and has indebtedness that is substantial in
relation to its stockholder's equity. As of June 30, 1996, on a pro forma basis
after giving effect to the Transactions, the Company would have had an aggregate
of $137.9 million of outstanding indebtedness for borrowed money, $1.7 million
(liquidation preference) of outstanding preferred stock of a subsidiary of Astor
Corporation held by Astor Holdings II and $28.8 million of stockholder's equity.
Astor Corporation is a subsidiary of Astor Holdings II. Astor Holdings II has
guaranteed the obligations of Astor Corporation under the Indenture and the
Notes. As of June 30, 1996, on a pro forma basis after giving effect to the
Transactions, Astor Holdings II (on a consolidated basis including the Company
and its subsidiaries) would have had an aggregate of $137.9 million of
outstanding indebtedness for borrowed money and $34.1 million of stockholder's
equity. The Indenture permits Astor Corporation, its subsidiaries and Astor
Holdings II to incur additional indebtedness, including Senior Debt (as defined
herein) subject to certain limitations. See "Capitalization," "Pro Forma
Financial Information," "Description of Notes" and the Consolidated Financial
Statements of Astor Holdings II and the related notes thereto included elsewhere
in this Memorandum.
The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including the following: (i) the Company's
ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes may be impaired; (ii) a
substantial portion of the Company's cash flow from operations must be dedicated
to the payment of interest on the Notes and interest and principal on its other
existing indebtedness, thereby reducing the funds available to the Company for
other purposes; (iii) indebtedness under the Senior Bank Facility will be at
variable rates of interest, which will cause the Company to be vulnerable to
increases in interest rates; (iv) the Company may be hindered in its ability to
adjust rapidly to changing market conditions; and (v) the Company's substantial
degree of leverage could make it more vulnerable in the event of a downturn in
general economic conditions or in its business.
The Senior Bank Facility matures prior to the maturity of the Notes. In the
event that the Company is unable to refinance the Senior Bank Facility or raise
funds to repay the facility through asset sales, sales of equity or otherwise,
its ability to pay the principal of and interest on the Notes would be adversely
affected.
SUBORDINATION
The Notes and the Guarantee will be general obligations of Astor Corporation
and Astor Holdings II, respectively, and will be subordinate in right of payment
to all Senior Debt of the Company and Astor Holdings II (or any future U.S.
subsidiary which guarantees the Notes), including all amounts owing under the
Senior Bank Facility. In addition, the borrowings under the Senior Bank Facility
(including the guarantees thereof) are secured by a first priority security
interest in all assets of Astor Corporation, all of the capital stock of Astor
Corporation's direct and indirect U.S. subsidiaries, 65% of the voting capital
stock and 100% of the non-voting capital stock of ABI Acquisition 2 plc and all
of the capital stock of Astor Corporation. See "Senior Bank Facility." In the
event of a bankruptcy, liquidation or reorganization of Astor Corporation or
Astor Holdings II, the assets of Astor Corporation or Astor Holdings II, as the
case may be, would be available to pay obligations on the Notes or the
Guarantee, as the case may be, only after all Senior Debt has been paid in full,
and there may not be sufficient assets remaining to pay amounts due on any or
all of the Notes then outstanding. As of June 30, 1996, on a pro forma basis
after giving effect to the Transactions, Astor Corporation would have had Senior
Debt of approximately $21.8 million and approximately $28.2 million of unused
commitment under the Senior Bank Facility. Additional Senior Debt, including
secured indebtedness, may be incurred by Astor Corporation and Astor Holdings II
from time to
14
<PAGE>
time subject to certain restrictions contained in the Senior Bank Facility and
the Indenture. See "Description of Notes -- Subordination," "-- Certain
Covenants -- Incurrence of Indebtedness or Issuance of Preferred Stock" and
"Senior Bank Facility."
ABSENCE OF GUARANTEES FROM EXISTING SUBSIDIARIES; LIMITATIONS ON PAYMENTS TO THE
COMPANY
Under the Indenture, Astor Corporation's existing subsidiaries are not
required to guarantee Astor Corporation's obligations under the Notes, although
the Indenture requires all future direct and indirect U.S. subsidiaries of Astor
Corporation to guarantee the Notes. As of and for the year ended June 30, 1996,
on a pro forma basis after giving effect to the Transactions, the existing
subsidiaries of the Company would have had an aggregate of $45.7 million of
tangible assets (representing 31.7% of the total tangible assets of the Company
and Astor Holdings II on a consolidated basis) and $6.6 million of EBITDA
(constituting 23.3% of the total consolidated pro forma EBITDA of the Company
and the Guarantor). The rights of Astor Corporation and its creditors, including
the holders of the Notes, to realize upon the assets of Astor Corporation's
existing subsidiaries and any future non-U.S. subsidiary in the event of
bankruptcy, liquidation or reorganization of any such subsidiary will be subject
to the prior claims of such subsidiary's creditors, except to the extent that
Astor Corporation or Astor Holdings II may itself be a creditor with recognized
claims against such subsidiary. Astor Corporation is a creditor of Astor Stag
Ltd., an indirect U.K. subsidiary of Astor Corporation, for a total of $26.9
million which was loaned by the Company to Astor Stag Ltd. to repay existing
indebtedness of Astor Stag Ltd. and another indirect non-U.S. subsidiary of
Astor Corporation outstanding under the UBS Credit Facility. This claim, which
is secured by substantially all of the assets of Astor Stag, Ltd., has been
pledged to secure the Senior Bank Facility and is repayable upon demand by Astor
Corporation. There can be no assurance that such claim will remain outstanding
at any time. In addition, this claim (to the extent unsecured), and any other
such unsecured or junior secured claim of Astor Corporation or Astor Holdings II
with respect to a subsidiary of Astor Corporation, will still be subordinate to
any indebtedness secured (to the extent senior) by the assets of the subsidiary.
Astor Corporation may rely, in part, upon dividends and other payments from its
subsidiaries (including interest payments and the repayment of principal under
intercompany indebtedness) or funds contributed or otherwise transferred to
Astor Corporation by Astor Holdings II (which must rely upon equity or debt
financing in the absence of dividend payments from Astor Corporation) to meet
Astor Corporation's obligations, including the payment of principal and interest
on the Notes. The ability of Astor Corporation's subsidiaries and Astor Holdings
II to make such payments and transfers may be restricted or limited by, among
other things, applicable state and foreign corporate laws, tax laws and other
laws and regulations or by terms of agreements to which they may become party.
RESTRICTIVE LOAN COVENANTS
The Notes and the Senior Bank Facility impose upon the Company certain
financial and operating covenants including, among other things, requirements
that the Company maintain certain financial ratios and satisfy certain financial
tests, limitations on capital expenditures, and restrictions on the ability of
the Company to incur indebtedness, pay dividends or take certain other corporate
actions, all of which may restrict the Company's ability to expand or to pursue
its business strategies. In addition, instruments evidencing future borrowings
by the Company will likely contain similar restrictions. Changes in economic or
business conditions, results of operations or other factors could in the future
cause a violation of one or more covenants in the Company's debt instruments,
entitling the holders of such indebtedness to declare the indebtedness
immediately due and payable. There can be no assurance that the assets of the
Company will be sufficient to repay any such accelerated indebtedness, and any
indebtedness containing cross-default provisions to such indebtedness, including
the Notes. See "Description of Notes" and "Senior Bank Facility."
CONTROL OF THE COMPANY; CHANGE OF CONTROL PUT
Astor Corporation is a subsidiary of Astor Holdings II, which in turn is a
subsidiary of the Parent. Entities controlled by Gerald L. Parsky, a director of
the Parent, Astor Holdings II and Astor Corporation, collectively own all of the
outstanding common stock of the Parent. Therefore, Mr. Parsky is able to elect
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directly or indirectly a majority of the directors of the Parent, Astor Holdings
II and the Company, and to approve or disapprove substantially all matters
submitted to a vote of stockholders of the Parent, Astor Holdings II and the
Company. See "Ownership of Voting Securities."
Upon the occurrence of a Change of Control (as defined herein), Astor
Corporation will be required to make an offer to repurchase the Notes at a price
equal to 101% of the principal amount thereof, together with accrued and unpaid
interest thereon. In addition, a change of control of Astor Corporation under
the Senior Bank Facility and, in all likelihood, other Senior Debt to which
Astor Corporation becomes a party will give rise to a default and rights of
acceleration under such other indebtedness. Such acceleration would prevent
repurchase of the Notes as a result of the subordination provisions applicable
to the Notes until the Senior Debt has been paid in full, decreasing the
likelihood that Astor Corporation would have the financial resources to
repurchase all or any part of the Notes, and consequently there can be no
assurance that sufficient resources will be available for such purpose. Even if
such acceleration does not occur, the existence of such a default under the
Senior Bank Facility and, in all likelihood, other Senior Debt will also contain
prohibitions on payment of the Notes under such circumstances for a specified
period. See "Description of Notes -- Subordination."
LIMITED REORGANIZED OPERATING HISTORY
Astor Corporation was incorporated as a new venture in 1989 in the State of
Delaware under the name Petrowax PA Inc. ("Petrowax") for the purpose of
developing a wax production business. As part of its start-up plan of
operations, Petrowax acquired two lube oil and wax production facilities from
Quaker State Oil Co. ("Quaker State"). Shortly after the completion of the
acquisition in 1990 and prior to the acquisition of ABI and ADCO, Petrowax
encountered a number of operational and financial difficulties, resulting in
Petrowax filing a voluntary petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code on February 25, 1992 (the "Filing"). Petrowax's Chapter 11
plan of reorganization (the "Reorganization Plan") was confirmed by an order of
the bankruptcy court dated May 19, 1995 and became effective as of June 28, 1995
(the "Effective Date"). On the Effective Date, Petrowax received an equity
infusion of $10.0 million from Astor Holdings II in consideration of the sale of
its common stock. As part of the Reorganization Plan, Petrowax entered into the
UBS Credit Facility pursuant to which UBS provided term loans in the principal
amount of $57.5 million and agreed to provide a revolving facility in the
principal amount of $20.0 million. Additionally, as part of the Reorganization
Plan, Petrowax consummated the ABI Acquisition and changed its name from
Petrowax to Astor Corporation, a tradename of ABI. As a result of the
reorganization and certain related actions, Astor Corporation is under new
operational management, its assets and liabilities have been substantially
restructured and its strategic plan has been significantly changed from its
strategic focus prior to the reorganization.
Because the Reorganization Plan became effective as of June 28, 1995,
purchasers of the Notes have only limited historical financial and other
information upon which to assess the effectiveness of the new strategic plan and
the results of Astor's restructured operations, including its combination with
ABI. Effective March 31, 1996, having attained consistent earnings for the
nine-month period since its emergence from bankruptcy, Astor Holdings II
effected a quasi-reorganization to restate, in conformity with generally
accepted accounting principles, its equity and financial position to better
reflect its true equity and financial position as a reorganized entity. Pursuant
to the quasi-reorganization, Astor Holding II's accumulated deficit at that date
of $23.9 million was offset against its additional paid-in capital, its retained
earnings were reduced to zero and its additional paid-in capital was
proportionately reduced. See "Prior Reorganization" and Note 3 to the
Consolidated Financial Statements of Astor Holdings II included elsewhere in
this Memorandum.
ENVIRONMENTAL MATTERS
The Company is subject to stringent federal, state, local and foreign laws
and regulations relating to the protection of the environment, including,
without limitation, those relating to the storage, handling, emission and
discharge of materials into the environment. The Company has expended, and may
be required to expend in the future, substantial funds for compliance with and
remediation under such laws and regulations. Some risk of environmental
liability is inherent in the nature of the Company's business, and there can be
no assurance that additional material environmental costs will not arise as a
result of future legislation or
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the discovery of non-compliance with existing laws and regulations.
Additionally, environmental statutes and regulations are becoming increasingly
more stringent. To the extent that the cost of compliance increases and the
Company cannot pass on future increases to its customers, such increases may
have a material adverse effect on the Company's profitability.
The Company is aware of certain conditions which may lead to environmental
liability being imposed on the Company with respect to the operation of its
facilities and business. Contamination exists at the Company's facility in
Titusville, Pennsylvania, which management believes resulted from disposal of
waste at the facility by an oil refinery that formerly operated in the area. In
addition, an EPA investigation, the conclusions of which management believes to
be inaccurate, indicated that a former subsidiary of ABI (which has since been
merged into the Company) was the former owner and a contributor of waste to a
waste disposal area which has been investigated by the EPA for potential
inclusion on the Superfund list. Soil and ground water contamination, which is
being addressed in large measure by Quaker State pursuant to an indemnity, also
exists at the Company's Emlenton and McKean, Pennsylvania facilities. Finally
contamination exists at ADCO's manufacturing facility in Michigan Center,
Michigan for which Astor is seeking protection from liability under a new state
statute which shields new owners from responsibility for contamination existing
prior to acquisition of a facility. The Company has certain indemnification
rights with respect to certain of these environmental matters. Assuming that the
indemnitors continue to meet their obligations, the Company does not believe
that the above or any other environmental matters will have a material adverse
effect on the business or financial condition of the Company. There can be no
assurance, however, that the indemnitors will continue to meet their obligations
or that the Company will not incur additional significant liabilities in
connection with the above or other environmental matters, either of which could
have a material adverse effect on the Company's business or financial condition.
See "Business -- Environmental Matters."
COMMODITY PRICE RISKS
The Company's raw material costs, particularly the costs of its wax
production feedstocks, are subject to commodity pricing risks. The markets and
prices for the Company's wax production feedstocks and other raw materials
depend on many factors beyond the control of the Company. The Company purchases
wax feedstocks primarily based on formulas tied to oil and gasoline price
indices which permit substantial volatility in feedstock costs. The Company is
able to hedge a portion of these costs by hedging crude oil in the public market
and, when possible, seeks to raise the prices of its specialty wax products in
response to increases in feedstock costs. However, the Company has not always in
the past been, and may not in the future always be, able to raise prices high
enough or quickly enough to offset the effects of such increased feedstock
costs. A substantial or prolonged increase in feedstock prices without a
corresponding increase in the Company's specialty wax product prices could have
a material adverse effect on the Company's business and financial condition.
AVAILABILITY OF RAW MATERIALS
Approximately 26% of the Company's wax related raw material costs result
from the purchase of wax feedstocks derived from Altamont/Bluebell Yellow Wax
crude oil ("A/B Crude"). These wax feedstocks are purchased pursuant to a
long-term feedstock supply contract with Lube & Wax Ventures, L.L.C. ("L&W")
which expires on October 1, 2006, subject to certain early termination rights.
While the Company believes that, if needed, there are alternative sources of A/B
Crude and other wax feedstocks, the unanticipated termination of or
nonperformance by the supplier under this supply contract could have a material
adverse effect on the Company's business and financial condition.
RISKS RELATING TO ADCO ACQUISITION
Astor acquired ADCO concurrent with the closing of the Offering. Under the
acquisition agreement pursuant to which ADCO was acquired, the representations
and warranties of ADCO did not survive the effectiveness of the acquisition.
There can be no assurance that the Company will not encounter unanticipated
problems or liabilities with respect to the operations of ADCO or with the
integration of ADCO's operations with those of the Company. See "Acquisition of
ADCO."
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COMPETITION
The Company competes with a wide variety of companies in a diverse number of
markets. In certain wax market segments, the Company competes with large
multinational oil refineries. The Company also competes with specialized wax
producers and formulators around the world which, like the Company, create
value-added products through formulating and packaging. Both the specialty wax
product and adhesives and sealants industries are highly fragmented, and the
Company competes with a large number of manufacturers in these industries.
Certain of the Company's competitors have greater financial, technical,
marketing and other resources than the Company. There can be no assurance that
the Company will be able to compete successfully in any of the markets in which
it operates. See "Business -- Competition."
DEPENDENCE ON KEY PERSONNEL
The success of the Company will depend upon the efforts and abilities of
certain key officers and employees. The Company could be adversely affected if
for any reason these officers and employees should no longer be active in the
Company's operations. In addition, a primary element in the Company's strategic
plan is the specialized expertise of its technical personnel and the abilities
of its sales and customer service personnel to build and maintain relationships
with its customers. The Company does not believe that the departure of any
particular individual would have a material adverse effect on the Company.
However, if a significant number of such personnel should no longer be active in
the Company's business, and if the Company were unable to find equally qualified
personnel to replace them, there can be no assurance that the Company would not
be materially adversely affected. Certain of the Company's executive officers,
including Boyd D. Wainscott, the Chairman of the Board and the Chief Executive
Officer, and C. Richard Spalton, a Director and the President, have entered into
employment agreements with the Company. See "Management."
LACK OF PUBLIC MARKET
There is currently no established market for the Notes and there can be no
assurance as to the liquidity of markets that may develop for the Notes, the
ability of Holders of the Notes to sell their Notes or the price at which such
Holders would be able to sell their Notes. If such markets were to exist, the
Notes could trade at prices that may be higher or lower than the initial market
values thereof depending on many factors, including prevailing interest rates
and the markets for similar securities. The Old Notes are eligible for trading
in the Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") market. The Company does not intend to apply for listing of the Notes
on any securities exchange or for quotation through any automated quotation
system. The Initial Purchasers have advised the Company that they currently
intend to make a market in the Old Notes, and, if issued, the Notes. However,
neither is obligated to do so, and any market-making with respect to the Old
Notes or the Notes may be discontinued at any time without notice. In addition,
such market-making activity may be limited during the pendency of the Offer. The
Offer will not be conditioned upon any minimum or maximum aggregate principal
amount of Old Notes being tendered for exchange. No assurance can be given as to
the liquidity of the trading market for the Notes, or, in the case of
non-tendering Holders of Old Notes, the trading market for the Old Notes
following the Offer. See "Plan of Distribution."
THE OFFER
PURPOSE OF THE OFFER
The Offer is designed to provide Holders of Old Notes with an opportunity to
acquire Notes which, unlike the Old Notes, will be freely tradable at all times,
subject to any restrictions on transfer imposed by state "blue sky" laws and
provided that the Holder is not an affiliate of the Company within the meaning
of the Securities Act and represents that the Notes are being acquired in the
ordinary course of such Holder's business and the Holder is not engaged in, and
does not intend to engage in a distribution of the Notes. The outstanding Old
Notes in the aggregate principal amount of $110.0 million were originally issued
and sold on October 8, 1996 (the "Original Issue Date") in order to provide
financing for the ADCO Acquisition and the repayment of the Company's
outstanding indebtedness under the UBS credit facility. The original sale to the
Initial Purchasers was not registered under the Securities Act in reliance upon
the exemption provided by Section 4(2) of the Securities Act and the concurrent
resale of the Old Notes to investors was not registered under the Securities Act
in reliance upon the exemption provided by Rule 144A promulgated under the
Securities Act. The Old Notes may not be reoffered, resold or transferred other
than pursuant to a
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registration statement filed pursuant to the Securities Act or unless an
exemption from the registration requirements of the Securities Act is available.
Pursuant to Rule 144, Old Notes may generally be resold (a) commencing two years
after the Original Issue Date, in an amount up to, for any three-month period,
the greater of 1% of the Old Notes then outstanding or the average weekly
trading volume of the Old Notes during the four calendar weeks immediately
preceding the filing of the required notice of sale with the Commission and (b)
commencing three years after the Original Issue Date, in any amount and
otherwise without restriction by a Holder who is not, and has not been for the
preceding 90 days, an affiliate of the Company. The Old Notes are eligible for
trading in the PORTAL Market, and may be resold to certain Qualified
Institutional Buyers pursuant to Rule 144A. Certain other exemptions may also be
available under other provisions of the federal securities laws for the resale
of the Old Notes.
In connection with the original issue and sale of the Old Notes, the Company
entered into a Registration Rights Agreement, pursuant to which it agreed to
file with the Commission a registration statement covering the exchange by the
Company of the Notes for the Old Notes (the "Exchange Offer Registration
Statement"). The Registration Rights Agreement provides that (i) the Company
will file the Exchange Offer Registration Statement with the Commission on or
prior to 30 days after the Original Issue Date, (ii) the Company will use its
best efforts to have the Exchange Offer Registration Statement declared
effective by the Commission on or prior to 105 days after the Original Issue
Date, (iii) unless the Offer would not be permitted by applicable law or
Commission policy, the Company will commence the Offer and use its best efforts
to issue on or prior to 30 business days after the date on which the Exchange
Offer Registration Statement is declared effective by the Commission, Notes in
exchange for all Old Notes tendered prior thereto in the Offer and (iv) if
obligated to file a shelf registration statement covering the Old Notes (a
"Shelf Registration Statement"), the Company will file the Shelf Registration
Statement with the Commission on or prior to 30 days after such filing
obligation arises and use its best efforts to cause the Shelf Registration
Statement to be declared effective by the Commission on or prior to 105 days
after such obligation arises and cause such Shelf Registration Statement to
remain effective and usable for a period of two years following the initial
effectiveness thereof. If (a) the Company fails to file any of the registration
statements required by the Registration Rights Agreement on or before the date
specified for such filing, (b) any of such registration statements is not
declared effective by the Commission on or prior to the date specified for such
effectiveness, (c) the Company fails to consummate the Offer within 30 business
days after the date on which the Exchange Offer Registration Statement is
declared effective, or (d) the Shelf Registration Statement or the Exchange
Offer Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
(as defined below) during the periods specified in the Registration Rights
Agreement (each such event referred to in clauses (a) through (d) above a
"Registration Default"), then the Company will pay liquidated damages
("Liquidated Damages") to each Holder of Transfer Restricted Securities, with
respect to the first 90-day period immediately following the occurrence of such
Registration Default in an amount equal to $.10 per week per $1,000 principal
amount of Transfer Restrictive Securities held by such person. The amount of the
Liquidated Damages will increase by an additional $.05 per week per $1,000
principal amount of Transfer Restricted Securities with respect to each
subsequent 60-day period until all Registration Defaults have been cured up to a
maximum amount of Liquidated Damages of $.30 per week per $1,000 principal
amount of Transfer Restricted Securities (regardless of whether one or more than
one Registration Default is outstanding). Following the cure of all Registration
Defaults, the accrual of Liquidated Damages will cease. For purposes of the
foregoing, "Transfer Restricted Securities" means each Old Note until (i) the
date on which such Old Note has been exchanged by a person other than a
broker-dealer for a Note in the Offer, (ii) the date on which such Old Note has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement, (iii) the date on which such
Old Note is distributed to the public pursuant to Rule 144 under the Securities
Act or, (iv) the date on which such Old Note is salable pursuant to Rule 144(k)
under the Securities Act.
The staff of the Commission has issued certain interpretive letters that
concluded, in circumstances similar to those contemplated by the Offer, that new
debt securities issued in a registered exchange for outstanding debt securities,
which new securities are intended to be substantially identical to the
securities for which they are exchanged, may be offered for resale, resold and
otherwise transferred by a holder thereof (other than (i) a broker-dealer who
purchases such securities from the issuer to resell pursuant to Rule 144A
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or any other available exemption under the Securities Act or (ii) a person who
is an affiliate of the issuer within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provision of the Securities Act, PROVIDED that the new securities are acquired
in the ordinary course of such holder's business and such holder has no
arrangement with any person to participate in the distribution of the new
securities. However, a broker-dealer who holds outstanding debt securities that
were acquired for its own account as a result of market-making or other trading
activities may be deemed to be an "underwriter" within the meaning of the
Securities Act and must, therefore, deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the new
securities received by the broker-dealer in any such exchange. See "--Resales of
Notes." The Company has not requested or obtained an interpretive letter form
the Commission staff with respect to this Offer, and the Company and the Holders
are not entitled to rely on interpretive advice provided by the staff to other
persons, which advice was based on the facts and conditions represented in such
letters. However, the Offer is being conducted in a manner intended to be
consistent with the facts and conditions represented in such letters. If any
Holder has any arrangement or understanding with respect to the distribution of
the Notes to be acquired pursuant to the Offer, such Holder (i) could not rely
on the applicable interpretations of the staff of the Commission and (ii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. In addition, each
broker-dealer that receives Notes for its own accounts in exchange for the Old
Notes, where such Old Notes were acquired by such broker-dealers as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Notes. See "Plan
of Distribution" By delivering the Letter of Transmittal, a Holder tendering Old
Notes for exchange will represent and warrant to the Company that the Holder is
acquiring the Notes in the ordinary course of its business and that the Holder
is not engaged in, and does not intend to engage in, a distribution of the
Notes. Any Holder using the Offer to participate in a distribution of the Notes
to be acquired in the Offer must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction. Holders who do not exchange their Old Notes pursuant to this
Offer will continue to hold Old Notes that are subject to restrictions on
transfer.
It is expected that the Notes will be freely transferable by the Holders
thereof, subject to the limitations described in the immediately preceding
paragraph and in "--Resales of Notes." Sales of Notes acquired in the Offer by
Holders who are "affiliates" of the Company within the meaning of their
Securities Act will be subject to certain limitation on resale under Rule 144 of
the Securities Act. Such persons will only be entitled to sell Notes in
compliance with the volume limitations set forth in Rule 144, and sales of Notes
by affiliates will be subject to certain Rule 144 requirements as to the manner
of sale, notice and the availability of current public information regarding the
Company. The foregoing is a summary only of Rule 144 as it may apply to
affiliates of the Company. Any such persons must consult their own legal counsel
for advice as to any restrictions that might apply to the resale of their Notes.
The Notes otherwise will be substantially identical in all material respects
(including interest rate, maturity, security and restrictive covenants) to the
Old Notes for which they may be exchanged pursuant to this Offer.
TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth herein and in the
accompanying Letter of Transmittal, the Company will exchange $1,000 principal
amount of Notes for each $1,000 principal amount of its outstanding Old Notes.
Notes will be issued only in integral multiplies of $1,000 to each tendering
Holder of Old Notes whose Old Notes are accepted in the Offer.
The Notes will bear interest from and including the Original Issue Date.
Accordingly, Holders who receive Notes in exchange for Old Notes will forego
accrued but unpaid interest on their exchanged Old Notes for the period from and
including the Original Issue Date to the date of exchange, but will be entitled
to such interest under the Notes.
As of October , 1996, $110.0 million aggregate principal amount of Old
Notes were outstanding. This Prospectus and the Letter of Transmittal are being
sent to all registered Holders of Old Notes as of that date. Tendering Holders
will not be required to pay brokerage commissions or fees or, subject to the
instructions
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in the Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Offer. The Company will pay all charges and expenses,
other than certain transfer taxes which may be imposed, in connection with the
Offer. See "--Payment of Expenses" below.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the Delaware General Corporation Law in connection with the Offer.
EXPIRATION DATE; EXTENSIONS; TERMINATION
The Offer will expire at 5:00 P.M., New York City time, on
, 1996 subject to extension by the Company by notice to the
Exchange Agent as herein provided. The Company reserves the right to extend the
Offer at its discretion, in which event the term "Expiration Date" shall mean
the time and date on which the Offer as so extended shall expire. The Company
shall notify the Exchange Agent of any extension by oral or written notice and
shall mail to the registered holders of Old Notes an announcement thereof, each
prior to 9:00 A.M., New York City time, on the next business day after the
previously scheduled Expiration Date.
The Company reserves the right to extend or terminate the Offer and not
accept for exchange any Old Notes if any of the events set forth below under
"--Conditions to the Offer" occur and are not waived by the Company, by giving
oral or written notice of such delay or termination to the Exchange Agent. See
"--Conditions to the Offer." The rights reserved by the Company in this
paragraph are in addition to the Company's rights set forth below under the
caption "--Conditions to the Offer."
PROCEDURES FOR TENDERING
The tender to the Company of Old Notes by a Holder thereof pursuant to one
of the procedures set forth below and the acceptance thereof by the Company will
constitute an agreement between such Holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
Except as set forth below, a holder who wishes to tender Old Notes for
exchange pursuant to the Offer must transmit a properly completed and duly
executed Letter of Transmittal, including all other documents required by such
Letter of Transmittal, to the Exchange Agent at the address set forth below
under "Exchange Agent" on or prior to the Expiration Date. In addition, either
(i) certificates for such Old Notes must be received by the Exchange Agent along
with the Letter of Transmittal, or (ii) a timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Old Notes, if such procedure is
available, into the Exchange Agent's account at The Depository Trust Company
pursuant to the procedure of book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date, or (iii) the holder
must comply with the guaranteed delivery procedures described below. LETTERS OF
TRANSMITTAL AND OLD NOTES SHOULD NOT BE SENT TO THE COMPANY. WE ARE NOT ASKING
YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Signatures on a Letter of Transmittal must be guaranteed unless the Old
Notes tendered pursuant thereto are tendered (i) by a registered Holder of Old
Notes who has not completed the box entitled "Special Issuance and Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of any firm
that is a member of a registered national securities exchange or a member of the
National Association of Securities Dealers, Inc. (the "NASD") or a commercial
bank or trust company having an office in the United States (an "Eligible
Institution"). In the event that signatures on a Letter of Transmittal are
required to be guaranteed, such guarantee must be by an Eligible Institution.
The method of delivery of Old Notes and other documents to the Exchange
Agents is at the election and risk of the Holder, but if delivery is by mail it
is suggested that the mailing be made sufficiently in advance of the Expiration
Date to permit delivery to the Exchange Agent before the Expiration Date.
If the Letter of Transmittal is signed by a person other than a registered
Holder of any Old Note tendered therewith, such Old Note must be endorsed or
accompanied by appropriate bond powers, in either case signed exactly as the
name or names of the registered Holder or Holders appear on the Old Note(s).
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If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Old Notes will be resolved by the Company,
whose determination will be final and binding. The Company reserves the absolute
right to reject any or all tenders that are not in proper form or the acceptance
of which would, in the opinion of counsel for the Company, be unlawful. The
Company also reserves the right to waive any irregularities or conditions of
tender as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Offer (including the instructions in the Letter of
Transmittal) will be final and binding. Unless waived, any irregularities in
connection with tenders must be cured within such time as the Company shall
determine. Neither the Company nor the Exchange Agent shall be under any duty to
give notification of defects in such tenders or shall incur liabilities for
failure to give such notification. Tenders of Old Notes will not be deemed to
have been made until such irregularities have been cured or waived. Any Old
Notes received by the Exchange Agent that are not properly tendered and as to
which the irregularities have not been cured or waived will be returned by the
Exchange Agent to the tendering Holder, unless otherwise provided in the Letter
of Transmittal, as soon as practicable following the Expiration Date.
The Company's acceptance for exchange of Old Notes tendered pursuant to the
Offer will constitute a binding agreement between the tendering person and the
Company upon the terms and subject to the conditions of the Offer.
BOOK ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Depository Trust Company for purposes of the Exchange
offer within two business days after the date of this Prospectus, and any
financial institution that is a participant in the Depository Trust Company's
systems may make book-entry delivery of Old Notes by causing the Depository
Trust Company to transfer such Old Notes into the Exchange Agent's account at
the Depository Trust Company in accordance with such Depository Trust Company's
procedures for transfer. However, although delivery of Old Notes may be effected
through book-entry transfer at the Depository Trust Company, the Letter of
Transmittal or facsimile thereof with any required signature guarantees and any
other required documents must, in any case, be transmitted to and received by
the Exchange Agent at one of the addresses set forth below under "Exchange
Agent" on or prior to the Expiration Date or the guaranteed delivery procedures
described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder of the Old Notes, the
certificate number or numbers of such Old Notes and the principal amount of
Old Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof)
together with the certificate(s) representing the Old Notes, or a Book-Entry
Confirmation, as the case may be, and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer, or a Book-Entry Confirmation, as the
case may be, and all other documents required by the Letter of Transmittal
are received by the Exchange Agent within five New York Stock Exchange
trading days after the Expiration Date.
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Upon request of the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer, or any extension of the
Offer, the Company will not be required to issue Notes in respect of any
properly tendered Old Notes not previously accepted, and may terminate the Offer
by oral or written notice to the Exchange Agent and the Holders, or at its
option, modify or otherwise amend the Offer, if any material change occurs that
is likely to affect the Offer, including, but not limited to, the following:
(a) there shall be instituted or threatened any action or proceeding
before any court or governmental agency challenging the Offer or otherwise
directly or indirectly relating to the Offer or otherwise affecting the
Company;
(b) there shall occur any development in any pending action or
proceeding that, in the sole judgement of the Company, would or might (i)
have an adverse effect on the business of the Company, (ii) prohibit,
restrict or delay consummation of the Offer, or (iii) impair the
contemplated benefits of the Offer;
(c) any statute, rule or regulation shall have been proposed or enacted,
or any action shall have been taken by any governmental authority which, in
the sole judgment of the Company, would or might (i) have an adverse effect
on the business of the Company, (ii) prohibit, restrict or delay
consummation of the Offer, or (iii) impair the contemplated benefits of the
Offer; or
(d) there exists, in the sole judgment of the Company, any actual or
threatened legal impediment (including a default or prospective default
under an agreement, indenture or other instrument or obligation to which the
Company is a party or by which it is bound) to the consummation of the
transactions contemplated by the Offer.
The Company expressly reserves the right to terminate the Offer and not
accept for exchange any Old Notes upon the occurrence of any of the foregoing
conditions. In addition, the Company may amend the Offer at any time prior to
5:00 P.M., New York City time, on the Expiration Date if any of the conditions
set forth above occur. Moreover, regardless of whether any of such conditions
has occurred, the Company may amend the Offer in any manner which, in its good
faith judgement, is advantageous to the Holders.
The foregoing conditions are for the sole benefit of the Company and may be
waived by the Company, in whole or in part, in its sole discretion. Any
determination made by the Company concerning an event, development or
circumstance described or referred to above will be final and binding on all
parties.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NOTES
Upon the terms and subject to the conditions of the Offer, the Company will
accept all Old Notes validly tendered prior to 5:00 P.M., New York City time, on
the Expiration Date. The Company will deliver Notes in exchange for Old Notes
promptly following the Expiration Date.
For purposes of the Offer, the Company shall be deemed to have accepted
validly tendered Old Notes when, as and if the Company has given oral or written
notice thereof to the Exchange Agent. The Exchange Agent will act as agent for
the tendering Holders for the purpose of receiving the Notes. Under no
circumstances will interest be paid by the Company or the Exchange Agent by
reason of any delay in making such payment or delivery.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, any such unaccepted Old Notes will be returned, at the Company's
expense, to the tendering Holder thereof as promptly as practicable after the
expiration or termination of the Offer.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth below under "Exchange
Agent." Any such notice of withdrawal must specify the
23
<PAGE>
name of the person having tendered the Old Notes to be withdrawn, identify the
Old Notes to be withdrawn (including the principal amount of such Old Notes),
and (where certificates for Old Notes have been transmitted) specify the name in
which such Old Notes are registered, if different from that of the withdrawing
Holder. If certificates for Old Notes have been delivered or otherwise
identified to the Exchange Agent, then, prior to the release of such
certificates the withdrawing Holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such Holder is an
Eligible Institution. If Old Notes have been tendered pursuant to the procedure
for book-entry transfer described above, any notice of withdrawal must specify
the name and number of the account at the Depository Trust Company to be
credited with the withdrawn Old Notes and otherwise comply with the procedures
of such facility. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Offer. Any Old Notes which have been tendered for exchange but
which are not exchanged for any reason will be returned to the Holder thereof
without cost to such Holder (or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at the Depository Trust Company
pursuant to the book-entry transfer procedures described above, such Old Notes
will be credited to an account maintained with the Depository Trust Company for
the Old Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under "-- Procedures for
Tendering" above at any time on or prior to the Expiration Date.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizing certain federal income tax consequences
of the Offer reflects the opinion of Gibson, Dunn, & Crutcher, counsel to the
Company, as to material federal income tax consequences expected to result from
the Offer. An opinion of counsel is not binding on the Internal Revenue Service
("IRS") or the courts, and there can be no assurances that the IRS will not
take, and that a court would not sustain, a position contrary to that described
below. Moreover, the following discussion is for general information only and
does not constitute comprehensive tax advice to any particular Holder of Old
Notes. The summary is based on the current provisions of the Internal Revenue
Code of 1986, as amended, and applicable Treasury regulations, judicial
authority and administrative pronouncements. The tax consequences described
below could be modified by future changes in the relevant law, which could have
retroactive effect. Each Holder of Old Notes should consult its own tax adviser
as to these and any other federal income tax consequences of the Offer as well
as any tax consequences to it under foreign, state, local or other law.
Exchanges of Old Notes for Notes pursuant to the Offer should be treated as
a modification of the Old Notes that does not constitute a material change in
their terms, and the Company intends to treat the exchanges in that manner.
Under that approach, a Note is treated as a continuation of the corresponding
Old Note. An exchanging Holder's holding period for a Note would include such
Holder's holding period for the Old Note. Such Holder would not recognize any
gain or loss, and such Holder's basis in the Note would be the same as such
Holder's basis in the Old Note. The Offer will result in no federal income tax
consequences to a non-exchanging Holder.
EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as Exchange Agent for
the Offer. All correspondence in connection with the Offer and the Letter of
Transmittal should be addressed to the Exchange Agent as follows:
<TABLE>
<CAPTION>
BY HAND DELIVERY, MAIL OR OVERNIGHT EXPRESS
(INSURED OR REGISTERED RECOMMENDED): BY FACSIMILE:
- --------------------------------------------------------------------------- -----------------
<S> <C>
State Street Bank and Trust Company (617) 664-5365
Two International Place, 4th Floor
Boston, Massachusetts 02110 BY TELEPHONE:
-----------------
Attention: Jackie Thompson -- Corporate Trust Department (617) 664-5344
</TABLE>
24
<PAGE>
Requests for additional copies of the Prospectus or the Letter of
Transmittal should be directed to the Exchange Agent or the Company.
PAYMENT OF EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Offer and will not make any payments to brokers, dealers or
others for soliciting acceptances of the Offer. The Company, however, will pay
reasonable and customary fees and reasonable out-of-pocket expenses to the
Exchange Agent in connection therewith. The Company will also pay the cash
expenses to be incurred in connection with the Offer, including accounting,
legal, printing, and related fees and expenses.
ACCOUNTING TREATMENT
The Notes will be recorded at the same carrying value as the Old Notes, as
reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized. The
Company's expenses of the Offer will be capitalized for accounting purposes.
RESALES OF NOTES
With respect to resales of Notes, based on certain interpretive letters
issued by the staff of the Commission to third parties, the Company believes
that a Holder of Notes (other than (i) a broker-dealer who purchases such Notes
directly from the Company to resell pursuant to Rule 144A or any other available
exemption under the Securities Act or (ii) a person who is an affiliate of the
Company within the meaning of Rule 405 under the Securities Act) who exchanged
Old Notes for Notes in the ordinary course of business and who is not
participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of the Notes,
will be allowed to resell the Notes to the public without further registration
under the Securities Act and without delivering to the purchasers of the Notes a
prospectus that satisfies the requirements of the Securities Act. However, a
broker-dealer who holds Old Notes that were acquired for its own account as a
result of market making or other trading activities may be deemed to be an
"underwriter" within the meaning of the Securities Act and must, therefore,
deliver a prospectus meeting the requirements of the Securities Act. If any
other Holder is deemed to be an "underwriter" within the meaning of the
Securities Act or acquires Notes in the Offer for the purpose of distributing or
participating in a distribution of the Notes, such holder must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a Secondary resale transaction, unless an exemption from
registration is otherwise available. The Company has agreed that for a period of
180 days from the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
25
<PAGE>
PRO FORMA CAPITALIZATION
The following table sets forth the pro forma combined debt and equity
capitalization of Astor Holdings II as of June 30, 1996 and as adjusted to give
effect to the Transactions, including the application of the net proceeds from
the Offering.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
-----------------------
PRO FORMA
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Debt:
UBS Credit Facility:
Term loans............................................................................. $ 53,932 $ --
Revolving loans........................................................................ 11,925 --
Senior Bank Facility:
Bank Term Loan......................................................................... -- 20,000
Revolving Credit Facility (1).......................................................... -- --
Subsidiary debt (2)...................................................................... 1,758 1,758
Senior Subordinated Notes, net of original issue discount................................ -- 109,450
Subordinated Note due to an affiliate (3)................................................ 5,708 5,708
Other (4)................................................................................ 441 441
---------- -----------
Total debt............................................................................... 73,764 137,357
---------- -----------
Stockholder's Equity:
Common stock, $0.01 par value, 10,000 shares authorized, 1,000 shares issued and
outstanding............................................................................. -- --
Additional paid-in capital............................................................... 36,671 36,671
Foreign currency translation adjustment.................................................. (20) (20)
Retained earnings........................................................................ 1,414 (2,522) (5)
---------- -----------
Total stockholder's equity............................................................... 38,065 34,129
---------- -----------
Total capitalization..................................................................... $ 111,829 $ 171,486
---------- -----------
---------- -----------
</TABLE>
- ------------------------
(1) After giving effect to the Transactions and the issuance of $1.8 million of
letters of credit under the Senior Bank Facility, the Company will have
$28.2 million available for revolving borrowings under the Senior Bank
Facility, subject to borrowing base limitations.
(2) Subsidiary debt represents borrowings, by a Belgian subsidiary, from a
Belgian bank in Belgian francs, of which the equivalent of $1.7 million is
secured by a letter of credit issued under the UBS Credit Facility. Upon the
consummation of the Offering, this letter of credit was replaced for the
same amount under the Senior Bank Facility.
(3) Represents an unsecured note payable to the Parent maturing on July 5, 2003.
Interest accrues on such note at the rate of 8% and is payable
semi-annually.
(4) Includes current maturities of $110,000.
(5) Represents the cost of early termination of interest rate swap contracts,
net of tax benefit, of $68,000 and the elimination of unamortized debt
issuance costs related to early extinguishment of term loans under the UBS
Credit Facility, net of a tax benefit, of $3.9 million.
26
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated statement of income for the
year ended March 31, 1996 gives effect to (i) the Prior Transactions and (ii)
the Transactions, including the ADCO Acquisition and the Offering and the
application of the net proceeds therefrom, as if they had occurred on April 1,
1995. The unaudited pro forma consolidated statement of income for the three
months ended June 30, 1996 gives effect to the Transactions, including the ADCO
Acquisition and the Offering and the application of the net proceeds therefrom,
as if they had occurred on April 1, 1995. The unaudited pro forma consolidated
statement of income for the twelve months ended June 30, 1996 gives effect to
the Transactions, including the ADCO Acquisition and the Offering and the
application of the net proceeds therefrom, as if they had occurred on April 1,
1995. The unaudited pro forma condensed consolidated balance sheet at June 30,
1996 gives effect to the Transactions, including the ADCO Acquisition and the
Offering and the application of the net proceeds therefrom, as if they had
occurred on June 30, 1996. The historical financial statements of Astor Holdings
II reflect the Prior Transactions as of June 28, 1995. For purposes of this pro
forma financial information, both the ABI Acquisition and the ADCO Acquisition
are treated as purchases. The unaudited pro forma consolidated statements of
income reflect the preliminary allocation of the purchase price for ADCO to
Astor Holdings II's tangible and intangible assets and liabilities. The final
allocation of the ADCO purchase price and the resulting amortization expense may
differ somewhat from the preliminary estimates.
The unaudited pro forma financial data are based on the historical financial
statements of each of Astor Holdings II, ABI and ADCO, and the assumptions and
adjustments described in the accompanying notes. The unaudited pro forma
consolidated financial data are provided for informational purposes only and do
not purport to represent what Astor Holdings II's financial position or results
of operations actually would have been if the foregoing transactions occurred as
of the dates indicated or what such results will be for any future periods.
The unaudited pro forma financial data are based on assumptions that the
Company believes are reasonable and should be read in conjunction with the
Consolidated Financial Statements and the related notes thereto for each of
Astor Holdings II, ABI and ADCO included elsewhere in this Memorandum.
27
<PAGE>
ASTOR HOLDINGS II
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1996
---------------------------------------------------------------------------------------
HISTORICAL ASTOR
HOLDINGS II FOR HISTORICAL ABI
THE YEAR ENDED FOR THE THREE ABI PRO FORMA FOR HISTORICAL ADCO FOR
MARCH 31, 1996 MONTHS ENDED JUNE ACQUISITION PRIOR THE YEAR ENDED
(1) 28, 1995 (2) ADJUSTMENTS TRANSACTIONS DECEMBER 31, 1995
----------------- ----------------- ------------- ------------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales......................... $ 135,418 $ 24,451 $ (1,080)(3) $ 158,789 $ 47,411
Cost of sales................. 108,176 18,546 (1,080)(3) 125,390 32,264
(252)(4)
-------- ------- ------------- ------------- -------
Gross profit before
depreciation................. 27,242 5,905 252 33,399 15,147
Selling, general and
administrative expenses...... 12,893 2,644 -- 15,537 6,087
-------- ------- ------------- ------------- -------
Operating profit before non-
recurring items, interest,
depreciation, amortization,
taxes, reorganization items
and extraordinary items...... 14,349 3,261 252 17,862 9,060
Income from investment in
Rheochem..................... 91 276 -- 367 --
Management fee income
(expense).................... -- -- -- -- (151)
Other income.................. -- -- -- -- 16
-------- ------- ------------- ------------- -------
EBITDA (6).................... 14,440 3,537 252 18,229 8,925
Non-recurring items (7)....... 1,730 -- -- 1,730 310
Depreciation and
amortization................. 5,416 823 130(8) 6,369 1,169
Interest expense.............. 5,252 123 1,170 (10 6,545 17
Dividends on preferred stock
of subsidiary................ -- -- -- -- 280
-------- ------- ------------- ------------- -------
Income before taxes and
extraordinary items.......... 2,042 2,591 (1,048) 3,585 7,149
Provision for (benefit from)
income taxes................. (3,434) 875 (2,559) 2,877
-------- ------- ------------- ------------- -------
Income before extraordinary
items........................ $ 5,476 $ 1,716 $ (1,048) $ 6,144 $ 4,272
-------- ------- ------------- ------------- -------
-------- ------- ------------- ------------- -------
<CAPTION>
TRANSACTION ASTOR HOLDINGS
ADJUSTMENTS II PRO FORMA
------------- ----------------
<S> <C> <C>
Sales......................... $ -- $ 206,200
Cost of sales................. -- 157,654
------------- ----------------
Gross profit before
depreciation................. -- 48,546
Selling, general and
administrative expenses...... -- 21,624
------------- ----------------
Operating profit before non-
recurring items, interest,
depreciation, amortization,
taxes, reorganization items
and extraordinary items...... -- 26,922
Income from investment in
Rheochem..................... -- 367
Management fee income
(expense).................... 151(5) --
Other income.................. -- 16
------------- ----------------
EBITDA (6).................... 151 27,305
Non-recurring items (7)....... -- 2,040
Depreciation and
amortization................. 1,695(9) 9,233
Interest expense.............. 7,349 (11 13,911
Dividends on preferred stock
of subsidiary................ (280)(12) --
------------- ----------------
Income before taxes and
extraordinary items.......... (8,613) 2,121
Provision for (benefit from)
income taxes................. (2,885)(13) (2,567)
------------- ----------------
Income before extraordinary
items........................ $ (5,728) $ 4,688
------------- ----------------
------------- ----------------
</TABLE>
(See footnotes on following page)
28
<PAGE>
ASTOR HOLDINGS II
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(1) Represents Astor Holdings II's consolidated results of operations for the
fiscal year ended March 31, 1996, which include the results of operations
of ABI since its acquisition on June 28, 1995.
(2) Represents ABI's historical operating results for the preacquisition period
from April 1, 1995 to June 28, 1995.
(3) Represents the elimination of Astor Holdings II's sales to ABI and costs of
such sales for the preacquisition period from April 1, 1995 to June 28,
1995.
(4) Represents the elimination of additional cost of sales resulting from the
write-up of finished goods inventory to fair market value for the ABI
Acquisition due to its nonrecurring nature.
(5) Represents the capitalization of management fees paid to former
stockholders of ADCO.
(6) EBITDA represents earnings before interest expense, income tax expense,
depreciation and amortization expense, extraordinary items and
non-recurring items. Information concerning EBITDA has been included as it
is used by certain investors as a measure of a company's ability to service
its debt. EBITDA should not be used as an alternative to, or be construed
as more meaningful than, operating income or cash flows or as an indicator
of the operating performance or liquidity of Astor Holdings II.
(7) Represents non-recurring flood expense of $500,000, moving expense of
$374,000 and reorganization expense of $856,000 incurred by Astor Holdings
II and the new packaging expense of $310,000 incurred by ADCO.
(8) Represents a reduction in depreciation expense of $496,000 resulting from
adjusting property, plant and equipment to fair market value and assigning
new useful lives to property, plant and equipment for the ABI Acquisition
and the additional amortization of new intangibles, including goodwill over
25 years, for the three months prior to the ABI Acquisition of $626,000.
The revised depreciation policy is the straight-line method of depreciation
with asset lives of 20 to 31.5 years for buildings and 10 years for
machinery and equipment.
(9) Represents the additional amortization of new intangibles from the ADCO
Acquisition of $1.1 million, including goodwill over 40 years and deferred
financing costs over 10 years, and the additional depreciation expense
resulting from the write-up of property, plant and equipment to fair market
value for the ADCO Acquisition of $625,000. The revised depreciation policy
is the straight-line method of depreciation with asset lives of 40 years
for buildings and 10 years for machinery and equipment.
(10) Represents the additional interest expense on the borrowings under the UBS
Credit Facility utilized to purchase ABI for the three months prior to the
ABI Acquisition.
(11) Reflects the pro forma interest expense as follows:
<TABLE>
<CAPTION>
Senior Subordinated Notes, net of original issue discount
(interest rate of 10.5%)...................................... $11,550,000
<S> <C>
Bank Term Loan (assumed interest rate of 9.125%)............... 1,825,000
Subordinated Note due to an affiliate.......................... 342,000
Subsidiary debt................................................ 194,000
Elimination of historical interest charge...................... (6,562,000)
----------
$7,349,000
----------
----------
</TABLE>
An increase of 1/8% in the interest rate on the variable rate pertaining to
the above debt instruments would result in an interest expense increase of
$27,000.
(12) Represents the elimination of cash dividends paid to former holders of
preferred stock of ADCO's subsidiary.
(13) Represents the tax benefit resulting from higher expenses, primarily
interest costs.
29
<PAGE>
ASTOR HOLDINGS II
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1996
-------------------------------------------------------------------
HISTORICAL ASTOR TRANSACTION
HOLDINGS II HISTORICAL ADCO ADJUSTMENTS PRO FORMA
---------------- ---------------- ------------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Sales........................................ $ 43,222 $ 13,995 $ -- $ 57,217
Cost of sales................................ 33,318 9,858 -- 43,176
------- ------- ------------- -------
Gross profit before depreciation............. 9,904 4,137 -- 14,041
Selling, general and administrative
expenses.................................... 4,433 1,498 -- 5,931
------- ------- ------------- -------
Operating profit before interest,
depreciation, amortization, taxes,
extraordinary items......................... 5,471 2,639 -- 8,110
Income from investment in Rheochem........... 216 -- -- 216
Management fee income (expense).............. -- (40) 40(1) --
Other income (expense)....................... -- 24 -- 24
------- ------- ------------- -------
EBITDA (2)................................... 5,687 2,623 40 8,350
Depreciation and amortization................ 1,553 326 389(3) 2,268
Interest expense............................. 1,669 (45) 1,854(4) 3,478
Dividends on preferred stock of subsidiary... -- 70 (70)(5) --
------- ------- ------------- -------
Income before taxes and extraordinary
items....................................... 2,465 2,272 (2,133) 2,604
Provision for income taxes................... 1,051 902 (785)(6) 1,168
------- ------- ------------- -------
Income before extraordinary items............ $ 1,414 $ 1,370 $ (1,348) $ 1,436
------- ------- ------------- -------
------- ------- ------------- -------
</TABLE>
(See footnotes on following page)
30
<PAGE>
ASTOR HOLDINGS II
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(1) Represents the capitalization of management fees paid to former
stockholders of ADCO.
(2) EBITDA represents earnings before interest expense, income tax expense,
depreciation and amortization expense, extraordinary items and
non-recurring items. Information concerning EBITDA has been included as it
is used by certain investors as a measure of a company's ability to service
its debt. EBITDA should not be used as an alternative to, or be construed
as more meaningful than, operating income or cash flows or as an indicator
of the operating performance or liquidity of Astor Holdings II.
(3) Represents the additional amortization of new intangibles from the ADCO
Acquisition of $267,000, including goodwill over 40 years and deferred
financing costs over 10 years, and the additional depreciation expense
resulting from the write-up of property, plant and equipment to fair market
value for the ADCO Acquisition of $122,000. The revised depreciation policy
is the straight line method of depreciation with asset lives of 40 years
for buildings and 10 years for machinery and equipment.
(4) Reflects the pro forma interest expense as follows:
<TABLE>
<S> <C>
Senior Subordinated Notes, net of original issue discount
(interest rate of 10.5%)........................................ $2,888,000
Bank Term Loan (assumed interest rate of 9.125%)................ 456,000
Subordinated Note due to an affiliate........................... 85,000
Subsidiary debt................................................. 49,000
Elimination of historical interest charge....................... (1,624,000)
----------
$1,854,000
----------
----------
</TABLE>
An increase of 1/8% in the interest rate on the variable rate pertaining to
the above debt instruments would result in an interest expense increase of
$7,000.
(5) Represents the elimination of cash dividends paid to former holders of
preferred stock of ADCO's subsidiary.
(6) Represents tax benefits resulting from higher expenses, primarily interest
costs.
31
<PAGE>
ASTOR HOLDINGS II
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JUNE 30, 1996
-------------------------------------------------------------------
HISTORICAL ASTOR TRANSACTION
HOLDINGS II HISTORICAL ADCO ADJUSTMENTS PRO FORMA
---------------- ---------------- ------------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Sales........................................ $ 161,810 $ 48,268 $ -- $ 210,078
Cost of sales................................ 126,911 33,504 (337)(1) 160,078
-------- ------- ------------- --------
Gross profit before depreciation............. 34,899 14,764 337 50,000
Selling, general and administrative
expenses.................................... 16,191 5,920 -- 22,111
-------- ------- ------------- --------
Operating profit before non-recurring item,
interest, depreciation, amortization, taxes,
extraordinary items......................... 18,708 8,844 337 27,889
Income from investment in Rheochem........... 307 -- -- 307
Management fee income (expense).............. -- (157) 157(2) --
Other income................................. -- 106 -- 106
-------- ------- ------------- --------
EBITDA (3)................................... 19,015 8,793 494 28,302
Non-recurring items (4)...................... 688 535 -- 1,223
Depreciation and amortization................ 6,416 1,232 1,695(5) 9,343
Interest expense............................. 6,548 (165) 7,528(6) 13,911
Dividends on preferred stock of subsidiary... -- 280 (280)(7) --
-------- ------- ------------- --------
Income before taxes and extraordinary
items....................................... 5,363 6,911 (8,449) 3,825
Provision for (benefit from) income taxes.... (2,383) 2,791 (2,818)(8) (2,410)
-------- ------- ------------- --------
Income before extraordinary items............ $ 7,746 $ 4,120 $ (5,631) $ 6,235
-------- ------- ------------- --------
-------- ------- ------------- --------
</TABLE>
(See footnotes on following page)
32
<PAGE>
ASTOR HOLDINGS II
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(1) Represents the elimination of the additional cost of sales resulting from
the write-up of finished goods inventory to fair market value for the ABI
Acquisition due to non-recurring nature.
(2) Represents the capitalization of management fees paid to former
stockholders of ADCO.
(3) EBITDA represents earnings before interest expense, income tax expense,
depreciation and amortization expense, extraordinary items and
non-recurring items. Information concerning EBITDA has been included as it
is used by certain investors as a measure of a company's ability to service
its debt. EBITDA should not be used as an alternative to, or be construed
as more meaningful than, operating income or cash flows or as an indicator
of the operating performance or liquidity of Astor Holdings II.
(4) Represents the non-recurring expenses related to new packaging expense at
ADCO of $535,000 and flood expense of $500,000 and moving expense of
$188,000 at Astor Holdings II.
(5) Represents the additional amortization of new intangibles from the ADCO
Acquisition of $1.1 million, including goodwill over 40 years and deferred
financing costs over 10 years, and the additional depreciation expense
resulting from the write-up of property, plant and equipment to fair market
value for the ADCO Acquisition of $625,000. The revised depreciation policy
is the straight-line method of depreciation with asset lives of 40 years
for buildings and 10 years for machinery and equipment.
(6) Reflects the interest expense on the pro forma debt instruments as follows:
<TABLE>
<S> <C>
Senior Subordinated Notes, net of original issue discount
(interest rate of 10.5%)....................................... $11,550,000
Bank Term Loans (assumed interest rate of 9.125%).............. 1,825,000
Subordinated Note due to an affiliate.......................... 342,000
Subsidiary debt................................................ 194,000
Elimination of historical interest charge...................... (6,383,000)
----------
$7,528,000
----------
----------
</TABLE>
An increase of 1/8% in the interest rate on the variable rate pertaining to
the above debt instruments would result in an interest expense increase of
$27,000
(7) Represents the elimination of cash dividends paid to former holders of
preferred stock of ADCO's subsidiary.
(8) Represents tax benefits resulting from higher expenses, primarily interest
costs.
33
<PAGE>
ASTOR HOLDINGS II
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
------------------------------------------------
HISTORICAL
---------------------- ASTOR
ASTOR TRANSACTION HOLDINGS II
HOLDINGS II ADCO ADJUSTMENTS PRO FORMA
----------- --------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................... $ 1,035 $ 3,559 $ (4,594)(1) $ --
Accounts receivable, net..................................... 24,159 7,601 -- 31,760
Receivables from affiliates.................................. 304 -- -- 304
Receivables from Rheochem.................................... 606 -- -- 606
Inventory.................................................... 21,092 5,781 485(2) 27,358
Prepaid expenses and other current assets.................... 3,635 204 -- 3,839
----------- --------- ----------- -----------
Total current assets........................................... 50,831 17,145 (4,109) 63,867
Property, plant and equipment, net............................. 50,847 9,075 10,175(3) 70,097
Investment in Rheochem......................................... 4,194 -- -- 4,194
Goodwill....................................................... 29,631 7,423 29,312(4) 66,366
Intangible assets, net......................................... 6,465 471 (2,304)(5) 4,632
Deferred income taxes, net..................................... 3,299 353 1,961(6) 5,613
Other assets................................................... -- 14 -- 14
----------- --------- ----------- -----------
Total assets................................................... $ 145,267 $ 34,481 $ 35,035 $ 214,783
----------- --------- ----------- -----------
----------- --------- ----------- -----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable............................................. $ 18,587 $ 2,054 $ -- $ 20,641
Accrued interest payable..................................... 875 -- -- 875
Accrued expenses............................................. 6,685 2,306 130(7) 9,121
Current portion of long term debt............................ 4,539 -- (4,429)(8) 110
----------- --------- ----------- -----------
Total current liabilities...................................... 30,686 4,360 (4,299) 30,747
Long term debt................................................. 63,517 -- 68,022 (10 131,539
Subordinated Note due to an affiliate (9)...................... 5,708 -- -- 5,708
Deferred income taxes.......................................... 4,772 1,031 3,360 (11 9,163
Other long-term liabilities.................................... 2,519 -- 978 (12 3,497
ADCO redeemable preferred stock of subsidiary.................. -- 3,920 (3,920) 13) --
Stockholder's equity:
ADCO stockholders' equity.................................... -- 25,170 (25,170) 14) --
Common stock................................................. -- -- -- --
Additional paid-in capital................................... 36,671 -- -- 36,671
Retained earnings............................................ 1,414 -- (3,936) 15) (2,522)
Foreign currency translation adjustment...................... (20) -- -- (20)
----------- --------- ----------- -----------
Total stockholder's equity..................................... 38,065 25,170 (29,106) 34,129
----------- --------- ----------- -----------
Total liabilities and stockholder's equity..................... $ 145,267 $ 34,481 $ 35,035 $ 214,783
----------- --------- ----------- -----------
----------- --------- ----------- -----------
</TABLE>
(See footnotes on following page)
34
<PAGE>
ASTOR HOLDINGS II
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(1) Represents the use of ADCO cash of $3.6 million to redeem outstanding
preferred stock of ADCO's subsidiary and the use of Astor's existing cash of
$1,035,000 to fund the Transactions. See note 10 below.
(2) Represents the estimated write-up of finished goods inventory to fair market
value in connection with the purchase price allocation.
(3) Represents the estimated write-up of property, plant and equipment to fair
market value in connection with the purchase price allocation.
(4) Represents $36.7 million of excess purchase price over the fair market value
of the net assets acquired less the elimination of ADCO's existing goodwill
of $7.4 million. Management's preliminary allocation of the purchase price
for ADCO is as follows:
<TABLE>
<CAPTION>
Purchase price:
<S> <C>
Cash portion................................................... $54,414,000
Estimated fees and expenses.................................... 4,989,000
----------
Total...................................................... $59,403,000
----------
----------
Allocated as follows:
Existing book value of ADCO.................................... $25,170,000
Accrued dividend on redeemable preferred stock of ADCO
subsidiary.................................................... (117,000)
Increase in inventory to estimated fair market value........... 485,000
Estimated increase in property, plant and equipment to fair
market value.................................................. 10,175,000
Elimination of existing ADCO goodwill.......................... (7,423,000)
Transaction related liabilities................................ (2,261,000)
Increase in deferred tax....................................... (3,360,000)
Increase in goodwill........................................... 36,734,000
----------
Total...................................................... $59,403,000
----------
----------
</TABLE>
(5) Represents deferred debt issuance costs related to the Offering of $3.5
million less the elimination of unamortized debt issuance costs related to
early extinguishment of term loans under the UBS Credit Facility of $5.8
million.
(6) Represents the federal and foreign tax benefits on the $5.8 million
extraordinary loss for write-off of debt issuance costs related to the early
extinguishment of term loans under the UBS Credit Facility.
(7) Represents the current portion of the transaction-related liabilities
resulting from the allocation of purchase price of $184,000 less the tax
benefit on the cost of early termination of interest swap contracts of
$54,000.
(8) Represents the repayment of current portion of long-term debt under the UBS
Credit Facility.
(9) Represents an unsecured loan note payable to the Parent maturing on July 5,
2003. Interest accrues on such note at the rate of 8% and is payable
semi-annually.
35
<PAGE>
ASTOR HOLDINGS II
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (CONTINUED)
(10) Represents the proceeds from the Offering of $109.5 million and the Bank
Term Loan under the Senior Bank Facility of $20.0 million, net of repayment
of long-term debt of $65.9 million. The sources and uses of funds of the
Transactions are as follows:
<TABLE>
<CAPTION>
Source of funds:
<S> <C>
Cash on hand.............................................. $ 1,035,000
Bank Term Loan............................................ 20,000,000
Proceeds from the Offering................................ 109,450,000
-----------
Total sources......................................... $130,485,000
-----------
-----------
Use of funds:
ADCO cash purchase price.................................. $54,414,000
Redemption of ADCO's preferred stock...................... 478,000
Repayment of borrowings under UBS Credit Facility......... 65,857,000
Fees and expenses......................................... 9,736,000
-----------
Total uses............................................ $130,485,000
-----------
-----------
</TABLE>
(11) Represents the net deferred tax liabilities resulting from the allocation
of purchase price for the ADCO Acquisition.
(12) Represents the long term portion of the transaction-related liabilities
resulting from the allocation of purchase price.
(13) Represents ADCO's redemption of preferred stock of its subsidiary of $3.9
million.
(14) Represents the elimination of ADCO's historical stockholders' equity
resulting from the application of purchase accounting.
(15) Represents the cost of early termination of interest swap contracts, net of
tax benefit, of $68,000 and the elimination of unamortized debt issuance
costs related to early extinguishment of term loans under the UBS Credit
Facility, net of tax benefit, of $3.9 million.
36
<PAGE>
ASTOR HOLDINGS II
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of March 31 of
each of the years 1992 through 1996 and for the years then ended have been
derived from the Consolidated Financial Statements of Astor Holdings II. The
Consolidated Financial Statements of Astor Holdings II for each of the fiscal
years ended March 31, 1994, 1995 and 1996 were audited by Ernst & Young LLP,
independent auditors, and appear elsewhere in this Memorandum. The selected
financial data as of and for the years ended March 31, 1992 and 1993 and as of
June 30, 1995 and 1996 and for the three months then ended have been derived
from unaudited consolidated financial statements of Astor Holdings II, but
include all adjustments which are, in the opinion of management, necessary for a
fair presentation of Astor Holdings II's financial position at such dates and
results of operations for such periods. Astor Holdings II, the parent
corporation of Astor Corporation, has guaranteed the obligations of Astor
Corporation under the Notes and has no material operating assets or liabilities
or operations other than its ownership of all the outstanding common stock of
Astor Corporation, the outstanding $1.7 million (liquidation preference) of
preferred voting ordinary stock of ABI Acquisition 1 plc, a subsidiary of Astor
Corporation, a subordinated intercompany note payable to the Parent in the
amount of $5.7 million and a corresponding subordinated intercompany note
receivable from ABI Acquisition 1 plc in the amount of $5.7 million. Operating
results for the three months ended June 30, 1996 are not necessarily indicative
of the results that may be expected for the year ending March 31, 1997. The
selected consolidated financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and the related notes
thereto for each of Astor Holdings II and ABI included elsewhere in this
Memorandum.
37
<PAGE>
ASTOR HOLDINGS II
SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
AS OF OR FOR THE
THREE MONTHS ENDED
AS OF AND FOR YEARS ENDED MARCH 31, JUNE 30,
-------------------------------------------------------- --------------------
1992 1993 1994 1995 1996(1) 1995 1996
---------- --------- ---------- --------- ---------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales.................................... $ 48,052 $ 47,837 $ 54,665 $ 61,852 $ 135,418 $ 16,830 $ 43,222
Gross profit before depreciation......... (12,606) 789 3,759 7,302 27,242 2,246 9,904
Selling, general and administrative
expenses................................ 5,694 3,505 3,652 4,132 12,893 1,319 4,433
Depreciation and amortization............ 3,274 4,870 4,041 1,993 5,416 553 1,553
Non-recurring items...................... 202 1,315 27,139(2) 1,088 1,730 856 --
---------- --------- ---------- --------- ---------- --------- ---------
Income (loss) from operations............ (21,776) (8,901) (31,073) 89 7,203 (482) 3,918
Income from Rheochem..................... -- -- -- -- 91 -- 216
Interest and other income................ 65 7 5 -- -- 12 --
Interest expense......................... 4,220 1,015 1,476 1,606 5,251 385 1,669
---------- --------- ---------- --------- ---------- --------- ---------
Income (loss) before income taxes and
extraordinary items..................... (25,931) (9,909) (32,544) (1,517) 2,043 (855) 2,465
Provision for (benefit from) income
taxes................................... -- -- -- -- (3,434 (3) -- 1,051
---------- --------- ---------- --------- ---------- --------- ---------
Income (loss) before extraordinary
items................................... (25,931) (9,909) (32,544) (1,517) 5,477 (855) 1,414
Extraordinary items...................... -- -- -- -- 44,933(4) 44,933(4) --
---------- --------- ---------- --------- ---------- --------- ---------
Net income (loss)........................ $ (25,931) $ (9,909) $ (32,544) $ (1,517) $ 50,410 $ 44,078 $ 1,414
---------- --------- ---------- --------- ---------- --------- ---------
---------- --------- ---------- --------- ---------- --------- ---------
OTHER DATA:
EBITDA (5)............................... $ (18,300) $ (2,716) $ 107 $ 3,170 $ 14,440 $ 927 $ 5,687
EBITDA margin (6)........................ N/A N/A 0.2% 5.1% 10.7% 5.5% 13.2%
EBITDA to interest expense, net.......... N/A N/A 0.1x 2.0x 2.7x 2.5x 3.4x
Total debt to EBITDA (7)................. N/A N/A N/M 20.2x 5.3x 21.3x 3.2x
Capital expenditures..................... $ 680 $ 70 $ 260 $ 274 $ 4,640 $ 46 $ 851
Ratio of earnings to fixed charges (8)... N/A N/A N/A 0.3x 1.3x N/A 2.4x
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, AS OF JUNE 30,
--------------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1995 1996
--------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets........................ $ 16,675 $ 12,313 $ 10,192 $ 13,475 $ 47,479 $ 48,695 $ 50,831
Current liabilities................... 1,975 3,743 6,239 13,707 27,604 26,003 30,686
Total assets.......................... 66,819 58,344 28,131 30,166 142,906 141,617 145,267
Total debt............................ 44,916 55,336 56,696 64,075 76,524 79,164 73,764
Stockholder's equity (deficit)........ (147) (10,055) (42,599) (44,115) 36,358(9) 30,339 38,065
</TABLE>
(See footnotes on following page)
38
<PAGE>
ASTOR HOLDINGS II
SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)
(1) Represents Astor Holdings II's consolidated results of operations for the
fiscal year ended March 31, 1996, which includes the results of operations
of ABI since its acquisition on June 28, 1995.
(2) In fiscal 1994, Astor Holdings II recorded a provision of $25.9 million,
representing the writedown of property, plant and equipment and other
intangible assets in order to recognize a permanent impairment of value.
(3) During this period Astor Holdings II, Inc. recognized a net deferred tax
asset primarily with respect to net operating loss carryforwards.
(4) Astor Holdings II recorded a gain on the forgiveness of debt of $44.9
million upon the effectiveness of Petrowax's Reorganization Plan as of June
28, 1995.
(5) EBITDA represents earnings before interest expense, income tax expense,
depreciation and amortization expense, extraordinary items and non-recurring
items. Information concerning EBITDA has been included as it is used by
certain investors as a measure of a company's ability to service its debt.
EBITDA should not be used as an alternative to, or be construed as more
meaningful than, operating income or cash flows or as an indicator of the
operating performance or liquidity of Astor Holdings II.
(6) EBITDA margin is the ratio of EBITDA to sales, expressed as a percentage.
(7) For purposes of calculating total debt to EBITDA, EBITDA for the three
months ended June 30, 1996 and 1995 has been annualized.
(8) For the purposes of determining the ratio of earnings to fixed charges,
earnings consist of income before income taxes, extraordinary items and
fixed charges. Fixed charges consist of interest expense, amortization of
debt expense and the interest component of rent expense. Earnings for the
years ended March 31, 1992, 1993 and 1994 and for the three months ended
June 30, 1995 were insufficient to cover fixed charges by $25.9 million,
$9.9 million, $32.5 million and $855,000, respectively.
(9) In addition to the forgiveness of debt by Petrowax's creditors, the sole
stockholder recapitalized Astor Holdings II on June 28, 1995 by contributing
$30.7 million to its equity.
39
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
"Selected Consolidated Financial Data" and the Consolidated Financial Statements
and the related notes included elsewhere in this Memorandum. The consolidated
financial data presented below is that of Astor Holdings II. Astor Holdings II
is the parent corporation of Astor Corporation, has guaranteed the obligations
of Astor Corporation under the Notes and has no material assets or liabilities
or operations other than its ownership of all the outstanding common stock of
Astor Corporation, the outstanding $1.7 million (liquidation preference) of
preferred voting ordinary stock of ABI Acquisition 1 plc, a subsidiary of Astor
Corporation, a subordinated intercompany note payable to the Parent in the
amount of $5.7 million and a corresponding subordinated intercompany note
receivable from ABI Acquisition 1 plc in the amount of $5.7 million. As a
result, except for its ownership of the preferred voting ordinary stock of ABI
Acquisition 1 plc, the consolidated financial statements of Astor Holdings II
and Astor Corporation are substantially identical.
GENERAL
The current business and structure of Astor were created through the
combination of Astor Corporation and ABI in June 1995. This combination created
one of the largest producers of specialty waxes in the world, based on sales,
and a recognized U.K. manufacturer and marketer of adhesives and sealants. The
ABI Acquisition improved Astor's in-house marketing and packaging capabilities,
resulting in improved product distribution and improved Astor's product
development capabilities, allowing the development of more higher-margin
value-added products.
Astor Corporation was incorporated as a new venture in 1989 in the State of
Delaware under the name Petrowax for the purpose of developing a wax production
business. As part of its start-up plan of operations, Petrowax acquired two lube
oil and wax production facilities from Quaker State. Shortly after the
completion of the acquisition in 1990 and prior to the acquisition of ABI and
the acquisition of ADCO, Petrowax encountered a number of operational and
financial difficulties, including (i) difficulties in converting the acquired
facilities to the production of specialty waxes, (ii) surplus inventories
resulting from long lead times required to secure customer approvals, an
exclusive reseller's inability to perform its obligations to purchase wax from
Petrowax and the delay in converting one of the facilities, (iii) a lack of
extensive process knowledge and limited product development capabilities
resulting in the production of low-margin products and (iv) insufficient working
capital, forcing Petrowax to liquidate inventory to fund day-to-day operations.
As a result of these and other difficulties and inefficiencies, Petrowax
voluntarily filed for relief pursuant to Chapter 11 of the U.S. Bankruptcy Code
on February 25, 1992.
Following the Filing, Petrowax took a number of steps to improve its
competitive position, including (i) the recruitment of turnaround management,
(ii) the renegotiation of its primary supply contract to provide for improved
pricing and the delivery of higher quality waxy components of A/B Crude, (iii)
the termination of Petrowax's exclusive marketing contract with its reseller,
the establishment of a number of non-exclusive reseller arrangements and the
increase of Petrowax's direct sales of its products, (iv) the arrangement of
debtor-in-possession financing and additional working capital to provide for
short-term working capital needs, (v) the renegotiation of various
transportation and terminaling contracts and (vi) the implementation of a number
of other overhead reduction measures.
After the above described corrective measures were taken, Petrowax focused
on its emergence from bankruptcy and improving its strategic position in the
marketplace. In June 1994, Mr. Boyd Wainscott, an experienced multinational
chemical company manager, joined Petrowax to lead it in developing and
implementing a strategic business plan. This plan included (i) improving
marketing functions and product distribution, (ii) developing more
higher-margin, value-added products, (iii) improving manufacturing operations
and increasing manufacturing capacity, and (iv) pursuing acquisition
opportunities in the consolidating specialty chemicals industry.
In June 1995, Petrowax emerged from bankruptcy, was recapitalized, acquired
ABI and changed its name from Petrowax to Astor Corporation, a tradename of ABI.
The acquisition of ABI has resulted in a significant improvement in the
operating results of Astor.
40
<PAGE>
Of Astor's total sales of $135.4 million for fiscal year 1996, specialty wax
products represented approximately 90%. Astor has facilities in the U.S., the
U.K. and Belgium and sells its products to customers in over 50 countries.
RESULTS OF OPERATIONS
The following table sets forth, on a comparative basis, certain income
statement data as a percentage of sales for the last three fiscal years ended
March 31 and the three months ended June 30, 1995 and 1996:
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED ENDED
MARCH 31, JUNE 30,
------------------- ------------
1994 1995 1996 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Sales........................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales................................... 93.1 88.2 79.9 86.7 77.1
----- ----- ----- ----- -----
Gross profit before depreciation................ 6.9 11.8 20.1 13.3 22.9
Selling, general and administrative expenses.... 6.7 6.7 9.5 7.8 10.2
----- ----- ----- ----- -----
Income from operations before non-recurring
items.......................................... 0.2 5.1 10.6 5.5 12.7
Income from investment in Rheochem.............. -- -- 0.1 -- 0.5
----- ----- ----- ----- -----
EBITDA margin (1)............................... 0.2% 5.1% 10.7% 5.5% 13.2%
</TABLE>
- ------------------------
(1) Excludes non-recurring items.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
SALES. Sales increased by $26.4 million from $16.8 million for the three
months ended June 30, 1995 to $43.2 million for the three months ended June 30,
1996. Of this sales increase, $23.9 million is related to the acquisition of ABI
in June 1995. Excluding the impact of ABI, sales increased $2.5 million, or 15%,
as a result of (i) higher sales volume due to the capacity improvements achieved
from the capital expenditure program completed in January 1996, (ii) higher
specialty wax prices realized in the U.S., (iii) a more focused marketing effort
provided by the addition of ABI's sales force resulting in greater sales volume
and (iv) a product mix shift to higher priced products.
GROSS PROFIT. Gross profit increased by $7.7 million from $2.2 million for
the three months ended June 30, 1995 to $9.9 million for the three months ended
June 30, 1996, with $6.9 million of the increase attributable to the acquisition
of ABI. Gross profit as a percentage of sales increased from 13.3% for the three
months ended June 30, 1995 to 22.9% for the three months ended June 30, 1996,
primarily as a result of the acquisition. Excluding the acquisition of ABI,
gross profit as a percentage of sales improved to 15.5% principally as a result
of the reasons discussed above.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $3.1 million from $1.3 million for the
three months ended June 30, 1995 to $4.4 million for the three months ended June
30, 1996. Selling, general and administrative expenses as a percentage of sales
increased from 7.8% for the three months ended June 30, 1995 to 10.2% for the
three months ended June 30, 1996. The increase was primarily associated with the
expansion of the business as a result of the acquisition of ABI. The $3.1
million increase was comprised of (i) $1.3 million of additional selling related
costs associated with ABI product sales, (ii) $1.3 million of administrative
costs associated with the acquired ABI businesses and (iii) $0.5 million
associated with planned staff increases to support the new larger company and
Astor's growth strategy.
INCOME FROM RHEOCHEM. Astor's share of equity earnings from Rheochem (as
defined herein) was $0.2 million for the three months ended June 30, 1996
compared to no income from Rheochem for the three months ended June 30, 1995.
Astor acquired its interest in Rheochem on June 28, 1995 with the acquisition of
ABI. See "Business -- Rheochem Joint Venture."
41
<PAGE>
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased by $1.0 million from $0.6 million for the three months ended June 30,
1995 to $1.6 million for the three months ended June 30, 1996 primarily due to
the acquisition of ABI.
INTEREST EXPENSE, NET. Interest expense, net, increased by $1.3 million
from $0.4 million for the three months ended June 30, 1995 to $1.7 million for
the three months ended June 30, 1996. The increase was primarily due to the
additional debt incurred in connection with the acquisition of ABI.
NONRECURRING EXPENSES. The $0.9 million of reorganization expenses for the
three months ended June 30, 1995 were primarily attributable to professional
fees associated with Astor's emergence from bankruptcy. No costs related to the
Prior Transactions occurred in the 1996 quarter or are expected in the future.
EXTRAORDINARY ITEM -- GAIN ON CANCELLATION OF DEBT. An extraordinary item
resulting from the gain on cancellation of $44.9 million of debt was recorded in
the three months ended June 30, 1995 reflecting the discharge of pre-petition
indebtedness of Petrowax.
NET INCOME BEFORE EXTRAORDINARY ITEMS. As a result of the factors discussed
above, particularly the acquisition of ABI and improved performance of Astor's
business, net income before extraordinary items for the three months ended June
30, 1996 was $1.4 million while the three months ended June 30, 1995 showed a
$0.9 million net loss before extraordinary items.
FISCAL YEAR ENDED MARCH 31, 1996 COMPARED TO FISCAL YEAR ENDED MARCH 31, 1995
SALES. Sales increased by $73.5 million from $61.9 million in fiscal year
1995 to $135.4 million in fiscal year 1996. Of this sales increase, $68.6
million is related to the acquisition of ABI in June 1995. Excluding the impact
of ABI, sales increased $4.9 million, or 8%, from $61.9 million in fiscal year
1995 to $66.8 million in fiscal year 1996 as a result of (i) increased sales
volume due to capacity improvements achieved from the capital expenditure
program completed in January 1996, (ii) higher specialty wax prices realized in
the U.S., (iii) a more focused marketing effort provided by the acquisition of
ABI's sales force resulting in greater sales volumes and (iv) a product mix
shift to higher priced products.
GROSS PROFIT. Gross profit increased by $19.9 million from $7.3 million in
fiscal year 1995 to $27.2 million in fiscal year 1996, with most of the increase
attributable to the acquisition of ABI in June 1995. Gross profit as a
percentage of sales increased from 11.8% in fiscal year 1995 to 20.1% in fiscal
year 1996, primarily as a result of the acquisition. Excluding the acquisition
of ABI, Astor's gross profit increased by $2.8 million, or 38%, from $7.3
million in fiscal year 1995 to $10.1 million in fiscal year 1996 and, on a
percentage of sales basis, from 11.8% in fiscal 1995 to 15.1% in fiscal 1996
principally as a result of the reasons discussed above.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $8.8 million from $4.1 million in fiscal
year 1995 to $12.9 million in fiscal year 1996. The acquisition of ABI accounted
for $7.6 million of the selling, general and administrative expenses increase.
INCOME FROM RHEOCHEM. Astor's share of equity earnings from Rheochem was
$0.1 million in fiscal year 1996 compared to no income from Rheochem for fiscal
year 1995. Astor acquired its interest in Rheochem on June 28, 1995 with the
acquisition of ABI. See "Business -- Rheochem Joint Venture."
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased by $3.4 million from $2.0 million in fiscal year 1995 to $5.4 million
in fiscal year 1996 primarily due to the acquisition of ABI.
INTEREST EXPENSE, NET. Interest expense, net, increased by $3.7 million
from $1.6 million in fiscal year 1995 to $5.3 million in fiscal year 1996. The
increase was primarily due to the additional debt incurred in connection with
the acquisition of ABI.
NONRECURRING EXPENSES. Reorganization expenses of $0.9 million were
recognized in fiscal year 1996 compared to $1.1 million in fiscal year 1995.
These expenses were primarily attributable to professional fees and employee
costs associated with Petrowax's operating under bankruptcy. No additional costs
pertaining
42
<PAGE>
to this matter are expected in the future. Other non-recurring costs of $0.8
million in fiscal year 1996 included $0.5 million related to a flood at the
Farmer's Valley facility and $0.3 million related to non-recurring moving costs.
EXTRAORDINARY ITEM -- GAIN ON CANCELLATION OF DEBT. An extraordinary item
resulting from the gain on cancellation of $44.9 million of debt was recorded in
fiscal year 1996 reflecting the discharge of pre-petition indebtedness of
Petrowax.
NET INCOME BEFORE EXTRAORDINARY ITEMS. Net income before extraordinary
items increased by $7.0 million from a loss of $1.5 million in fiscal year 1995
to $5.5 million in fiscal year 1996.
FISCAL YEAR ENDED MARCH 31, 1995 COMPARED TO FISCAL YEAR ENDED MARCH 31, 1994
SALES. Sales increased by $7.2 million, or 13%, from $54.7 million in
fiscal year 1994 to $61.9 million in fiscal year 1995. This sales increase was
primarily the result of (i) increased wax volumes resulting from the use of a
higher wax yielding feedstock, (ii) a product mix shift to higher priced
products and (iii) the addition of three new marketing professionals who conduct
direct sales to customers.
GROSS PROFIT. Gross profit increased by $3.5 million from $3.8 million in
fiscal year 1994 to $7.3 million in fiscal year 1995. Gross profit as a
percentage of sales increased from 6.9% in fiscal year 1994 to 11.8% in fiscal
year 1995 principally as a result of the reasons discussed above.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $0.4 million from $3.7 million in fiscal
year 1994 to $4.1 million in fiscal year 1995. The selling, general and
administrative expense increase was primarily the result of higher sales volume.
Selling, general and administrative expenses as a percentage of sales remained
stable at 6.7% in fiscal years 1994 and 1995.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization charges
decreased by $2.0 million from $4.0 million in fiscal year 1994 to $2.0 million
in fiscal year 1995 primarily due to adjustments in fiscal year 1994 to the book
value of certain assets in recognition of their impairment.
INTEREST EXPENSE, NET. Interest expense, net, increased by $0.1 million
from $1.5 million in fiscal year 1994 to $1.6 million in fiscal year 1995. This
increase was primarily due to higher debt levels related to an increase in
working capital requirements.
NONRECURRING EXPENSES. The $27.1 million of nonrecurring expenses
recognized in fiscal year 1994 compared to $1.1 million in fiscal year 1995 was
primarily attributable to a $25.9 million provision reflecting the writedown of
assets in order to recognize permanent impairment of their value. Reorganization
expenses decreased by $0.2 million from $1.3 million in fiscal year 1994
primarily due to lower professional fees associated with Petrowax's bankruptcy.
NET LOSS. The net loss decreased by $5.2 million from a net loss before
extraordinary items and asset impairment writedown of $6.7 million in fiscal
year 1994 to a net loss of $1.5 million in fiscal year 1995 for the reasons
discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the three months ended June
30, 1996 was $3.4 million compared to a net use of cash of $0.8 million for the
three months ended June 30, 1995. The $3.4 million of net cash provided in the
three months ended June 30, 1996 was primarily due to cash flow from operating
profits of $2.8 million and $0.6 million of working capital changes. The use of
cash of $0.8 million for the three months ended June 30, 1995 was primarily due
to the payment of $1.1 million of accrued reorganization expenses and accrued
interest payable and $0.3 million of cash flow used by operating losses
offsetting a $0.6 million source of cash provided by working capital.
Net cash provided by operating activities for the years ended March 31,
1996, 1995 and 1994 was $1.5 million, $0.9 million and $0.4 million,
respectively. The cash provided for the year ended March 31, 1996 was primarily
due to an increase in cash flow from operations as a result of the acquisition
of ABI, increased sales, and higher product prices. The cash provided for the
year ended March 31, 1995 was primarily due to $0.5 million of cash flow from
operating profits and a $0.4 million source of cash from working capital,
43
<PAGE>
resulting from an increase in accounts payable which offset increased
inventories and accounts receivable due to higher sales. The cash provided for
the year ended March 31, 1994 resulted from increased accounts payable.
Cash used in investing activities for the three months ended June 30, 1996
and 1995 and the years ended March 31, 1996, 1995 and 1994 was $0.9 million,
$66.8 million, $71.3 million, $0.3 million and $0.3 million, respectively. Cash
used in investing for the three months ended June 30, 1995 and for the year
ended March 31, 1996 included the ABI acquisition costs of $66.8 million. Cash
used for the year ended March 31, 1996 also included capital expenditures of
$4.6 million. Astor expects that capital expenditure requirements will be
approximately $3.4 million for fiscal year 1997 and approximately $0.6 million
for the ADCO operations following the ADCO Acquisition, resulting in total
capital expenditures of $4.0 million for fiscal 1997. Astor expects to fund
capital expenditures primarily from cash generated from operating activities,
except that Astor purchased ADCO with proceeds from the Offering and the Senior
Bank Facility.
Cash used in financing activities for the three months ended June 30, 1996
was $2.8 million due to debt repayments. Cash provided by financing activities
for the three months ended June 30, 1995 was $70.4 million due to (i) proceeds
from the long-term debt issuance of $60.9 million, net of fees, (ii) proceeds of
$30.4 million from the issuance of stock and warrants, net of fees, and (iii)
the repayment of $20.9 million of existing debt and the settlement of bankruptcy
claims. Cash provided by financing activities for the year ended March 31, 1996
of $69.0 million included the aforementioned debt financing and capital
infusion, net of repayments of existing debt and bankruptcy claims. Cash used
for financing activities for the fiscal years ended March 31, 1995 and 1994 was
$0.1 million and $0.5 million, respectively, and was due to capital lease
payments and the reduction of pre-petition liabilities.
Concurrent with the closing of the Offering, Astor Corporation (i) acquired
ADCO, (ii) refinanced all remaining indebtedness under the UBS Credit Facility
and (iii) entered into the new Senior Bank Facility. The new secured Senior Bank
Facility consists of the Bank Term Loan of $20.0 million and a revolving credit
facility with a maximum availability of $30.0 million, both secured by a first
priority security interest in all assets of Astor Corporation, all of the
capital stock of Astor Corporation's U.S. subsidiaries and 65% of the voting
capital stock and 100% of the non-voting capital stock of ABI Acquisition 2 plc.
Upon completing the Transactions, $28.2 million of the revolving facility
remained available. This facility significantly increased the Company's
liquidity position and is expected to be sufficient to fund working capital
needs, capital expenditure requirements and add-on acquisitions for the
foreseeable future.
The Company's primary capital requirements consist of debt service and
capital expenditures. The required debt amortization payments under the Senior
Bank Facility for the next five fiscal years will be: (i) no amortization
payments in fiscal year 1997, (ii) $1.4 million in fiscal year 1998, (iii) $1.8
million in fiscal year 1999, (iv) $3.0 million in fiscal year 2000 and (v) $4.5
million in fiscal year 2001. The Bank Term Loan and Revolving Credit Facility
borrowings will bear interest at the election of Astor Corporation at an
interest rate determined either by the Bank's prime lending rate plus an initial
margin of 1.25% or the Eurodollar rate plus an initial margin of 2.5%. The
Senior Bank Facility and the Notes impose various restrictions and covenants on
the Company, including, among other things, financial covenants relating to the
maintenance of minimum fixed charge coverage ratios and interest coverage ratios
as well as restrictions on indebtedness, guarantees, acquisitions, capital
expenditures, investments, loans, liens, dividends and other restricted payments
and asset sales. The Company estimates that approximately $3.5 million is
required annually for maintenance and improvements of its facilities. The
Company's principal source of cash to fund these capital requirements is cash
generated from operating activities. Upon the consummation of the Transactions,
the Company had $28.2 million (after the issuance of $1.8 million letters of
credit) of availability under the Senior Bank Facility.
As of March 31, 1996 Astor Corporation had net operating losses ("NOLs")
aggregating approximately $24.0 million available to offset certain taxable
income in future years. The utilization of these NOLs would be limited under
Section 382 of the Internal Revenue Code (the "Code") if Astor Corporation were
to undergo, or is deemed to have previously undergone, an "ownership change."
Although the Prior Transactions involved substantial changes in Astor
Corporation's equity ownership, Astor Corporation believes an
44
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"ownership change," as defined by the Code, did not occur. However, this
determination is subject to uncertainty. In addition, there can be no assurance
that future changes in the equity ownership of Astor Corporation, Astor Holdings
II or the Parent will not occur or that such NOLs may be utilized in the future.
The NOLs are expected to expire in the years 2007 through 2009.
SEASONALITY. Based on the historical performances of Astor Holdings II and
ADCO, management expects the Company's future performance to display seasonal
fluctuations, with the first fiscal quarter being the strongest quarter and the
third fiscal quarter being the weakest.
FOREIGN EXCHANGE EXPOSURE. The functional currency for the majority of
Astor's foreign operations is the applicable local currency. The bulk of Astor's
foreign sales, raw materials, expenses, assets, and liabilities (including bank
debt) are denominated in the local currency, providing for a natural hedge for
currency exposure. For a small portion of foreign sales transactions, Astor uses
forward foreign exchange contracts to mitigate exposure. The translation from
the applicable foreign currency to U.S. dollars is performed for balance sheet
accounts using current exchange rates in effect at the balance sheet date and
for revenue and expense accounts using a weighted average exchange rate during
the period. Translation adjustments resulting from such translation were $0.3
million at March 31, 1996.
45
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BUSINESS
RECENT HISTORY
In 1994, Mr. Boyd Wainscott, an experienced multinational chemical company
manager, joined Astor to lead it in developing and implementing a strategic
business plan. This plan included improving marketing functions and product
distribution, developing more higher-margin, value-added products, improving
manufacturing operations and increasing manufacturing capacity, and pursuing
acquisition opportunities in the consolidating specialty chemicals industry.
Since implementation of the plan, Astor has increased production capacity by 12%
and increased sales by its direct sales force from the 1994 to the 1996 fiscal
year by $11.2 million.
As part of this strategic plan, in June 1995, the current business and
structure of Astor were created through the combination of Astor Corporation and
ABI, a manufacturer of specialty waxes and adhesives and sealants based in the
U.K. This combination created one of the largest producers of specialty waxes in
the world, based on sales, and a recognized U.K. manufacturer of adhesives and
sealants. In addition, the ABI Acquisition improved Astor's in-house marketing
and packaging capabilities, resulting in improved product distribution and
improved Astor's product development capabilities, allowing for the development
of higher-valued products.
Concurrent with the consummation of the Offering on October 8, 1996, Astor
acquired all of the outstanding capital stock and all of the issued but
unexercised options of ADCO, a publicly traded Nasdaq National Market
manufacturer and marketer of adhesives and sealants, for an aggregate
consideration of $54.4 million. Through the acquisition of ADCO, Astor added
significant depth to its product lines, global marketing and manufacturing
networks and product development capabilities. Management believes that these
strengths will enable Astor to improve significantly the penetration of its
existing adhesives and sealants in the U.S. and provide Astor the opportunity to
market ADCO's products outside of the U.S. Management believes that the ADCO
Acquisition will also serve as an excellent platform from which to pursue
complementary acquisitions in the highly fragmented adhesives and sealants
industry. Astor and ADCO are referred to herein on a combined basis, after
giving effect to the ADCO Acquisition, as the Company.
COMPANY OVERVIEW
The Company is a leading global developer, producer and marketer of a wide
variety of value-added specialty chemical products. Its principal products are
(i) a broad range of specialty waxes, which represented approximately 70% of pro
forma sales for the 1996 fiscal year, and (ii) an extensive line of
technologically advanced adhesives and sealants, which represented approximately
30% of pro forma sales for the 1996 fiscal year. These products are sold to a
diverse base of over 4,000 customers in more than 50 countries worldwide, with
35.4% of 1996 pro forma sales made to customers outside the U.S., and are used
in numerous industrial and commercial applications. In the 1996 fiscal year, no
single customer of the Company accounted for more than 5% of the Company's pro
forma sales, and the top ten customers accounted for approximately 21% of the
Company's pro forma sales. During the twelve months ended June 30, 1996, the
Company had pro forma revenues and EBITDA of $210.1 million and $28.3 million,
respectively. The Company's sales of specialty waxes and adhesives and sealants
grew on a pro forma basis from $159.4 million in fiscal year 1994 to $206.2
million in fiscal year 1996, or at a compound annual rate of 13.7%, and its
EBITDA grew on a pro forma basis from $14.1 million in fiscal year 1994 to $27.3
million in fiscal year 1996, or at a compound annual rate of 39.1%.
The Company focuses on developing value-added products to satisfy customers'
unique product demands and exacting specifications by conducting extensive
applied research and product development, often in conjunction with its
customers. The Company's product development has led to a variety of new
products and patented technologies for the Company. The Company's position is
further strengthened by its numerous technical customer approvals and the
value-added nature of its products, which generally represent a relatively small
percentage of an end-use product's total cost. These factors contributed to the
high contribution margins (defined as sales less raw material costs) which have
been achieved by the Company in recent periods. In fiscal 1996, pro forma
contribution margins for specialty waxes and for adhesives and sealants were
approximately 38.8% and 48.6%, respectively.
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SPECIALTY WAXES. Management of the Company believes that the Company is the
largest developer, producer and marketer of specialty waxes in North America,
and one of the largest producers of specialty waxes in the world, based on
sales. During 1993, the most recent year for which statistics are available,
approximately two billion pounds of specialty and other waxes were consumed in
the U.S., representing over $500 million in revenues, and over seven billion
pounds of specialty and other waxes were consumed worldwide, according to Wax
Data and a study by Kline & Company. During the last ten years, wax demand has
grown at approximately 3.3% per annum in the U.S., according to Wax Data.
However, certain end-use products have experienced significantly higher growth
rates, such as the PVC pipe market which grew at a rate of 10.0% from 1993 to
1994, according to Modern Plastics. Due to the lack of cost-effective wax
substitutes, management believes that wax demand will be driven by the growth of
its end-use products. Specialty waxes, like the Company's products, are
distinguished by their melt point, hardness, color and other performance
characteristics, as well as their consistent qualities and custom
specifications, and are used as an essential value-added component in hundreds
of products and applications. The primary applications of the Company's products
include use as a protective component in packaging and tires, as a fuel in
candles and synthetic firelogs and as a lubricant in PVC extrusion. The Company
produces one of the most extensive lines of customized waxes in the industry and
currently has over 3,000 different wax formulations in its proprietary database.
The Company had $143.7 million of pro forma sales of specialty waxes in
fiscal 1996. Over the past three fiscal years, the Company's sales of specialty
waxes have grown on a pro forma basis at a compound annual rate of 10.9%, well
in excess of the wax industry's growth rate, primarily due to the Company's
focus on high-growth niche markets. The Company's specialty wax products are
manufactured in the U.S., the U.K. and Belgium, and are sold both directly and
through independent agents to customers worldwide. During the 1996 fiscal year,
40.0%, or $57.5 million, of the Company's pro forma specialty wax sales were in
non-U.S. markets.
ADHESIVES AND SEALANTS. The Company is a leading developer, producer and
marketer of an extensive line of adhesives and sealants for a variety of
specialized niche applications. According to Chemical Week, in 1995 sales of
adhesives and sealants reached approximately $15.4 billion worldwide, and $9.4
billion in North America. Adhesives are used to bond various materials under
numerous temperature and moisture conditions, and sealants are used to prevent
the passage of air, water and noise between two surfaces. The primary markets
for the Company's adhesives and sealants are new and replacement commercial
roofing, transportation aftermarket, transportation OEM, insulated window
manufacturing for new and replacement construction, concrete pipe and vaults,
and new and rehab building construction. The Company currently offers more than
1,650 proprietary adhesives and sealants to its customers.
The Company had $62.5 million of pro forma sales of adhesives and sealants
in fiscal 1996. Over the past three fiscal years, the Company's sales of
adhesives and sealants have grown on a pro forma basis at a compound annual rate
of 21.3%, well in excess of the adhesives and sealants industry's growth rate of
5.0% - 6.0% as reported by Chemical Week, primarily due to the Company's
aggressive development of and the commercial acceptance of its new products. The
Company's adhesives and sealants are manufactured in both the U.S. and the U.K.,
and are sold both directly and through independent agents to customers
worldwide. During the 1996 fiscal year, 24.6%, or $15.4 million, of the
Company's pro forma adhesives and sealants sales were in non-U.S. markets.
COMPETITIVE STRENGTHS. The Company believes that it benefits from the
following competitive strengths:
DIVERSE GLOBAL END-USE MARKETS AND PRODUCTS. The Company serves numerous
end-use markets with over 4,650 products. This wide variety of products is sold
to a diverse global base of over 4,000 customers. In the 1996 fiscal year, no
single customer of the Company accounted for more than 5% of the Company's pro
forma sales, and the top ten customers accounted for approximately 21% of the
Company's pro forma sales. This diversity of products, markets and customers
minimizes the Company's exposure to any particular customer, economic cycle or
geographic market and provides a broad base from which to grow sales through
continued development of core technologies and new applications.
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LEADING MARKET POSITIONS. The Company enjoys substantial market shares in
many niche markets because of its product designs capabilities, reputation,
quality and service. In addition, the names -- Astor Stag, Astor Wax and ADCO --
are established and trusted in their respective industries and provide brand
name recognition for the introduction and development of new products and
markets.
GLOBAL MARKETING AND MANUFACTURING CAPABILITIES. The Company sells its
products in over 50 countries worldwide through a global marketing network and
maintains manufacturing facilities in the U.S., the U.K. and Belgium. In fiscal
1996, the Company's sales of specialty waxes and adhesives and sealants outside
of the U.S., on a pro forma basis, totaled $72.9 million, or 35.4% of total
sales. The Company's international marketing and manufacturing capabilities
provide a platform for the introduction of existing and new products throughout
the world and allow the Company to better serve its customers' needs on a
worldwide basis.
CUSTOMER-DRIVEN PRODUCT DEVELOPMENT. The Company focuses on developing
value-added products with its customers by utilizing its extensive product
development expertise and manufacturing process capabilities. The Company's
sales, technical service and development staff work with customers to identify
specific needs and develop innovative, superior performance solutions. New
developments resulting from this process can often be profitably applied to
other high-margin niche markets. Additionally, many of the Company's products
are sold to customers following an often rigorous technical approval process.
The Company has obtained numerous valuable customer approvals which it believes
provide it with a competitive advantage.
LOW-FIXED COST AND FLEXIBLE MANUFACTURING CAPABILITIES. The Company has
engineered its manufacturing facilities to be capable of producing batches of
specialty products on an as needed basis with a minimum of fixed costs which
were 20% of total pro forma costs in the 1996 fiscal year. This just-in-time
focus and relatively low fixed-cost structure enables the Company to respond
rapidly to changing customer specifications and reduces the impact on
profitability during periods of decreased customer demand.
EXPERIENCED MANAGEMENT TEAM. Since 1994, Astor's management team has
substantially improved operating efficiencies and achieved significant cost
savings. Additional efficiencies and savings were achieved by Astor following
the acquisition of ABI in June 1995. The ADCO Acquisition further enhances
managerial expertise with the addition of several new senior managers. The
resulting management team has extensive wax and specialty chemical industry
experience.
BUSINESS STRATEGY. The Company's business strategy includes the following
key elements:
FOCUS ON DIVERSE, HIGH-MARGIN NICHE MARKETS. The Company intends to
continue to aggressively expand its diverse line of high-margin products for
niche markets. New product development will be achieved through customer
solution engineering and the extension of existing technologies to new
applications. The Company believes that increasing the breadth and diversity of
its product offerings will further reduce the Company's already limited exposure
to fluctuations in any single market.
CONTINUE CUSTOMER-DRIVEN PRODUCT DEVELOPMENT. The Company intends to
continue its strong commitment to applied research and product development. The
Company's focus on solutions for the customer fosters a collaborative effort
between its experienced technical and sales personnel and its customers. This
product development effort serves to enhance customer loyalty and is the genesis
for many new products.
FURTHER GLOBAL EXPANSION. The Company intends to continue to grow in new
geographic markets by selling existing and new products to its current global
customers as they move manufacturing capacity to new geographic regions. Once
established in a new region, the Company intends to open sales offices and
develop marketing alliances to target new customers. Through the combination of
ADCO's product line and Astor's global distribution network, the Company will
have the ability to further develop global adhesives and sealants market
opportunities. Additionally, the strong product development, manufacturing and
distribution base of ADCO in the U.S. will enable Astor to more aggressively
introduce and market its adhesives and sealants in the U.S.
PURSUE STRATEGIC ACQUISITIONS. The Company intends to selectively pursue
complementary acquisitions which can be integrated into the Company's existing
businesses. As a result of global consolidation trends
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and the fragmented nature of the specialty wax and the adhesives and sealants
industries, management believes many opportunities exist for the Company to make
strategic acquisitions. The Company intends to pursue acquisitions which will
diversify its product lines, enhance its product development capabilities,
improve its global marketing reach and lower its costs.
INDUSTRY OVERVIEW
Through the successful execution of its business strategy, the Company has
become a leader in two distinct segments of the specialty chemical industry --
specialty waxes and adhesives and sealants.
WAXES
The large number of wax applications in industrial and consumer products has
created significant worldwide wax demand. During 1993, the last year for which
statistics are available, approximately two billion pounds of specialty and
other waxes were consumed in the U.S., representing over $500 million in
revenues, and seven billion pounds of specialty and other waxes were consumed
worldwide, according to Wax Data and a study by Kline & Company. During the last
ten years, wax demand has grown at a rate of approximately 3.3% per annum in the
U.S., according to Wax Data. However, certain end-use products have experienced
significantly higher growth rates, such as the PVC pipe market which grew at a
rate of 10.0% from 1993 to 1994, according to Modern Plastics. Due to a lack of
cost-effective substitutes, management believes that wax demand will be driven
by the growth of its end-use products. The Company believes that businesses
which successfully target such high growth niche markets as PVC and that develop
new applications and customers will have the opportunity to experience
significantly higher growth than the industry average.
Wax plays a critical role as both a primary element and as an additive in
many different product applications. Specialty waxes, like the Company's
products, are distinguished by their melt point, hardness, color and other
performance characteristics, as well as their consistent qualities and custom
specifications, and are used as an essential, value-added component in hundreds
of products and applications. In most cases, wax represents a small portion of
the total cost of production, but is a critical component of the end-use
product.
Wax is primarily derived as a by-product of the petroleum refining process
and typically represents less than 1% of the volume of a standard barrel of
petroleum. Wax industry suppliers include large petroleum refiners and wax
specialists.
Petroleum refiners are typically volume-driven bulk suppliers providing
little product specialization or service, in part because they view wax as a
by-product of their refining operations. Typically, wax sales by these refiners
represent less than 1% of their revenues, and thus wax production receives
little strategic or capital commitment. The characteristics of the waxes
resulting from production by large refiners are often inconsistent due to
alterations made in the refining process to emphasize production of other
products. As a result, waxes produced by petroleum refiners are typically
commodity in nature and customers tend to be volume buyers requiring little or
no customization or servicing.
Wax specialists, like the Company, focus on customer service. Such services
include development assistance, product customization, specification and supply
consistency, custom packaging and order-size flexibility. Wax specialists target
niche applications and customers demanding these value-added services. As a
result, wax specialists develop significant customer relationships and numerous
product formulations.
ADHESIVES AND SEALANTS
Adhesives and sealants are utilized in a multitude of applications within
many industrial and consumer products. According to Chemical Week, in 1995,
worldwide sales of adhesives and sealants totaled $15.4 billion, with sales in
North America representing approximately $9.4 billion. In 1994, U.S. industry
sales of adhesives and sealants increased by approximately 5% to 6%, according
to Chemical Week. Certain niche markets have experienced significantly higher
growth rates, such as the automotive industry, which, according to Adhesive Age,
an industry publication, experienced a compound annual growth rate in the use of
adhesives and sealants sales of 14.9% from 1985 to 1993.
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Adhesives and sealants are critical to the performance of an end-use
product, but typically represent a small portion of total product cost.
Adhesives are used to bond various materials under numerous temperature and
moisture conditions, and sealants are used to prevent the passage of air, water
and noise between two surfaces.
The worldwide adhesives and sealants industry is highly fragmented with over
500 suppliers in the U.S. alone. According to Chemical Marketing Reporter, an
industry publication, while the five largest suppliers comprise approximately
33% of total U.S. sales, the ten largest suppliers in the U.S. only comprise
approximately 42% of total sales. The adhesives and sealants industry's broad
range of applications leads to the highly fragmented nature of this industry.
Certain applications require little customer service or specialization; these
adhesives and sealants have commodity characteristics and are sold either
directly to customers or through distributors. However, many suppliers, like the
Company, develop expertise within specialized niches. Due to the unique
technical requirements within these niches, even a small supplier to the
industry can be a leader for certain applications. These suppliers tend to be
service-oriented with significant focus on technical development. As a result,
they target customers requiring customized products, strict quality control and
technical support. This value-added service can generate significant goodwill
and strong customer relationships.
PRODUCTS AND MARKETS
The Company offers a complete line of specialty waxes and an extensive line
of adhesives and sealants. The Company markets its products in over 50 countries
worldwide through its direct sales force and global network of agents. During
the 1996 fiscal year, the Company's pro forma revenue was geographically
diversified; 65% in the U.S., 16% in the U.K., 9% in continental Europe and 10%
in all other regions. During the 1996 fiscal year, specialty waxes represented
approximately 70% of the Company's pro forma sales, and adhesives and sealants
represented approximately 30% of the Company's pro forma sales. The following
table summarizes the Company's 1996 fiscal year pro forma sales by product and
market:
1996 PRO FORMA SALES
<TABLE>
<CAPTION>
U.S. NON-U.S. TOTAL % OF SALES
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
SPECIALTY WAXES:
Consumer/Industrial Products................................... $ 29.6 $ 21.4 $ 51.0 25%
Packaging...................................................... 12.3 11.3 23.6 11
Tire/Rubber.................................................... 11.8 9.0 20.8 10
Candle......................................................... 14.2 1.4 15.6 8
Synthetic Fireplace Logs....................................... 6.0 1.0 7.0 4
Cable Fill..................................................... 0.6 5.8 6.4 3
PVC Lubricants................................................. 5.2 1.1 6.3 3
Anticorrosives................................................. -- 4.0 4.0 2
Road Surfacing................................................. -- 2.5 2.5 1
Byproducts..................................................... 6.5 -- 6.5 3
--------- ----- --------- ---
Specialty Waxes Total........................................ $ 86.2 $ 57.5 $ 143.7 70%
--------- ----- --------- ---
</TABLE>
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<TABLE>
<CAPTION>
U.S. NON-U.S. TOTAL % OF SALES
--------- ----------- --------- -----------
ADHESIVES AND SEALANTS:
<S> <C> <C> <C> <C>
Roofing........................................................ $ 18.5 $ -- $ 18.5 9%
Transportation Aftermarket..................................... 5.7 8.7 14.4 7
Transportation OEM............................................. 9.4 1.7 11.1 5
Window Manufacturing........................................... 6.0 -- 6.0 3
Concrete Pipe & Vault.......................................... 5.4 -- 5.4 3
Building Construction.......................................... -- 5.0 5.0 2
Other Industrial............................................... 2.1 -- 2.1 1
--------- ----- --------- ---
Adhesives and Sealants Total................................. 47.1 15.4 62.5 30
--------- ----- --------- ---
Total........................................................ $ 133.3 $ 72.9 $ 206.2 100%
--------- ----- --------- ---
--------- ----- --------- ---
</TABLE>
SPECIALTY WAXES
The Company's proprietary specialty waxes are generally sold to customers
demanding unique performance characteristics. An infinite number of formulations
are possible depending on the customer's requirements for melting point, color,
hardness, viscosity and many other performance characteristics. The Company's
major markets and products are described below.
CONSUMER/INDUSTRIAL PRODUCTS The Company produces specific wax formulations
for hundreds of applications requiring exacting specifications, such as: cheese
wax coatings, hot-melt wax used for bonding materials, chewing gum base,
petroleum based jellies for pharmaceuticals and cosmetics, thermostat waxes,
dental floss, stains and textile production applications and crayons. These
products generally serve value-added niches which require a high degree of
customer reliance on product quality. Many of these products also meet the
specifications of the U.S. Food and Drug Administration ("FDA"). The Company is
diversified globally in this product category with approximately 42% of its
fiscal 1996 pro forma sales of these products made outside of the U.S.
PACKAGING. The Company's products are used by packaging manufacturers in
the production of flexible packages, folding cartons and various foil, cardboard
and paper related packages. Such products provide barrier characteristics, scuff
protection and flexibility. These packaging applications are often used for food
products, and are therefore produced by the Company to meet FDA, as well as U.K.
and European, food and quality standards. The Company is a significant packaging
wax provider, based on sales, maintaining strong customer relationships based
upon specific product design. In addition, the Company is diversified globally
in this product category with almost 50% of its fiscal 1996 pro forma sales of
these products outside of the U.S.
TIRE/RUBBER. The Company's waxes are used in rubber products to prevent
aging and cracking resulting from exposure to ozone in the atmosphere. The
Company's most significant customers are tire manufacturers who demand highly
specialized wax formulations to meet their rigid and exacting requirements.
Although the cost of wax is typically less than 5% of a tire's cost, its
specific chemical characteristics are integral and critical to the tire's
overall performance. As a result, the Company has maintained long established
relationships and acts as a product development partner with various tire
producers. The Company is a leading global supplier in this market category, and
the Company's sales in this product category are geographically diversified,
with approximately 43% of its fiscal 1996 pro forma sales of these products
outside of the U.S.
CANDLES. The Company is a significant supplier of wax to the candle
industry in the U.S. Waxes are the primary fuel source in candles and are used
to influence a candle's color, drip rate, smoke characteristics, burn time and
other performance characteristics. The Company is a high-end leader in specialty
formulations to specialty, value-added candle manufacturers. U.S. wax
consumption for candles accounts for approximately 12% of the total U.S. wax
market, and the Company has aggressively increased its position in the U.S.
market over the last three years.
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SYNTHETIC FIREPLACE LOGS. The Company's waxes are used as a major component
in the production of synthetic fireplace logs and are used both as a binder for
the log and as a fuel source. Wax formulations specifically affect the burning
characteristics such as color, height and duration of the firelog flame. The
Company is a leading supplier in North America to synthetic fireplace log
manufacturers.
CABLE FILL. The Company's waxes are used as a critical component in the
production of telephone cables and other fiber optic cables to provide barrier
and integrity protection for cable filament over a wide temperature range. The
Company has been active in the evolution from traditional petroleum jelly-based
fills for copper cables to more sophisticated gels used with fiber optics. The
Company's cable fill wax business has been cultivated through attention to
customer service and technical precision.
PVC LUBRICANTS. The production of rigid PVC pipe and siding requires
lubrication during the extrusion process, which is provided by specialty wax
formulations. The Company sells the majority of its PVC wax lubricants through
its joint venture partner, Rheochem, which in addition to manufacturing its own
range of products, acts as a distributor of the Company's PVC wax lubricants in
North America. The Company combined with Rheochem has a leading supply position
in the U.S. See "-- Rheochem Joint Venture."
ANTICORROSIVES. The Company's anticorrosives are used in automotive,
aerospace and engineering applications as corrosion inhibitors, sealers and
water barrier protectives due to their excellent film forming properties.
Significant anticorrosive approvals have been obtained from several automotive
producers in Europe and emerging countries. The Company has 100% of the
anticorrosive business of one major automobile producer in the U.K. to which one
Company employee is fully dedicated and on-site at the customer's facility.
ROAD SURFACING. The Company's road surfacing products are used as both a
surface dressing and as a binder for the aggregate used and are sold primarily
to municipalities for road surfacing in the U.K. and in selected parts of
Europe. These products are produced in the Company's facility in the U.K. and
are sold to roadway contractors. The Company's position has been stable in the
U.K. marketplace and opportunities are available to license road surfacing
technology to global partners.
BYPRODUCTS. Byproducts, which include lube base oil and catalytic cracker
feedstocks, represent a small percentage of the Company's sales and are derived
from its wax manufacturing process. The Company will continue to participate in
these segments while continuing to seek upgrades to more higher-margin products.
ADHESIVES AND SEALANTS.
The Company manufactures a growing line of adhesives and sealants which are
manufactured in various forms, including: hot-melts, pumpables and extruded tape
products. The Company concentrates its efforts on specialized applications in
which performance criteria are more demanding and in which greater added value
can be offered. The Company's primary products and markets are described below.
ROOFING. The Company supplies a number of products, including laminates,
butyl adhesives and sealants and primers to improve the installation and
retrofit of single-ply roofing systems in the new and rehab commercial building
industry. The Company has pioneered more efficient, faster curing seam tapes
and, by moving away from solvent-based traditional adhesives, the Company has
achieved a favored market position. The Company is a market leader in the U.S.
and its customers include all of the largest single-ply roofing system
suppliers. In addition, the Company has licensed certain of its technology
related to selected roofing products to Firestone. The market for the Company's
line of high-margin roofing products has grown steadily in recent years
particularly with the introduction of specialty laminates designed to fit over
difficult to cover areas.
TRANSPORTATION AFTERMARKET. The Company manufactures urethane sealants and
butyl tapes which are used to install and replace windshield glass in
automobiles in the U.S. and used for vehicle crash repair outside the U.S. These
products provide fast cure bonding in the installation of replacement
windshields in vehicles with airbags, which is required to ensure structural
integrity of the windshield in the event of an accident. The Company believes it
is well positioned to take advantage of this market shift to urethane, which is
stronger and cures faster than traditional bonding materials. Other
polyurethanes have been introduced for the adhesion of body parts.
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TRANSPORTATION OEM. The Company's products include: hot melt sealants,
acrylics, extrudable compounds, butyl tapes and polyurethanes. These products
are used by automobile, recreational vehicle and trailer manufacturers to reduce
the passage of unwanted air, moisture and noise between two surfaces and to
attach product components. Specialty adhesives are increasingly being used as a
substitute for mechanical fasteners to improve performance and reduce costs. The
Company's products are highly regarded by major automobile manufacturers and
often are the product of choice.
WINDOW MANUFACTURING. The Company produces hot melt adhesives and sealants,
pressure sensitive tapes and liquid butyl pumpables for the manufacture of
insulated glass windows. These products provide both adhesion and sealing
properties between the window glass and the window frame, and act as a moisture
barrier between two panes of glass. The Company is well positioned as the window
manufacturing market trends toward achieving greater energy efficiency for both
the new and retrofit market.
CONCRETE PIPE AND VAULT. The Company offers a line of construction-related
products serving various industrial markets, including the concrete pipe and the
concrete burial vault markets. The Company's products in these markets include
large cross-sectional flexible tape sealants designed to form a gasket-type seal
when compressed between two concrete surfaces. The Company maintains a leading
market position for sales of adhesives and sealants to the concrete vault
industry in the U.S.
BUILDING CONSTRUCTION. The Company produces a variety of adhesives and
sealants used for both new and rehab building construction. The Company's
products in this area are used to seal joints in structures, and are used to
provide waterproofing and corrosion resistance to floors, doors, windows, car
decks, bridges and commercial buildings. The Company's line of products are sold
exclusively in the U.K. and Europe at this time.
OTHER INDUSTRIAL. The Company performs toll processing of intermediate raw
materials for third parties, particularly the processing of butyl solutions. The
Company intends to continue to take advantage of these opportunities when
practical.
APPLIED RESEARCH AND PRODUCT DEVELOPMENT
The Company maintains a strong commitment to applied research and product
development, focusing its efforts on enhancing existing product lines as well as
developing new products based on the Company's existing technologies and
production capabilities. The Company's applied research and product development
staff works together with the Company's sales staff and customers to identify
specific needs and develop innovative, superior performance solutions which
satisfy those needs. This method of product development allows the customer to
become a member of the development team, develops close ongoing working
relationships between the Company and its customers and, in many instances,
permits the Company to gain an in-depth understanding of its customers'
businesses, enabling it to better anticipate and serve its customers' needs.
Advancements resulting from this process can often be profitably applied to
other high-margin niche markets.
The Company employs a research and development staff of 40 experienced
chemists and laboratory technicians. The Company expended $2.0 million, $2.3
million and $2.5 million on a pro forma basis in the 1994, 1995 and 1996 fiscal
years, respectively, in these efforts.
SALES AND MARKETING
The Company maintains an extensive global marketing network that includes a
direct sales force and relationships with independent sales representatives,
distributors and resellers. The Company has 90 technical sales and marketing
personnel who work in coordination with the Company's product development and
technical personnel to service the Company's customers. Members of the Company's
sales force typically have a chemistry background and extensive industry
experience and work directly with customers' technical personnel. The Company
extends its global marketing reach through a geographical network of over 40
local agents who specialize in a particular market.
The Company has over 3,000 wax product customers, of which the ten largest
customers in the 1996 fiscal year accounted for approximately 15% of total pro
forma sales. The Company has over 1,000 adhesives
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and sealants product customers, of which the ten largest customers accounted for
approximately 14% of total pro forma sales in the 1996 fiscal year. No single
customer of the Company accounted for more than 5% of the Company's total pro
forma sales in the 1996 fiscal year. The Company anticipates that over time
sales to its larger adhesives and sealants customers will become a smaller
percentage of its total sales.
The Company sells many of its products to customers pursuant to a technical
approval process, and over the past several years the Company has developed
numerous valuable customer approvals. The approval process ranges from a
relatively simple process of sample evaluation and product quality review
procedures to a more complicated process of matching a specific molecular
structure to a customer's applications. Oftentimes, approvals require long lead
times to obtain and require the Company to work closely with customer technical
personnel to develop product specifications. The Company believes that the
nature of these approvals gives it a significant competitive advantage and
positions the Company to develop new formulations for its customers' next
generation of products.
SUPPLY
SPECIALTY WAXES
The Company purchases a wide variety of raw materials for the production of
its specialty wax products. The primary feedstocks used for these products are
partially refined crude oil, other waxy feedstocks and fully processed waxes.
Approximately 26% of the Company's wax-related raw material costs are
attributable to wax feedstocks derived from A/B Crude extracted from Utah
production fields. The Company uses wax feedstocks derived from A/B Crude due to
its very high wax content. Wax represents approximately 27% of each barrel of
naturally occurring A/B Crude compared to a typical barrel of crude oil which
may have a wax content of as low as 1%. There are over 400 million barrels of
proven reserves of A/B Crude in the Utah production fields, or more than 70
years of supply based on current demand and extraction methods. The remaining
74% of the Company's raw materials used for production of specialty wax products
are other partially refined crude oils, fully processed waxes and additives that
are acquired from many sources worldwide and are readily available in the
marketplace.
The Company has a long-term contract with L&W for the purchase of its wax
feedstocks derived from A/B Crude. This contract expires on October 1, 2006,
subject to certain early termination rights. Although the Company believes that,
if needed, there are alternative sources of A/B Crude and other waxy feedstocks,
the unanticipated termination of or nonperformance by the supplier under this
supply contract could have a material adverse effect on the Company's business
and financial condition. Raw materials purchased under this contract and the
Company's other supply relationships are generally priced based on market price
formulas, many of which track crude oil or gasoline fuel prices. The Company is
able to hedge a portion of its raw material costs by hedging crude oil in the
futures market. The Company generally seeks to raise the prices of its specialty
wax products in response to increases in feedstock costs, although it has not
always been able to raise prices high enough or quickly enough to offset fully
increases in feedstock costs. In addition, the prices of certain byproducts from
the Company's production processes also track crude oil prices, acting to hedge
volatility in the Company's raw material costs. See "Risk Factors -- Commodity
Price Risks."
The Company continually monitors and evaluates alternative raw material
sources, and actively pursues alternative suppliers which can economically
provide waxes having the quality and consistency that the Company requires.
ADHESIVES AND SEALANTS
The primary raw materials used by the Company in the production of its
adhesives and sealants are butyl rubber, ethylene propylene diene monomer
rubber, polyisobutylenes, carbon black, isocyanates, polyols, petroleum oils and
release films. The Company purchases these materials from a wide variety of
suppliers. In general, these materials are available from multiple suppliers,
and the Company makes an effort to establish secondary suppliers as well as seek
cost-effective alternatives for raw materials having limited availability.
Long-term purchase agreements are pursued when practical.
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MANUFACTURING
The Company has engineered its manufacturing facilities to be capable of
producing batches of specialty products on an as needed basis with a minimum of
fixed costs which were 20% of total pro forma costs in the 1996 fiscal year.
This just-in-time focus and relatively low fixed-cost structure enables the
Company to respond rapidly to changing customer specifications and reduces the
impact on profitability during periods of decreased customer demand.
PRODUCTION OF SPECIALTY WAXES
The Company's wax production and formulation facilities are located in
Western Pennsylvania -- the McKean plant located near Farmers Valley,
Pennsylvania and the Emlenton plant located in Emlenton, Pennsylvania. In
addition, the Company's formulation and packaging operations are conducted at
four global locations: Marshall, Texas; Titusville, Pennsylvania; West Drayton,
U.K. and Eupen, Belgium. The Company has joint ownership of Rheochem's PVC wax
lubricant facility in Columbia, Missouri.
At the Company's wax production and formulation facilities, waxy feedstocks
undergo multiple separation processes whereby oil is removed from wax and wax is
separated by melting point into various wax streams. Many of the waxes are
filtered to FDA standards. The resulting wax products are either sold as is,
formulated and then sold, or shipped to one of the Company's formulation and
packaging operations. During each step of wax production, from the raw materials
to the ultimate finished product, quality control personnel sample and monitor
each stream of each process to ensure its quality, specification and
consistency.
At the Company's formulation and packaging facilities, specialty blends of
waxes are produced by mixing together various types and melt point grades of
waxes, as well as by adding non-wax additives such as ethylene-vinyl acetate,
polyethylene and other polymers and resins which can modify overall viscosity
and other specific characteristics dictated by customers. All formulations
designed for specific customers and market applications are proprietary in
nature and produced under strict quality controls. The Company offers a complete
line of packaging capabilities including pelletizing, prilling, slabbing and
flaking of all its wax products and ships them in all forms of containers.
The Company's specialty formulation and packaging facilities are
strategically located to serve world markets and to take advantage of feedstock
sources. The production capabilities of each facility are similar. In general,
bulk materials and ingredients are purchased and then processed using formulas
designed by the Company's and customers' chemists.
All of the Company's formulation and packaging facilities are ISO 9002
certified and operate under its strict guidelines. The Company is currently
seeking to have its wax production and formulation facilities ISO certified.
The Company's McKean plant and Emlenton plant are currently operating at
nearly full capacity. The Company estimates that up to $5.0 million of capital
expenditures would be required to increase the production capacity of these
facilities by approximately 25% over their current levels of production. Less
than 25% of the waxes produced at these two facilities is utilized as wax raw
materials for the Company's remaining four facilities, with the balance of the
wax feedstocks for these operations being supplied by third parties. The Company
believes that there are adequate third party sources of wax raw materials
available to meet the foreseeable needs of its formulation and packaging
operations. The Company believes that its formulation and packaging operations
will be able to meet customer demand for the Company's specialty waxes for the
foreseeable future without significant capital expenditures.
ADHESIVES AND SEALANTS PRODUCTION
All production of adhesives and sealants is conducted at two locations: West
Drayton, U.K. and Michigan Center, Michigan. These facilities are well located
to serve the Company's major customers. The production of adhesives and sealants
is a multi-stage process which involves extensive formulation and mixing. Due to
the diversity in the Company's products, the Company utilizes versatile,
proprietary machinery and equipment to fulfill production requirements. The
product is then packaged in drums, pails, cartridges or other forms based on the
customer's requirements. The Company's manufacturing personnel
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maintain and improve operating processes as well as assist in the development of
new processes for new products. The expertise of these employees in the
construction, installation and modification of existing and new manufacturing
systems is critical to the development of new products. The Company believes
that it has the equipment, processes and knowledge to accommodate the production
of new adhesives and sealants without significant capital additions.
In connection with the recently completed ADCO Acquisition, the Company
intends to take steps designed to increase sales of Astor's U.K.-manufactured
adhesives and sealants in the U.S. and sales of ADCO's U.S.-manufactured
products globally. The Company believes that it will benefit by manufacturing
products in the country or geographic region in which the products will be sold.
Limited capital expenditures may be necessary to accommodate the production of
Astor's adhesives and sealants at ADCO's Michigan Center plant.
RHEOCHEM JOINT VENTURE
The Company holds a 50% joint venture interest in Rheochem Technologies,
Inc. ("Rheochem"), a manufacturer of a range of PVC lubricant products based in
Columbia, Missouri. The other 50% joint venture partner is Rheochem, Inc.
("RCI"), whose principal founded Rheochem and has wide experience in PVC
compounding technology. Rheochem has developed advanced wax-based lubricants
which improve processing of PVC siding and pipes and has allowed Rheochem to
capture a large share of what the Company believes to be an expanding PVC
lubricant market. Under the terms of the joint venture agreement, RCI is
primarily responsible for the management of the joint venture whereas the
Company provides the joint venture with accounting services and technical
support. In addition, there is an agreement between the Company and Rheochem
whereby Rheochem markets PVC lubricants developed by Astor in North America,
while the Company processes certain of Rheochem's PVC lubricants at its
processing plants in Titusville, Pennsylvania and Marshall, Texas. These
products are sold to the joint venture at mutually agreed upon prices, which
have historically been market prices. The Company and RCI share equally in the
profits and losses of the joint venture and each of them receives management
fees for the respective management and technical services they provide.
Under the joint venture agreement, neither the Company nor RCI may sell its
interests in Rheochem without first complying with right of first offer and
right of first refusal procedures in favor of the other party. After December
31, 1997, either the Company or RCI may compel the other party to purchase all
its Rheochem interests or to sell to it all the other party's Rheochem
interests. In addition, if the principal of RCI ceases to render services to
Rheochem as a result of death, disability or other reasons, then the Company
will have a six-month call option to require RCI to sell its Rheochem interests
and RCI will concurrently have a seven month put option to require the Company
to purchase RCI's Rheochem interests, in either case at aggregate current value
determined under procedures set forth in the agreement.
Rheochem recorded net sales of $25.9 million and net income of $0.4 million
for the year ended December 31, 1995. Rheochem recorded net sales of $16.6
million and net income of $0.6 million for the six months ending June 30, 1996.
The combined contribution of management fees and equity earnings to Astor's
fiscal year 1996 earnings was $1.2 million.
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FACILITIES
The Company operates ten locations and participates in a joint venture which
operates one additional facility with an aggregate total space of approximately
824,000 square feet. The following table sets forth certain information
regarding these locations. Each of the locations is owned by the Company unless
otherwise indicated.
<TABLE>
<CAPTION>
APPROXIMATE
LOCATION SQ. FT. (1) TYPE OF OPERATIONS
- -------------------------------------- ------------ -------------------------------------------------
<S> <C> <C>
Raleigh, North Carolina (2) 6,600 Global corporate offices
Farmers Valley, Pennsylvania 185,000 Wax production and formulation
Emlenton, Pennsylvania 95,000 Wax production and formulation
Titusville, Pennsylvania 50,000 Wax formulation and packaging
Atlanta, Georgia (2) 22,500 U.S. sales and marketing and administration
Marshall, Texas 74,000 Wax formulation and packaging
Michigan Center, Michigan 170,000 Adhesives and sealants production and research
and development
Columbia, Missouri (3) 22,500 Wax formulation and packaging
West Drayton, Middlesex, England 130,000 European offices, research and development, wax
formulation and packaging, and adhesives and
sealants production
Eupen, Belgium 67,000 Wax formulation and packaging
Kuala Lumpur, Malaysia (2) 1,200 Asian sales and marketing
</TABLE>
- ------------------------
(1) Does not include acreage used for tank farms, other equipment not under roof
or stand-alone warehouses.
(2) These facilities are leased. The Raleigh, North Carolina lease expires on
May 31, 2001, the Atlanta, Georgia lease expires on March 1, 2001 and the
Kuala Lumpur, Malaysia lease expires on April 1, 1998.
(3) This facility is owned and operated by Rheochem, a joint venture in which
the Company holds a 50% interest. See "-- Rheochem Joint Venture."
COMPETITION
The Company competes in the production and sale of specialty wax products
with (i) large multinational oil refineries who largely produce commodity wax as
a byproduct of their lube oil refining business, (ii) a wide variety of
specialty wax producers around the world, which, like the Company, create
value-added products through formulation and packaging and (iii) a large number
of specialty chemical manufacturers, which typically compete in one or more
niche markets. Certain of these competitors have greater financial, technical,
marketing and other resources than the Company. The Company competes on a
variety of factors, including the consistency of its products, the breadth of
its product line, its applied research and product development capabilities, its
worldwide marketing capabilities and its value-added customer services.
The adhesives and sealants markets are highly fragmented, and the Company
competes with a large number of other manufacturers, many of which have greater
financial, technical, marketing and other resources than the Company. The
Company competes by pursuing definable niches in less competitive markets in
which the Company can utilize its technological expertise and applied research
and product development capabilities.
In both the specialty wax and adhesives and sealants businesses, the Company
has developed many of its product formulations in conjunction with its
customers, who often work closely with the Company during the product
development process. Additionally, the Company sells many of its products to
customers pursuant to a technical approval process, and over the past several
years the Company has developed numerous such
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customer approvals. The approval process ranges from a relatively simple process
of sample evaluation and product quality review procedures to a more complicated
process of matching a specific molecular structure to a customer's applications.
The Company believes that the nature of its approvals and its close working
relationship with certain of its customers reduces the threat of losing these
customers to its competitors and positions the Company to develop new
formulations for these customers' next generation of products.
PATENTS AND PROPRIETARY INFORMATION
The Company currently has over 3,000 different wax formulations and over
1,650 adhesives and sealants in its proprietary database. The Company relies
primarily upon trade secrets and other unpatented proprietary information in its
operations, particularly in its specialty wax products business. The Company
also holds 19 patents in the U.S. and 26 patents in other countries on adhesives
and sealants compositions, methods of using such adhesives and sealants and
other technologies related to such products.
Certain of the Company's employees have entered into agreements providing
for confidentiality. However, there can be no assurance that the Company will be
able to maintain the confidentiality of its trade secrets and proprietary
formulations and processes, that others will not develop similar or better
formulations and processes, that the Company's patents will provide any
protection or benefit to the Company or that additional patents will be issued.
ENVIRONMENTAL MATTERS
The Company is subject to stringent federal, state, local and foreign
environmental laws and regulations relating to the protection of the
environment, including, without limitation, those relating to the storage,
handling, emission and discharge of materials into the environment
("Environmental Laws"). The Company has expended and may be required to expend
in the future, substantial funds for compliance with and remediation under
Environmental Laws. Costs and expenses may be incurred in connection with the
repair or upgrade of facilities to meet existing or new requirements under
Environmental Laws, the remediation of hazardous substances in the soil and
groundwater from historical or ongoing operations at the Company's facilities,
or for other purposes.
Environmental Laws are constantly evolving and it is impossible to predict
accurately the effect they may have upon the capital expenditures, earnings or
competitive position of the Company in the future, except that such
Environmental Laws are becoming increasingly strict and can be expected to
result in increasing compliance costs. To the extent that the cost of compliance
increases and the Company cannot pass on future increases to its customers, such
increases may have an adverse effect on the Company's profitability.
Environmental Laws also provide for substantial penalties and criminal sanctions
for certain violations. The Company is aware of certain conditions, including
the matters discussed below, which may lead to environmental liability being
imposed on the Company with respect to the operation of its facilities and
business. The Company has certain indemnification rights with respect to certain
of these environmental matters. Assuming that the indemnitors continue to meet
their obligations, the Company does not believe that these matters will have a
material adverse effect on the business or financial condition of the Company.
There can be no assurance, however, that the indemnitors will continue to meet
their obligations or that the Company will not incur additional significant
liabilities in connection with these or other environmental matters or that such
liabilities will not have a material adverse effect on the Company's business or
financial condition.
TITUSVILLE FACILITY
The Company is aware of contamination at a portion of its Titusville,
Pennsylvania facility. Investigations to date indicate that the Company's
operations did not contribute to the contamination and that most of the
contamination results from the disposal of waste by an oil refinery that
formerly operated in the area. Although the Company, as the current owner of the
site, could be held strictly liable under certain Environmental Laws for the
cleanup of the Titusville facility, the Company would have the right to recover
some or all of the costs of cleaning up this site from third parties who have
owned or operated the site or contributed to its contamination. Environmental
consultants engaged by the Company have given a preliminary estimate of $1
million for the cost of cleaning up this site. Under the terms of an agreement
between the Parent and ABI pursuant to which ABI was acquired and became a
subsidiary of the Company, the Parent is
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entitled to set-off, against principal and interest otherwise payable on
L1,450,988 of the subordinated debt issued to ABI's former stockholders, any
costs relating to this site over $350,000, so long as the Parent notifies the
former stockholders by June 28, 1999 of the existence of the condition giving
rise to the set-off claim. After October 1, 1996, any such set-off by the Parent
will result in a corresponding reduction in the mirror intercompany note from
ABI Acquisition 2 plc to ABI Acquisition 1 plc, the mirror intercompany note
from ABI Acquisition 1 plc to Astor Holdings II and the mirror intercompany note
from Astor Holdings II to the Parent. The Company has begun the process of
characterizing the contamination of the Titusville facility pursuant to the
Pennsylvania Land Recycling and Environmental Remediation Standards Act, which
provides for the voluntary cleanup of industrial properties through the use of
streamlined procedures and remedial standards tailored to the future use of the
property.
The Titusville facility is located near the Cyclops Site, which has evidence
of soil and groundwater contamination and has been the subject of an Expanded
Site Inspection by an EPA contractor. Costs of remediation of the Cyclops Site
have been estimated to range between $4 million and $15 million in 1995 dollars
for soil remediation. No cost estimate is available for the remediation, if any,
of groundwater at this site. Based upon investigations conducted to date, the
Company believes that other parties are likely responsible for the contamination
at the Cyclops Site. Under certain Environmental Laws, remediation costs for
this site would be borne by parties who have owned or operated the site or are
responsible for its contamination. An EPA investigation, the conclusions of
which management believes to be inaccurate, indicated that a former subsidiary
of ABI (which has since been merged into the Company) formerly owned the Cyclops
Site and disposed of wastes there. However, based on the Company's
investigations to date, the Company believes that ABI's former subsidiary never
owned or operated the Cyclops Site, or arranged for the disposal of or
transported hazardous waste there and that a different company with some common
ownership and a similar name was the prior owner. Because of the proximity of
the Company's property to the Cyclops Site and other unknown factors, there can
be no assurance that the Company will not incur some liability relating to the
Cyclops Site. Under the terms of the ABI acquisition agreement between the
Parent and ABI, the Parent is entitled to set-off, against the principal and
interest otherwise payable on L1,450,988 of subordinated debt issued to ABI's
former stockholders, any costs relating to the Cyclops Site, so long as the
Parent notifies the stockholders by June 28, 1999 of the existence of the
condition giving rise to the set-off claim. After October 1, 1996, any such
set-off by the Parent will result in a corresponding reduction in the mirror
intercompany note from ABI Acquisition 2 plc to ABI Acquisition 1 plc, the
mirror intercompany note from ABI Acquisition 1 plc to Astor Holdings II and the
mirror intercompany note from Astor Holdings II to the Parent.
PENNSYLVANIA REFINERY FACILITIES
Quaker State, which formerly owned the Company's Emlenton and McKean,
Pennsylvania facilities, has installed groundwater recovery systems at these
facilities and is using the Company's wastewater treatment facilities for
treatment of the contaminated groundwater. Quaker State is responsible for all
costs of the recovery systems, a fee for use of the Company's wastewater
treatment facilities and any incremental costs resulting from the Company's
treatment of groundwater in its wastewater treatment facilities. Groundwater
remediation at the McKean and Emlenton facilities is funded entirely by Quaker
State pursuant to an indemnity agreement. In addition, under the indemnity
agreement, certain non-groundwater environmental remediation and compliance
costs are divided equally between Quaker State and the Company (with the Company
paying its share in the form of subordinated notes payable to Quaker State on
December 31, 2008) up to a total of $5.5 million. Costs above $5.5 million are
paid entirely by Quaker State under the indemnity agreement. The cost sharing
arrangement for such non-groundwater remediation costs and compliance costs
expires in 2010. Since 1990, the Company has incurred approximately $150,000 of
indebtedness relating to this cost-sharing arrangement. There is no expiration
date or maximum liability, however, with respect to Quaker State's obligation to
pay for groundwater remediation at the Emlenton and McKean facilities. There are
several additional environmental compliance issues relating to tanks,
separators, drying pits, cleaning areas and other matters at these facilities,
some of which Quaker State is addressing pursuant to the indemnity agreement and
some for which the Company is seeking coverage from Quaker State under the
indemnity agreement. Quaker State consistently has performed its groundwater
remediation obligations under the indemnity. However, any failure by Quaker
State to continue funding the costs to be borne by it or
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the incurrence of any costs for which Quaker State is not responsible
substantially in excess of those currently expected by the Company could have a
material adverse effect on the Company's financial condition or results of
operations.
PAGE AVENUE FACILITY
ADCO's manufacturing facility located in Michigan Center, Michigan (the
"Page Avenue Facility") has been the subject of cleanup action during which
numerous buried drums and other waste as well as an underground storage tank
("UST") were removed. The Company believes that former owners and operators of
the Page Avenue Facility buried the drums and other waste and operated the UST.
Residual soil and groundwater contamination apparently released from the drum
waste and/or the UST still remains at the Page Avenue Facility. The results of
investigation and cleanup activities at the Page Avenue Facility have been
reported to the Michigan Department of Environmental Quality ("MDEQ"). Under
recent changes to the Michigan environmental cleanup liability statute, the
current owner of a contaminated facility is only liable for cleanup costs if it
is responsible for causing a release of contamination at the facility. In
October 1995, ADCO asserted to MDEQ that it should not be held liable for any
additional remediation under the revised statute because previous owners and
operators were responsible for the contamination at the Page Avenue Facility.
MDEQ has not yet responded to ADCO's correspondence on this issue. The revised
Michigan cleanup statute also shields from liability the new owner of a
previously contaminated facility if that person conducts a baseline
environmental assessment ("BEA") of the facility within 45 days of acquiring it
and discloses the results of the assessment to MDEQ and subsequent purchasers of
the facility. Astor Corporation has initiated the process of conducting a BEA of
the Page Avenue Facility. Pursuant to a 1993 agreement through which the Page
Avenue Facility was acquired from Nalco Chemical Company ("Nalco"), ADCO has an
indemnity, subject to caps and other limitations, from Nalco Chemical Company
for certain losses incurred in connection with the cleanup of the drum waste
area and the former UST (the "Nalco Indemnity"). There can be no assurance,
however, that the Company would be able to make any recovery under the Nalco
Indemnity.
THIRD PARTY WASTE DISPOSAL SITES
ADCO has been named as a potentially responsible party ("PRP") at two
third-party waste disposal sites pursuant to CERCLA -- the Jackson Drop Forge
Site in Jackson, Michigan (the "Jackson Site") and the Frontier Chemical Site in
Niagara Falls, New York (the "Frontier Site"). The Company believes that ADCO
has no involvement with the Jackson Site. In addition, the EPA has informally
indicated that it no longer considers ADCO a PRP at the Jackson Site. The
Company believes that a portion of the liability, if any, in connection with the
Jackson Site is subject to the Nalco Indemnity. In connection with the Frontier
Site, ADCO has paid approximately $9,000 to settle its share of alleged
liability for removal actions at the site. It is unclear whether the EPA will
require additional cleanup at the Frontier Site.
LEGAL PROCEEDINGS
From time to time, the Company has been and is involved in various legal
proceedings. Management believes that all of such litigation is routine in
nature and incidental to the conduct of its business, and that none of such
litigation would have a material adverse effect on the financial condition or
results of operations of the Company.
The Company has been named as a defendant, along with 92 other companies, in
a class action lawsuit in Texas. The suit alleges personal injury, death and
other damages arising out of the plaintiffs' exposure to a variety of building
materials and other products while working at the Corpus Christi Army Depot. The
plaintiffs, who are seeking approximately $500 million in damages, appear to
have named as defendants the manufacturers of every substance known to have been
used over an extended period at the Army Depot. The Company product involved
appears to be a sealant used in the installation and repair of commercial
roofing. The Company's insurance carrier is currently defending this action on
behalf of the Company. While the case is still in the early stages of discovery,
according to the insurer, no evidence has been produced to date linking the
Company's sealants to any of the plaintiffs' claims.
60
<PAGE>
EMPLOYEES
As of July 1, 1996, the Company had 768 employees in its worldwide
operations. Of that total, 525 were primarily engaged in manufacturing and
production, 90 were primarily engaged in sales, marketing and distribution, 40
were primarily engaged in applied research and product development, and 113 were
primarily engaged in management and administration.
At the Company's Emlenton and McKean, Pennsylvania facilities, 188 of the
hourly production employees are members of the Oil, Chemical and Atomic Workers
International Union. In February 1996, the Company entered into a labor
agreement with this union expiring in January 1999. At its Michigan Center,
Michigan facility, 130 of the Company's hourly production employees are members
of the International Association of Machinists and Aerospace Workers. In May
1994, the Company entered into a five-year labor agreement with this union.
The Company has never experienced a labor strike or other labor-related work
stoppage, and the Company believes that its employee and labor relations are
good.
61
<PAGE>
ACQUISITION OF ADCO
TERMS OF MERGER
Concurrent with the consummation of the Offering on October 8, 1996, Astor
acquired all of the outstanding capital stock and all of the issued but
unexercised options of ADCO, a publicly traded Nasdaq National Market
manufacturer and marketer of adhesives and sealants, for an aggregate
consideration of $54.4 million. Through the acquisition of ADCO, Astor added
significant depth to its product lines, global marketing and manufacturing
networks and product development capabilities. Management believes that these
strengths will enable Astor to improve significantly the penetration of its
existing adhesives and sealants in the U.S. and provide Astor the opportunity to
market ADCO's products outside of the U.S. Management believes that the ADCO
Acquisition will also serve as an excellent platform from which to pursue
complementary acquisitions in the highly fragmented adhesives and sealants
industry.
Pursuant to the terms of a definitive merger agreement between the parties,
Astor paid $10.25 per share for the 5.15 million ADCO shares outstanding, plus
an aggregate of $1.6 million representing the aggregate net spread on ADCO's
outstanding stock options. In addition, ADCO caused its subsidiary to redeem
approximately $3.9 million of outstanding preferred stock of such subsidiary and
pay the dividends accrued thereon as of the date of redemption.
The merger agreement contains customary representations and warranties from
ADCO to Astor. These representations and warranties, and any related
indemnification rights, terminated upon the effectiveness of the ADCO
Acquisition. Concurrent with the consummation of the Offering and the
acquisition of ADCO, ADCO Products, Inc., a subsidiary of ADCO, was merged with
and into ADCO, and ADCO was merged with and into Astor Corporation. Astor
Corporation is the surviving entity of these mergers.
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<PAGE>
CORPORATE STRUCTURE
The following chart depicts the equity ownership of the Company after giving
effect to the Transactions, including the ADCO Acquisition.
[FLOWCHART]
- ------------------------
(1) The outstanding voting preferred stock of ABI Acquisition 1 plc entitles the
holder thereof to (i) elect three of the four directors of ABI Acquisition 1
plc, (ii) exercise 75% of the voting power of the outstanding capital stock
of ABI Acquisition 1 plc and (iii) an aggregate liquidation preference of
$1.7 million.
(2) The outstanding voting preferred stock of Astor Corporation entitles the
holder thereof to an aggregate liquidation preference of $28.5 million and
has a cumulative dividend rate of 12.5% per annum. The holder of such shares
is also entitled to exercise 13.2% of the voting power of the currently
outstanding capital stock of Astor Corporation.
63
<PAGE>
MANAGEMENT
The following table sets forth the name, age and position of each of the
directors and executive officers of Astor Corporation, Astor Holdings II and the
Parent. Unless otherwise noted, each individual serves in the indicated capacity
at each of Astor Corporation, Astor Holdings II and the Parent. Each director
will hold office until the next annual meeting of stockholders or until his
successor has been elected and qualified. Officers are elected by the Board of
Directors and serve at the discretion of the Board.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ---------------------- --- --------------------------------------------------------------------------
<S> <C> <C>
Boyd D. Wainscott 52 Chairman of the Board, Chief Executive Officer, Director
C. Richard Spalton 56 Director, President
Jose C. Houssa 50 Vice President, Chief Technical Officer (1)
John F. Gottshall 49 Vice President, Chief Financial Officer, Treasurer, Assistant Secretary
David E. Hawkins 47 Vice President, Chief Administrative Officer, Secretary
Charles E. Sax 63 President of ADCO Division (1)
Philip D. Beery 52 Chief Operating Officer of ADCO Division (1)
Thomas P. Causer 47 Vice President, Wax Manufacturing Operations (1)
Ron B. Hallewell 47 Vice President, Sales and Marketing, America (1)
Adrian Browne 35 Vice President, Controller, Assistant Treasurer, Assistant Secretary (1)
Alan J. Andreini 50 Director
Richard R. Crowell 41 Director
Mark C. Hardy 32 Director
Kurt B. Larsen 32 Director
Justin Maccarone 37 Director
Gerald L. Parsky 53 Director
Richard K. Roeder 47 Director
W. Montague Yort 32 Director, Assistant Secretary
</TABLE>
- ------------------------
(1) Individual holds such positions at Astor Corporation and not at Astor
Holdings II or the Parent.
BOYD D. WAINSCOTT has served as Chairman and Chief Executive Officer of
Astor Corporation since 1994 and as a director of Astor Corporation since June
1995. From 1990 to 1993, Mr. Wainscott served as President and Chief Executive
Officer of Pitman-Moore, a division of the IMCERA Group and a global
manufacturer and marketer of animal health and nutrition products. Prior to
this, Mr. Wainscott held several senior marketing positions within Pitman-Moore
and at Stauffer Chemical Company where he was responsible for sales and
marketing of a division that produces herbicides and industrial products.
C. RICHARD SPALTON has served as President and a director of Astor
Corporation since June 1995. Prior to that, Mr. Spalton was the Managing
Director of Astor Stag Ltd. and ABI since 1974. Mr. Spalton joined ABI in 1971
as a Marketing Manager following nine years with Shell Oil in England.
JOSE C. HOUSSA has been Vice President and Chief Technical Officer of Astor
Corporation since June 1995. From 1989 to June 1995, Mr. Houssa was the Group
Technical Director of ABI's West Drayton facility and a member of the Board of
Directors of Astor Stag Ltd., ABI's English subsidiary. Prior to that he was
Chief Chemist and Product Director of Astor Stag S.A., ABI's Belgian subsidiary,
and responsible for the marketing and sales of ABI products in the European
community (U.K. excluded). Mr. Houssa has been with ABI since 1970.
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<PAGE>
JOHN F. GOTTSHALL joined Astor Corporation in 1995 as its Chief Financial
Officer. From 1991 to 1995, Mr. Gottshall served as Vice President and Chief
Financial Officer at Trident NGL, Inc., a natural gas liquids firm. In addition,
Mr. Gottshall was Senior Vice President and Chief Financial Officer of Freeport-
McMoRan Resource Partners L.P., an agricultural products firm from 1987 to 1990
and Treasurer of Freeport-McMoRan, Inc. from 1985 to 1987.
DAVID E. HAWKINS has been the Chief Administrative Officer of Astor
Corporation since 1994. From 1987 to 1993, Mr. Hawkins served in several senior
management positions, including Vice President of Marketing from 1987 to 1989,
and Senior Vice President of Strategic Planning, Mergers and Acquisitions from
1989 to 1993 at Pitman-Moore, a division of the IMCERA Group and a worldwide
manufacturer of animal health and nutrition products.
CHARLES E. SAX has been the President of the ADCO Division of the Company
since October 1996. From 1985 to October 1996, Mr. Sax served as President of
ADCO and from 1993 to October 1996 he served as a director of ADCO. Mr. Sax
began working for ADCO in 1985, following Nalco's acquisition of ADCO, and spent
a combined 38 years with Nalco and ADCO. It is currently anticipated that Mr.
Sax will retire from his position as an officer of Astor Corporation on December
31, 1996, at which time he will become a director of Astor Corporation.
PHILIP D. BEERY has been the Chief Operating Officer of the ADCO Division of
the Company since October 1996. From 1990 to October 1996, Mr. Beery served as
Vice President of Sales and Marketing of ADCO, during which time he was in
charge of all sales and marketing at ADCO, including market development and new
products. From 1983 to 1985, Mr. Beery served in several senior management
positions at ADCO.
THOMAS P. CAUSER has served as Vice President, Wax Manufacturing Operations
of Astor Corporation since 1992. From 1990 to 1992, Mr. Causer was McKean Plant
Manager and Quality Control Manager. Mr. Causer had previously spent 12 years as
Quality Control Manager at Quaker State.
RON B. HALLEWELL has been Vice President of Sales and Marketing, America at
Astor Corporation since consummation of the ABI Acquisition in June 1995. Mr.
Hallewell joined ABI in 1972 and held various management positions in ABI,
including Vice President of Sales and Marketing of Astor Wax Corp., a U.S.
subsidiary of ABI, from August, 1986 to June 1995.
ADRIAN BROWNE has been a Vice President of Astor Corporation since 1996 and
the Controller of Astor Corporation since June 1995. Mr. Browne joined ABI as
Group Finance Director in July 1994. Previously, he spent twelve years with the
London office of KPMG Peat Marwick and was Senior Manager of the Audit
Department from 1992 to 1994, working on audit and corporate finance
assignments. Mr. Browne is a chartered accountant.
ALAN J. ANDREINI has served as a director of Astor Corporation since 1989.
Since 1978, Mr. Andreini has served as Executive Vice President of Comdisco,
Inc., a technology services firm, where he is responsible for budgets, human
resources, venture leasing and compensation and also serves as a director. In
addition, Mr. Andreini currently serves as a director of Hugoton Energy
Corporation, an oil and gas exploration and production firm.
RICHARD R. CROWELL has served as a director of Astor Corporation since June
1995. Mr. Crowell is a founding partner of Aurora Capital Partners L.P. ("ACP")
and has served as a Managing Director of ACP since 1991. Prior to forming ACP,
Mr. Crowell was a Managing Director of Rosecliff, Inc., the management company
for Acadia Partners L.P.
MARK C. HARDY has served as a director of Astor Corporation since June 1995.
Mr. Hardy joined ACP in June 1993 as an Associate and has been a Vice President
of ACP since December 1995. Prior to joining ACP, Mr. Hardy was an Associate at
Bain & Company, a consulting firm.
65
<PAGE>
KURT B. LARSEN has served as a director of Astor Corporation since June
1995. Mr. Larsen joined ACP at its founding in 1991 as an Associate and served
as a Vice President of ACP from December 1993 through December 1995, at which
time he became a Principal of ACP. Prior to joining ACP, Mr. Larsen was an
Associate at Drexel Burnham Lambert, Inc.
JUSTIN MACCARONE was nominated in September 1996 by UBS Partners Inc. ("UBS
Partners") to serve as a director of Astor Corporation pursuant to the terms of
a Stockholders Agreement described below and under "Ownership of Voting
Securities -- Stockholders Agreement." Mr. Maccarone has served as a Managing
Director of UBS Capital LLC ("UBS Capital") since 1993 and as the President and
a Director of UBS Partners since 1995. Mr. Maccarone served as a Senior Vice
President at GE Capital Corporation from 1992 to 1993 and Vice President from
1989 to 1992. Mr. Maccarone also serves as a director of Cinnabon International,
Inc., Peoples Telephone Company, Inc. and American Sports Products Group, Inc.
GERALD L. PARSKY has served as a director of Astor Corporation since 1994.
Mr. Parsky is a founding partner and has been the Chairman and Managing Director
of ACP since its founding in 1991. Mr. Parsky is also the beneficial owner of
Century City 1800 Partners, L.P., a Delaware limited partnership ("CC 1800").
Prior to forming ACP, Mr. Parsky was a Senior Partner and member of the
Executive and Management Committees with the law firm of Gibson, Dunn &
Crutcher.
RICHARD K. ROEDER has served as a director of Astor Corporation since June
1995. Mr. Roeder is a founding partner and has been a Managing Director of ACP
since its founding in 1991. Prior to forming ACP, Mr. Roeder was a partner in
the law firm of Paul, Hastings, Janofsky & Walker, where he served as Chairman
of the firm's Corporate Law Department and a member of its National Management
Committee.
W. MONTAGUE YORT has served as a director of Astor Corporation since June
1995. Mr. Yort joined ACP in April 1993 as an Associate and has been a Vice
President of ACP since December 1995. From June 1992 to April 1993, Mr. Yort was
an Associate at Morgan Stanley & Co. Incorporated.
Under the Stockholders Agreement, dated as of June 27, 1995, among the
Parent and certain of its stockholders, warrant holders and option holders, UBS
Partners, a stockholder of the Parent, became entitled to appoint two members of
the Board of Directors of the Parent and one member of the Boards of Directors
of Astor Corporation and Astor Holdings II after consummation of the
Transactions. Pursuant to the Stockholders Agreement, UBS Partners designated
Justin Maccarone to serve on the Boards of Directors of Astor Corporation, Astor
Holdings II and the Parent. In addition, UBS Partners is entitled to have one
UBS Board nominee serve as a member of each Board committee of Astor
Corporation, Astor Holdings II and the Parent. See "Ownership of Voting
Securities -- Stockholders Agreement."
66
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth the cash compensation paid or awarded by
Astor Corporation to the Chief Executive Officer and the other four most highly
compensated executive officers of Astor Corporation (the "Named Executive
Officers") for the fiscal year ended March 31, 1996.
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL --------------
COMPENSATION NUMBER OF
---------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (2) OPTIONS (#)(3) COMPENSATION
- --------------------------- --------- ------------- ------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Boyd D. Wainscott, 1996 $ 270,000 $ 170,482 $ -- 81,818 $ 58,308(4)
Chief Executive Officer
C. Richard Spalton, 1996 178,250 96,487(5) -- 34,091 17,290(6)
President
Jose C. Houssa, 1996 143,800 25,110 -- 10,227 31,168(6)
Chief Technical Officer
John F. Gottshall, 1996 142,500(7) 22,900 -- 10,227 87,168(8)
Chief Financial Officer
David E. Hawkins, 1996 135,000 18,600 -- 6,818 105,947(9)
Chief Administrative
Officer
</TABLE>
- ------------------------
(1) Figures are in U.S. dollars and where appropriate reflect an assumed
exchange rate of L1.00 to $1.55 and 32.00 Belgian francs to $1.00.
(2) Excludes perquisites and other personal benefits which do not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus for any Named
Executive Officer.
(3) Represents options issued by the Parent to purchase securities of the
Parent. All such options were issued pursuant to the 1995 Stock Incentive
Plan of the Parent (the "Stock Incentive Plan"). Pursuant to the Stock
Incentive Plan, the Compensation Committee of the Board of Directors of the
Parent determines the terms and conditions of each option granted.
(4) Reflects the payment of relocation costs in the amount of $55,601 and the
payment of insurance premiums in the amount of $2,707.
(5) Includes a bonus of $46,113 paid by ABI prior to the June 1995 acquisition.
(6) Reflects contributions to pension plan.
(7) Reflects salary from July 1995 (commencement date of employment) to March
1996.
(8) Reflects the payment of relocation costs in the amount of $84,377 and the
payment of insurance premiums in the amount of $2,791.
(9) Reflects the payment of relocation costs in the amount of $102,130 and the
payment of insurance premiums in the amount of $3,817.
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<PAGE>
OPTION GRANTS
Shown below is information concerning grants of options issued by the Parent
to the Named Executive Officers for the fiscal year ended March 31, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL POTENTIAL REALIZABLE
GRANTS VALUE AT ASSUMED
-------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS GRANTED EMPLOYEES IN PRICE PER EXPIRATION ------------------------
NAME (#)(1) FISCAL YEAR SHARE DATE 5% 10%
- -------------------------------- --------------- --------------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Boyd D. Wainscott............... 81,818 42.3% $ 10.00 6/28/05 $ 514,635 $ 1,304,179
C. Richard Spalton.............. 34,091 17.6 10.00 6/28/05 214,432 543,411
Jose C. Houssa.................. 10,227 5.3 10.00 6/28/05 64,328 163,018
John F. Gottshall............... 10,227 5.3 10.00 6/28/05 64,328 163,018
David E. Hawkins................ 6,818 3.5 10.00 6/28/05 42,885 108,679
</TABLE>
- ------------------------
(1) These options were granted under the Stock Incentive Plan.
EXERCISES OF OPTIONS AND AGGREGATE YEAR-END OPTION VALUES
Shown below is information with respect to the year-end values of all
options held by the Named Executive Officers. No named executive officer
exercised any options in the fiscal year ended March 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------- ------------------- -------------------------
<S> <C> <C>
Boyd D. Wainscott..................................................... 16,364/65,454 0/0
C. Richard Spalton.................................................... 6,818/27,273 0/0
Jose C. Houssa........................................................ 2,045/ 8,182 0/0
John F. Gottshall..................................................... 2,045/ 8,182 0/0
David E. Hawkins...................................................... 1,364/ 5,454 0/0
</TABLE>
- ------------------------
(1) The exercise price of each option is $10.00 per share, the same price per
share paid by all purchasers of the Common Stock of the Parent at the time
of the Prior Transactions. There have been no subsequent issuances of any
class of the Common Stock of the Parent or options to purchase shares of
Common Stock of the Parent since such time. In addition, such Common Stock
is not publicly traded. As a result of these factors, the Board of Directors
of the Parent has decided to use $10.00 as the value of the Common Stock
underlying the unexercised options for the purpose of these calculations.
The value of the unexercised options is equal to the net value of such
Common Stock as of March 31, 1996 ($10.00), less the applicable per share
exercise price of the option ($10.00).
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<PAGE>
MANAGEMENT COMPENSATION AND EMPLOYMENT AGREEMENTS
Astor Corporation has entered into an employment agreement with Boyd D.
Wainscott effective as of June 28, 1995, which provides that he will serve as
Chairman and Chief Executive Officer of Astor Corporation for an initial term of
three years, which Astor Corporation can extend for successive one year periods.
Pursuant to the agreement, Mr. Wainscott receives an annual salary of $300,000
subject to increase at the discretion of the Board of Directors of the Company.
In addition, Mr. Wainscott is entitled to receive an annual bonus in an amount
up to 100% of his then annual base salary, subject to the satisfaction of
certain performance conditions and at the sole discretion of the Board of
Directors of Astor Corporation if such conditions are not met. On October 30,
1995 Mr. Wainscott also received stock options to purchase 81,818 shares of
Common Stock of the Parent which vest over a five-year period and become
exercisable upon vesting. If Mr. Wainscott's employment is terminated without
cause by Astor Corporation, he will be entitled to receive as severance an
amount equivalent to his then annual base salary for the remaining three year
initial term of his employment and the accrued portion of any bonus through the
date of the termination.
Astor Corporation has entered into an employment agreement with Charles R.
Spalton effective as of July 1, 1995, which provides that he will serve as
President of Astor Corporation. Astor Corporation may terminate Mr. Spalton's
employment on 24 months notice and Mr. Spalton may terminate his employment on
six months notice, provided that such notice, whether given by Astor Corporation
or Mr. Spalton, may not be effective prior to June 30, 1998. The Company may
terminate Mr. Spalton's employment by giving him at least 24 months written
notice. Pursuant to the agreement, Mr. Spalton receives an annual salary of
L125,000 (or $193,750 at an exchange rate of L1.00 to $1.55), subject to
increase at the discretion of the Board of Directors of the Company. In
addition, Mr. Spalton is entitled to receive an annual bonus in an amount up to
75% of his then annual base salary, subject to the satisfaction of certain
performance conditions and at the sole discretion of the Board of Directors of
Astor Corporation if such conditions are not met. On October 30, 1995 Mr.
Spalton also received stock options to purchase 34,091 shares of Common Stock of
the Parent which vest over a five year period and become exercisable upon
vesting.
Astor Corporation has entered into an employment agreement with Jose C.
Houssa effective as of July 1, 1995, which provides that he will serve as Chief
Technical Officer of Astor Corporation. Astor Corporation may terminate Mr.
Houssa's employment on 24 months notice and Mr. Houssa may terminate his
employment on six months notice, provided that such notice, whether given by
Astor Corporation or Mr. Houssa, may not be effective prior to June 30, 1998.
Pursuant to the agreement, Mr. Houssa receives an annual salary of L90,000 (or
$139,500 at an exchange rate of L1.00 to $1.55), subject to increase at the
discretion of the Board of Directors of Astor Corporation. In addition, Mr.
Houssa is entitled to receive an annual bonus in an amount up to 50% of his then
annual base salary, subject to the satisfaction of certain performance
conditions and at the sole discretion of the Board of Directors of if such
conditions are not met. On October 30, 1995 Mr. Houssa also received stock
options to purchase 10,227 shares of Common Stock of the Parent which vest over
a five year period and become exercisable upon vesting.
Astor Corporation has entered into an employment agreement with John F.
Gottshall effective as of July 1, 1995, which provides that he will serve as
Chief Financial Officer of Astor Corporation for an initial term of two years,
which Astor Corporation can extend for successive one year periods. Pursuant to
the agreement, Mr. Gottshall receives an annual salary of $190,000, subject to
increase at the discretion of the Board of Directors of Astor Corporation. In
addition, Mr. Gottshall is entitled to receive an annual bonus in an amount up
to 40% of his then annual base salary, subject to the satisfaction of certain
performance conditions and at the sole discretion of the Board of Directors of
Astor Corporation if such conditions are not met. On October 30, 1995 Mr.
Gottshall also received stock options to purchase 10,227 shares of Common Stock
of the Parent which vest over a five year period and become exercisable upon
vesting. If Mr. Gottshall's employment is terminated without cause by Astor
Corporation, he will be entitled to receive as severance (i) any accrued bonus,
(ii) an amount equal to his annual base salary and any bonus for the initial
term of two years as if he were employed for such period, (iii) 24-months of
annual base salary at the time of termination or expiration, commencing as of
the later of the termination date or the expiration of the
69
<PAGE>
initial two-year term, with such payments stopping upon Mr. Gottshall's
employment with another employer; provided, however, he receives payment of his
annual base salary for at least 12-months and (iv) an additional 12-months of
bonus credited as if he were employed for the 12-month period following the
later of the date of termination and the initial two-year term.
Astor Corporation has entered into an employment agreement with David E.
Hawkins effective as of July 1, 1995, which provides that he will serve as Chief
Administrative Officer of Astor Corporation for an initial term of one year,
which Astor Corporation can extend for successive one year periods. Astor
Corporation has extended Mr. Hawkins' term of employment through July 1, 1997.
Pursuant to the agreement, Mr. Hawkins receives an annual salary of $140,000,
subject to increase at the discretion of the Board of Directors of Astor
Corporation. In addition, Mr. Hawkins is entitled to receive an annual bonus in
an amount up to 40% of his then annual base salary, subject to the satisfaction
of certain performance conditions and at the sole discretion of the Board of
Directors of Astor Corporation if such conditions are not met. On October 30,
1995 Mr. Hawkins also received stock options to purchase 6,818 shares of Common
Stock of the Parent which vest over a five year period and become exercisable
upon vesting. If Mr. Hawkins' employment is terminated without cause by Astor
Corporation, he will continue to receive his annual salary for six months
following the termination and the accrued portion of any bonus through the date
of termination.
The employment agreement of each of Messrs. Wainscott, Spalton, Houssa,
Gottshall and Hawkins also contains (i) a nondisclosure provision which is
effective for the term of such individual's employment with Astor Corporation
and for an indefinite period thereafter and (ii) noninterference and
non-competition provisions, each of which is effective for the term of such
individual's employment with Astor Corporation and two years thereafter.
1995 STOCK INCENTIVE PLAN OF PARENT
Neither the Company nor Astor Holdings II has a stock incentive plan. The
Parent adopted its 1995 Stock Incentive Plan in June 1995, in order to provide
incentives to employees, directors (including non-employee directors) and
independent contractors of the Parent and its subsidiaries, including the
Company, by granting them awards tied to the Parent's Common Stock. The Stock
Incentive Plan is administered by the Compensation Committee of the Board of
Directors of the Parent, which has broad authority in administering and
interpreting the Stock Incentive Plan. The Board of Directors of the Parent and
the Compensation Committee thereof are identical to those of the Company and are
expected to remain identical for the foreseeable future. Awards are not
restricted to any specified form or structure and may include, without
limitation, sales or bonuses of stock, restricted stock, stock options, reload
stock options, stock purchase warrants, other rights to acquire stock,
securities convertible into or redeemable for stock, stock appreciation rights,
phantom stock, dividend equivalents, performance units or performance shares
(collectively, "Awards"). Options granted to employees under the Stock Incentive
Plan may be options intended to qualify as incentive stock options under Section
422 of the Internal Revenue Code of 1986, as amended, or options not intended to
so qualify. An Award granted under the Stock Incentive Plan to an employee or
independent contractor may include a provision terminating the Award upon
termination of employment under certain circumstances or accelerating the
receipt of benefits upon the occurrence of specified events, including, at the
discretion of the Compensation Committee, any change of control of the Parent or
the Company.
The Parent granted options to purchase an aggregate of up to 204,545 shares
of its Class D Common Stock to officers, employees and consultants of Astor
Corporation following the consummation of the Prior Transactions. The exercise
price of each option is $10.00 per share, the same price per share as paid by
all purchasers of Common Stock of the Parent through the consummation of the
Prior Transactions. Each option is subject to certain vesting provisions. All
options expire on the tenth anniversary of the date of grant. For certain
information regarding these options granted to officers of Astor, see "Ownership
of Voting Securities."
1997 INCENTIVE BONUS PROGRAM
Astor Corporation adopted its 1997 Incentive Bonus Program in April 1996, in
order to provide incentives to all salaried employees, but excluding any
participant in the 1997 Management Bonus Plan who
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is also eligible to participate in the U.K. Pension Plan (as defined herein), by
granting them awards tied to Astor Corporation's performance objectives
calculated in terms of year-end EBITDA. Salaried employees will receive a bonus
based on (i) actual year-end EBITDA as of March 31, 1997, (ii) a percentage of
the individual's annual salary which increases as year-end EBITDA increases and
(iii) the individual's satisfactory performance. Awards are restricted to cash
awards.
1997 MANAGEMENT BONUS PROGRAM
Astor Corporation adopted its 1997 Management Bonus Program in April 1996,
in order to provide incentives to 33 selected members of management, judged to
have the greatest impact on the year's results, by granting these members of
management awards tied to Astor Corporation's performance objectives calculated
in terms of year-end EBITDA. Participants in this program have been assigned a
percentage of their base salary as their bonus target for the 1997 fiscal year.
A participant's specific bonus award, however, is dependent on both Astor's
year-end EBITDA (which will determine the size of the bonus pool) and the
individual's performance contribution. For example, if the year-end actual
EBITDA achieves the planned EBITDA, a manager with a 20% target and superior
performance will receive a bonus equal to 20% of his or her base salary then in
effect. However, because the bonus pool directly correlates with the 1997 fiscal
year-end EBITDA, if year-end EBITDA is less than the target EBITDA, the
participant would receive less than a 20% bonus. The proposed management bonuses
will be presented to the Chief Executive Officer for review, but must be
approved by the Compensation Committee of the Board of Directors of Astor
Corporation. Awards are restricted to cash awards.
RETIREMENT SAVINGS PLANS
Astor Corporation has a profit sharing and savings plan that is qualified
under Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"401(k) Plan"). Any full-time employee of Astor Corporation who has completed
one year of service with Astor Corporation and is at least 18 years of age is
eligible to participate in the 401(k) Plan. Astor Corporation employees may
contribute to the plan up to a maximum of 15% of pay. Participants become
immediately vested in both their voluntary contributions as well as any profit
sharing or matching contributions made by Astor Corporation. Under the profit
sharing component of the 401(k) Plan, the Board of Directors annually determines
in its sole discretion the amount, if any, of Astor Corporation's aggregate
profit sharing contribution which is then allocated among participants based on
the ratio that each eligible participant's compensation bears to the total
compensation paid to all eligible participants for the plan year. Under the
matching contribution component of the Plan, Astor Corporation will match
employee contributions in an amount equal to 100% of the employee's pretax
contributions, up to 3% of the employee's eligible compensation contributed into
the plan for the plan year. For all union employees, Astor Corporation will
contribute 2% of the employee's eligible compensation into the plan as long as
the employee has deferred at least 1% of his or her eligible compensation into
the plan for the plan year. As of February 1, 1997, Astor Corporation will
contribute 3% of the union employee's eligible compensation into the plan as
long as the employee has deferred at least 1% of his or her eligible
compensation into the plan for the plan year.
On consummation of the Transactions, the Company assumed ADCO's
discretionary profit sharing plan, which includes a cash-or-deferred arrangement
under Section 401(k) of the Internal Revenue Code of 1986, as amended (the "ADCO
401(k) Plan"). Presently, any full-time employee of the Company who was formerly
a non-union employee of ADCO and who has completed one year of service with the
Company (including service with ADCO) is eligible to participate in the ADCO
401(k) Plan. The Company currently matches 25% of any employee's contribution to
the plan up to a maximum of 5% of pay. Participants become immediately vested in
both their voluntary contributions as well as the Company's matching
contributions in the profit sharing component of the ADCO 401(k) Plan. In
addition, under the profit sharing component of the ADCO 401(k) Plan, the
Company contributes 2% of a participant's compensation to the plan. Presently,
participants become fully vested in this part of the profit sharing component of
the ADCO 401(k) Plan upon completion of seven years of service with the Company
(including service with ADCO). The aggregate total contribution on behalf of all
participants to the ADCO 401(k) Plan may not exceed 15% of total participant
compensation.
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Astor has a pension plan for which all full-time salaried directors or
senior employees based in the U.K. between the ages of 20 and 65 are eligible
(the "U.K. Pension Plan"). Under this plan, eligible employees must contribute
at least 5% of their pay to a retirement savings account maintained by the U.K.
Pension Plan. Astor contributes to the U.K. Pension Plan based on actuarial
valuations. Upon reaching retirement, the eligible participants are entitled to
use contributions to increase their own pensions, to increase their spouse's
pension or, if the individual has been contributing to the fund since before
April 8, 1987, to provide additional tax-free cash at retirement. A participant
normally receives pension payments monthly, but may, with the Company's consent,
give up part of his or her pension and receive a tax-free lump sum payment.
Pension payments are equal to the product of the participant's final pensionable
salary as of the immediately preceding August 1 and the number of pensionable
service years divided by 60. Certain death benefits are paid in the event of
death.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive no compensation for
serving on the Board of Directors. Non-employee directors are reimbursed for
their out-of-pocket expenses in attending Board meetings. Messrs. Crowell,
Hardy, Larsen, Parsky, Roeder and Yort receive no fees in their capacities as
directors, but see "Certain Transactions" for a description of certain other
arrangements pursuant to which ACP and CC 1800 receive compensation from the
Company. Each of Messrs. Crowell, Hardy, Larson, Parsky, Roeder and Yort is an
affiliate or limited partner of, or employed by ACP. Mr. Parsky is the sole
limited partner and the sole beneficial owner of the general partner of CC 1800.
See "Management" and "Ownership of Voting Securities."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Andreini, Crowell and Roeder serve as the Compensation Committee of
Astor Corporation and the Parent and administer the Stock Incentive Plan.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102 of the Delaware General Corporation Law (the "DGCL") authorizes
a Delaware corporation to include a provision in its certificate of
incorporation limiting or eliminating the personal liability of its directors to
the corporation and its stockholders for monetary damages for breach of the
directors' fiduciary duty of care. The duty of care requires that, when acting
on behalf of the corporation, directors exercise an informed business judgment
based on all material information reasonably available to them. Absent the
limitations authorized by such provision, directors are accountable to
corporations and their stockholders for monetary damages for conduct
constituting gross negligence in the exercise of their duty of care. Although
Section 102 of the DGCL does not change a director's duty of care, it enables
corporations to limit available relief to equitable remedies such as injunction
or rescission. The Certificate of Incorporation and Bylaws of each of the
Parent, Astor Holdings II and Astor Corporation include provisions which limit
or eliminate the personal liability of its directors to the fullest extent
permitted by Section 102 of the DGCL. Consequently, a director or officer will
not be personally liable to any of the Parent, Astor Holdings II or Astor
Corporation or their respective stockholders for monetary damages for breach of
fiduciary duty as a director, except for (i) any breach of the director's duty
of loyalty to any such corporation or its stockholders, (ii) acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) unlawful payments of dividends or unlawful stock repurchases,
redemptions or other distributions, and (iv) any transaction from which the
director derived an improper personal benefit.
The Certificate of Incorporation and Bylaws of each of the Parent, Astor
Holdings II and Astor Corporation also provide, in effect, that, to the fullest
extent and under the circumstances permitted by Section 145 of the DGCL, each
such corporation will indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she is a director or officer of such corporation
or is or was serving at the request of any such corporation as a director or
officer of another
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corporation or enterprise. The inclusion of these indemnification provisions in
these Certificates of Incorporation and Bylaws is intended to enable each such
corporation to attract qualified persons to serve as directors and officers who
might otherwise be reluctant to do so. Each of the Parent, Astor Holdings II and
Astor Corporation may, in its discretion, similarly indemnify its employees and
agents.
Depending upon the character of the proceeding, each such corporation may
indemnify against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
any action, suit or proceeding if the person indemnified acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the best
interests of such corporation and, with respect to any criminal action or
proceeding, had no cause to believe his or her conduct was unlawful. To the
extent that a director or officer of any such corporation has been successful in
the defense of any action, suit or proceeding referred to above, any such
corporation would have the right to indemnify him or her against expenses
(including attorneys' fees) actually and reasonably incurred in connection
therewith.
OWNERSHIP OF VOTING SECURITIES
All of the issued and outstanding common stock of Astor Corporation is owned
by Astor Holdings II, and all of the issued and outstanding preferred stock of
Astor Corporation is owned by ABI Corporation, an indirect subsidiary of Astor
Corporation. All of the issued and outstanding capital stock of Astor Holdings
II is owned by the Parent. See "Acquisition of ADCO -- Corporate Structure." The
Parent's authorized capital stock consists of 1,000,000 shares of Preferred
Stock ("Preferred Stock"), 1,000,000 shares of Class A Common Stock ("Class A
Common Stock"), 1,000,000 shares of Class B Common Stock ("Class B Common
Stock"), 1,000,000 shares of Class C Common Stock ("Class C Common Stock") and
1,000,000 shares of Class D Common Stock ("Class D Common Stock" and
collectively with the Class A Common Stock, Class B Common Stock and Class C
Common Stock, the "Classed Common Stock"). In addition, the Parent's authorized
capital stock includes 4,000,000 shares of Common Stock ("Conversion Common
Stock" and together with the Classed Common Stock, "Common Stock") into which
the Classed Common Stock will convert on a share for share basis upon the
earlier of the affirmative vote of the holders of a majority of each class of
Classed Common Stock each voting as a separate class, the consummation of an
initial underwritten public offering of Common Stock meeting certain
requirements or June 28, 2005. All authorized shares of Preferred Stock and
Common Stock have a par value of $0.01 per share.
At July 31, 1996 there were outstanding 535,715 shares of Class A Common
Stock, 142,857 shares of Class B Common Stock and 71,427 shares of Class C
Common Stock. No shares of Class D Common Stock or Conversion Common Stock were
outstanding at July 31, 1996. The holders of Class A Common Stock, Class B
Common Stock and Class C Common Stock are entitled to one vote per share on all
matters submitted to a vote of stockholders, except that the holders of Class A
Common Stock voting as a separate class are entitled to elect five directors of
the Parent, the holders of Class B Common Stock voting as a separate class are
entitled to elect five directors of the Parent and the holders of Class C Common
Stock voting as a separate class are entitled to elect one director of the
Parent. The Class D Common Stock is nonvoting except as may otherwise be
required by applicable law. Upon issuance, the Conversion Common Stock will be
entitled to one vote per share on all matters submitted to a vote of
stockholders.
Subject to the preferences applicable to the outstanding Preferred Stock,
beneficial owners of Common Stock are entitled to receive ratably those
dividends declared by the Board of Directors out of legally available funds. In
the event of a liquidation, dissolution or winding up of the Parent, the holders
of Common Stock are entitled to share ratably in all assets remaining after all
liabilities and the liquidation preference attributable to the outstanding
Preferred Stock has been paid. The holders of Common Stock have no preemptive
rights or cumulative voting rights and no rights to convert their Common Stock
into any other securities, except that the Classed Common Stock is convertible
into Conversion Common Stock as provided above. All outstanding shares of Common
Stock are fully paid and nonassessable.
The Board of Directors of the Parent is authorized to fix the dividend
rights and terms, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, sinking fund and any other rights, preferences,
privileges and restrictions applicable to each series of Preferred Stock. As of
July 31, 1996 the
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Board of Directors had designated two series of Preferred Stock comprised of
142,500 shares of Series A Redeemable Cumulative Preferred Stock ("Series A
Preferred Stock") and 82,500 shares of Series B Redeemable Cumulative Preferred
Stock ("Series B Preferred Stock"). As of July 31, 1996 there were 142,500
shares of Series A Preferred Stock outstanding and 82,500 shares of Series B
Preferred Stock outstanding. Each share of Series A Preferred Stock and Series B
Preferred Stock has a stated value of $100.00.
The Series A Preferred Stock is entitled to receive dividends at the rate of
14.5% per annum on the stated value of each share of Series A Preferred Stock
when, as and if declared payable by the Board of Directors. If accrued dividends
are not paid, the unpaid dividends accumulate annually and accrue dividends at
the rate of 14.5% per annum. The Parent has not paid any cash dividends on the
Series A Preferred Stock and, due to restrictions in the Notes and the Senior
Bank Facility, does not expect to pay cash dividends on the Series A Preferred
Stock for the foreseeable future. The Parent may redeem the Series A Preferred
Stock at its election in whole or in part at any time upon payment of the stated
value of the shares of Series A Preferred Stock being redeemed plus all accrued
and unpaid dividends thereon. Upon the occurrence of certain events involving a
merger, a sale of all or substantially all of the assets or a change in control
(as defined) of the Parent, the holders of Series A Preferred Stock are entitled
to require the Parent to redeem all (or such lesser part as may be selected by
the holder) shares of Series A Preferred Stock for a redemption price of $100.00
per share plus accrued and unpaid dividends thereon. In addition, the Parent is
required to redeem any Series A Preferred Stock outstanding on June 15, 2007.
Upon the liquidation of the Parent each share of Series A Preferred Stock is
entitled to a liquidation preference of $100.00 plus all accrued and unpaid
dividends thereon.
The Series B Preferred Stock is pari passu with, and has the same rights,
preferences and privileges as, the Series A Preferred Stock, except that the
Series B Preferred Stock is not subject to mandatory redemption on June 15,
2007. Accordingly, each share of Series B Preferred Stock is entitled to
participate pro rata with the holders of Series A Preferred Stock in the payment
of dividends, as well as amounts paid upon redemption or liquidation.
The table below sets forth the beneficial ownership of each class of issued
and outstanding capital stock of the Parent, as of July 31, 1996, by each
director of Astor Corporation, each of the executive officers of Astor
Corporation listed under "Management," the directors and executive officers of
Astor Corporation as a group and each person who at such time beneficially owned
more than 5% of the outstanding shares of any class of voting securities of the
Parent.
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<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK
---------------------------------------- -----------------------------------
NUMBER OF NUMBER OF
NAME AND ADDRESS OF BENEFICIAL SHARES AND PERCENTAGE SHARES AND PERCENTAGE OF
OWNER CLASS (1) OF CLASS (1)(2) SERIES (1) CLASS (3)
- ----------------------------------- ---------------------- ---------------- ------------------- --------------
<S> <C> <C> <C> <C>
Petrowax Equity Partners I, L.P. 535,715 Class A 100.0% 58,928 Series B 71.4%
(4)(5)............................
Petrowax Equity Partners II, L.P. 142,857 Class B 100.0 15,714 Series B 19.0
(4)(5)............................
Petrowax Equity Partners III, L.P. 35,714 Class C 50.0 3,929 Series B 4.8
(4)(5)............................
Petrowax Equity Partners IV, L.P. 35,713 Class C 50.0 3,929 Series B 4.8
(4)(5)............................
UBS Partners Inc................... 409,090 Class C(6) 85.1 142,500 Series A 100.0
299 Park Avenue,
New York, NY 10171-0026
Alan J. Andreini (7)............... -- -- -- --
Adrian Browne (8).................. 1,091 Class D(9) 100.0 -- --
Thomas P. Causer (10).............. 1,364 Class D(9) 100.0 -- --
Richard R. Crowell (4)............. -- -- -- --
John F. Gottshall (10)............. 2,045 Class D(9) 100.0 -- --
Ronald B. Hallewell (10)........... 1,364 Class D(9) 100.0 -- --
Mark C. Hardy (4).................. -- -- -- --
David E. Hawkins (10).............. 1,364 Class D(9) 100.0 -- --
Jose C. Houssa (8)................. 2,045 Class D(9) 100.0 -- --
Kurt B. Larsen (4)................. -- -- -- --
Justin Maccarone (11).............. -- -- -- --
Gerald L. Parsky (4)(5)............ 535,715 Class A 100.0 82,500 Series B 100.0
142,857 Class B 100.0
71,427 Class C 100.0
Richard K. Roeder (4).............. -- -- -- --
C. Richard Spalton (8)............. 6,818 Class D(9) 100.0 -- --
Boyd D. Wainscott (10)............. 16,364 Class D(9) 100.0 -- --
W. Montague Yort (4)............... -- -- -- --
All directors and officers as a 82,500 100.0%
group (16 persons)................ 535,715 Class A 100.0
142,857 Class B 100.0
71,427 Class C 100.0
32,455 Class D(9) 100.0
</TABLE>
- ------------------------
(1) The shares of Common Stock underlying options, warrants, rights or
convertible securities that are exercisable as of July 31, 1996 or that will
become exercisable within 60 days thereafter are deemed to be outstanding
for the purpose of calculating the beneficial ownership of the holder of
such options, warrants, rights or convertible securities, but are not deemed
to be outstanding for the purpose of computing the beneficial ownership of
any other person. As a result, the aggregate percentage ownership of a
particular class of Common Stock may exceed 100.0%.
(2) The percentages shown are with respect to the individual classes of Classed
Common Stock.
(3) Percentages shown are with respect to the Series A Preferred Stock and the
Series B Preferred Stock of the Parent.
(4) The address of such beneficial holder is 1800 Century Park East, Suite 1000,
Los Angeles, California 90067.
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(5) The general partner of each of Petrowax Equity Partners I L.P., Petrowax
Equity Partners II L.P., Petrowax Equity Partners III L.P. and Petrowax
Equity Partners IV L.P. (collectively, the "Investment Partnerships") is CC
1800, the sole limited partner of which is Gerald L. Parsky and the general
partner of which is Century City Management Partners L.P., a Delaware
limited partnership ("CCMP"). The sole limited partner of CCMP is Mr. Parsky
and its general partner is a Delaware corporation which is wholly owned by
Mr. Parsky. Due to Mr. Parsky's dispositive power over shares of Common
Stock and Preferred Stock owned by each of the Investment Partnerships, Mr.
Parsky may be deemed to beneficially own all the shares of Common Stock and
Preferred Stock owned by each of the Investment Partnerships.
(6) Represents shares of Class C Common Stock issuable upon the exercise of
409,090 warrants that are immediately exercisable at $10.64 per share.
(7) Mr. Andreini is a limited partner of Petrowax Equity Partners III, L.P.
(8) The address of such beneficial holder is Tavistock Road, West Drayton
Middlesex, UB7 7 RA England.
(9) Represents shares of Class D Common Stock issuable upon the exercise of
immediately exercisable options granted under the 1995 Stock Option Plan of
the Parent.
(10) The address of such beneficial holder is 8521 Six Forks Road, Suite 105,
Raleigh, North Carolina 27615.
(11) Mr. Maccarone is a Director of UBS Partners, the beneficial owner of
142,500 shares of Series A Preferred Stock of the Parent and warrants to
purchase 409,090 shares of Class C Common Stock.
STOCKHOLDERS AGREEMENT
The following is a summary description of the principal terms of the
Stockholders Agreement dated as of June 27, 1995 among the Parent and certain of
its stockholders, optionholders and warrantholders (the "Stockholders
Agreement"). This summary description does not purport to be complete and is
subject to and qualified in its entirety by reference to the definitive
Stockholders Agreement.
The Stockholders Agreement provides that, with certain limited exceptions,
Petrowax Equity Partners I L.P. ("P-1"), Petrowax Equity Partners II L.P.
("P-2"), Petrowax Equity Partners III L.P. ("P-3") and Petrowax Equity Partners
IV L.P. ("P-4" and, collectively with P-1, P-2 and P-3, the "Investment
Partnerships"), and UBS Partners, each of which holds shares of or warrants to
purchase Common Stock and Preferred Stock of the Parent, and certain transferees
of such entities and any other stockholders, option holders and warrantholders
of the Parent described in the Stockholders Agreement (the "Restricted
Stockholders"), are limited in their ability to transfer any of their respective
shares or any interest therein without, in the case of P-1, P-2, P-3 and P-4,
the prior approval of the Parent and UBS Partners (so long as UBS Partners
maintains a certain level of ownership of the Parent's stock).
The Stockholders Agreement provides, subject to certain exceptions, for
certain rights of first refusal in favor of P-1, P-2 and UBS Partners and
certain related entities in the event that any other Restricted Stockholder
desires to transfer his or her shares of Common Stock, Preferred Stock or
Warrants to any person or entity other than an affiliate or associate of such
person, the Parent or a Permitted Transferee (as defined in the Stockholders
Agreement). To the extent that P-1, P-2 and UBS Partners and certain related
entities elect to purchase fewer than all of the shares proposed to be sold by
such selling Restricted Stockholder as provided in the Stockholders Agreement,
the Parent will have a right of first refusal with respect to any such unsold
shares. The first refusal rights will terminate with respect to all shares held
by each Restricted Stockholder upon the effective date of the registration
statement for a qualified initial public offering by the Parent as provided in
the Stockholders Agreement. All first refusal rights of UBS Partners and related
entities will terminate when UBS Partners no longer maintains a certain level of
ownership of the Parent's stock.
Subject to the provisions of the Stockholders Agreement, in the event that
P-1 and P-2 desire to accept a third party offer from a non-affiliate to
purchase all outstanding shares of Common Stock held by them, to effect a
business combination of the Parent and such offeror or an affiliate thereof or
to purchase all or substantially all of the assets of the Parent, the other
Restricted Stockholders will be required to sell all of their shares of Common
Stock of the Parent and securities exercisable or convertible into Common Stock
of the Parent to such Offeror on the terms set forth in such acquisition
proposal or to vote all of their shares in
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favor of such acquisition proposal, as the case may be, and to take all actions
necessary or appropriate to cause the Parent to consummate the transaction. The
rights and obligations described in this paragraph will terminate with respect
to all shares held by each Restricted Stockholder upon the earlier of (i) the
effective date of the registration statement for a qualified initial public
offering by the Parent as described in the Stockholders Agreement or (ii) if UBS
Partners so elects, the occurrence of a change in control of the Parent as
described in the Stockholders Agreement.
In the event that any of the Investment Partnerships desire to transfer any
shares of Common Stock and/ or Preferred Stock held by them, the other
Restricted Stockholders (other than the Investment Partnerships) will be
entitled to require, as a condition of such sale, that the proposed buyer
purchase shares of Common Stock or Preferred Stock from each such other
Restricted Stockholder on a pro rata basis. The rights and obligations described
in this paragraph will terminate with respect to all shares (other than Prefered
Stock) held by such other Restricted Stockholders upon the effective date of the
registration statement for a qualified initial public offering by the Parent.
All Restricted Stockholders will be entitled to certain "piggy-back"
registration rights with respect to shares of Common Stock in connection with a
qualified initial public offering by the Parent and in connection with certain
secondary public offerings effected by the Parent, as described in the
Stockholders Agreement. The Parent will bear all expenses incident to any such
registration, including but not limited to the reasonable fees and expenses of a
single counsel retained by the holders of a majority of such shares being
registered; however, each selling stockholder will be responsible for the
underwriting discounts and commissions and transfer taxes in connection with
shares sold by such stockholder. Each selling stockholder and the underwriters
through whom shares are sold on behalf of a selling stockholder will be entitled
to indemnification from the Parent against certain liabilities, including
liabilities under the Securities Act. UBS Partners is entitled to certain
"demand" registration rights with respect to certain shares of Common Stock or
shares of Series A Preferred Stock, subject to certain limitations. UBS Partners
may exercise this right two times, but no earlier than the earlier of June 27,
2002 or nine months after a qualified initial public offering by the Parent.
The Stockholders Agreement provides certain preemptive rights to UBS
Partners and certain related entities if the Parent proposes to sell or issue
shares of Common Stock or Preferred Stock or any securities exercisable for or
convertible into such stock or if a subsidiary of the Parent proposes to sell or
issue any equity securities or securities exercisable for or convertible into
equity securities, such that UBS Partners and cetain related entities will be
allowed priority to purchase shares, subject to certain limited exceptions,
necessary to maintain the equity ownership level of UBS Partners and such
related entities immediately prior to such issuance. Such rights will terminate
upon the effective date of the registration statement for a qualified initial
public offering by the Parent.
After UBS Partners, UBS or their respective affiliates are no longer
creditors of the Parent or its subsidiaries with respect to commercial loan or
revolving credit facility indebtedness and provided UBS Partners maintains a
certain level of ownership of the Parent's stock, UBS Partners will be entitled
to nominate two directors to the Board of Directors of the Parent and one member
of each board of directors of Astor Holdings II and Astor Corporation. The
Restricted Stockholders have agreed to vote their shares of Class A Common Stock
in whatever manner is necessary in order to elect one such nominee to the Board
of Directors of the Parent during such period and to vote their shares of Class
B Common Stock in whatever manner is necessary in order to elect a second such
nominee to the Board of Directors of the Parent during such period.
The Stockholders Agreement may be amended only by a written agreement
executed by the Parent, P-1, P-2 and UBS Partners, if then a stockholder. With
the exception of certain provisions thereof which shall survive, the
Stockholders Agreement will terminate on the earlier to occur of June 27, 2005
and the written approval of P-1, P-2 and UBS Partners, if then a stockholder.
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CERTAIN TRANSACTIONS
The Company believes the transactions described below that were entered into
by Astor Holdings II and Astor Corporation and its subsidiaries were beneficial
to the respective companies, and were no less favorable to the respective
companies as could have been obtained from unaffiliated third parties pursuant
to arms-length negotiations.
TRANSACTIONS WITH CC 1800 AND ITS AFFILIATES
In connection with the acquisition of ABI by Astor Coporation, an indirect
subsidiary of Astor Corporation paid ACP a financial advisory fee in the
aggregate amount of $1.2 million. ACP is a limited partnership, the general
partner of which is controlled by and the limited partners of which are Messrs.
Crowell, Parsky and Roeder, each of whom is a director of the Parent, Astor
Holdings II and Astor Corporation. Messrs. Hardy, Larsen and Yort, each of whom
is also a director of the Parent, Astor Holdings II and Astor Corporation, are
also employees of ACP. In connection with the acquisition of Astor Corporation
by the Parent, Astor paid CC 1800, a financial advisory fee of $500,000. Mr.
Parsky, a director of the Parent, Astor Holdings II and Astor Corporation, is
the sole limited partner and the sole beneficial owner of the general partner of
CC 1800. See "Management," "Ownership of Voting Securities" and "Prior
Reorganization."
CC 1800 was a secured and unsecured creditor in the Petrowax bankruptcy and
received certain payments in connection with the Petrowax reorganization
totaling $3.5 million. In addition, WSGP International, Inc., an affiliate of CC
1800, was a creditor in the Petrowax bankruptcy and received payments of
$751,754 on its pre-filing claims totaling $944,048 in connection therewith.
Immediately prior to the Effective Date of Petrowax's Reorganization Plan, CC
1800 was the beneficial owner of 42.5% of Petrowax's outstanding capital stock.
All of the then outstanding equity interests of Petrowax were canceled upon
effectiveness of the Reorganization Plan. On the Effective Date of the
Reorganization Plan, the Investment Partnerships (all of which are controlled by
CC 1800) acquired newly issued Common Stock and Preferred Stock of the Parent
for $15.8 million, and Astor Holdings II acquired all the newly issued capital
stock of Petrowax for $10.0 million upon Petrowax's emergence from bankruptcy
and its change of name to Astor Corporation. In addition, on the Effective Date
of the Reorganization Plan, Astor Holdings II and Astor became wholly-owned
subsidiaries of the Parent. See "Prior Reorganization." For information
regarding the ownership interest of CC 1800 and its affiliates in the Parent see
"Ownership of Voting Securities."
CC 1800 has entered into a Management Services Agreement with the Parent and
UBS Capital pursuant to which CC 1800 earns management fees from the Parent in
the amount of approximately $412,000 annually. These management fees are subject
to annual increases to reflect increases in the Consumer Price Index. Under the
terms of the Management Services Agreement, the Parent will also (i) pay CC 1800
a transaction fee equal to 1.4% of the aggregate acquisition consideration in
connection with merger and acquisition services rendered in connection with
acquisitions made by the Parent or any of the Parent's affiliates in which the
Parent has an ownership interest and (ii) reimburse CC 1800 for all reasonable
out-of-pocket costs and expenses incurred in connection with the performance of
its obligations under the Management Services Agreement. No such payment of
compensation shall be made if prohibited by the Senior Bank Facility. Concurrent
with the consummation of the Offering and the ADCO Acquisition, the Parent will
pay CC 1800 a closing fee of $761,800 for financial advisory services. The
Management Services Agreement also provides that the Parent will provide CC 1800
and its directors, officers, employees, partners and affiliates with customary
indemnification against all actions not involving gross negligence or willful
misconduct, or in criminal proceedings, if there was no reasonable cause to
believe the alleged conduct was unlawful.
Historically, Astor Corporation has paid certain administrative expenses of
P-1, P-2, P-3 and P-4 aggregating less than $28,000 annually and expects to
continue to pay such expenses in the future.
TRANSACTIONS WITH UBS AND ITS AFFILIATES
In connection with the Prior Transactions, UBS provided $77.5 million to
Astor consisting of a term loan facility in the amount of $57.5 million and a
revolving credit facility in the amount of $20.0 million (the "UBS Credit
Facility"). The outstanding indebtedness under the UBS Credit Facility was
repaid upon the
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consummation of the Transactions out of a portion of the proceeds of the
Offering. The term loan had a maturity of seven years, with a stated
amortization schedule and an additional annual paydown based on cash flow. The
outstanding principal balance of the term loan facility bore interest at the per
annum rate of LIBOR plus 2.25%. The revolving facility had a term of seven
years, with all outstanding principal to be paid at maturity. The outstanding
principal balance of the revolving facility bore interest at a per annum rate
equal to LIBOR plus 2.25%. The loans were secured by substantially all of the
assets of Astor. In connection with the Prior Transactions, the Parent paid UBS
Capital financial advisory fees in the amount of $815,000. In connection with
the Prior Transactions, the Parent also sold UBS Partners, an affiliate of UBS
Capital, 142,500 shares of its Series A Preferred at a per share price of
$100.00 (the same price offered to and paid by other investors) and warrants to
purchase 409,090 shares of its Class C Common Stock exercisable at $10.00 per
share (the same price per share offered to and paid by the other investors) for
an aggregate consideration of $700,000.
UBS Capital is a party to the Parent's Management Services Agreement with CC
1800. Under the terms of the Management Services Agreement, the Parent will (i)
pay to UBS Capital a transaction fee equal to 0.6% of the aggregate acquisition
consideration for merger and acquisition services rendered in connection with
acquisitions made by the Parent or any of the Parent's affiliates in which the
Parent has an ownership interest and (ii) reimburse UBS Capital for all
reasonable out-of-pocket costs and expenses incurred in connection with the
performance of its obligations under the Management Services Agreement.
Concurrent with the consummation of the Offering and the ADCO Acquisition, the
Parent paid UBS Capital a closing fee of $326,500 for financial advisory
services. The Management Services Agreement also provides that the Parent shall
provide UBS Capital and its directors, officers, employees, partners and
affiliates with customary indemnification against all actions not involving
gross negligence or willful misconduct, or in criminal proceedings, if there was
no reasonable cause to believe the alleged conduct was unlawful.
TAX SHARING AGREEMENT
The Parent intends to elect to file a consolidated Federal income tax return
which will include Astor Holdings II, Astor Corporation and its direct and
indirect subsidiaries. Under Federal tax law, Astor Holdings II, Astor
Corporation and each of its subsidiaries can be held severally liable for all
the Federal income tax liabilities with respect to each consolidated Federal
income tax return of the Parent in which Astor Holdings II, Astor Corporation or
its subsidiaries, respectively, are included.
In order to allocate the tax liabilities among them, the Parent and its
subsidiaries have entered into a Tax Sharing Agreement (the "Tax Sharing
Agreement"), which provides in general that, so long as the Parent is required
to file consolidated Federal income tax returns which include Astor Corporation
or any of its subsidiaries, Astor will be responsible for paying to the Parent
the Federal tax liability that would be payable by Astor as though it filed a
consolidated Federal income tax return that included only Astor. Similar
provisions will apply with respect to the filing of combined or consolidated
state income or franchise tax returns and the payment of tax on such returns.
Under the Tax Sharing Agreement, the Parent will determine the reporting of
all items on its consolidated federal income tax returns and will be responsible
for all audits and controversies. The tax liability of Astor will be adjusted to
reflect adjustments resulting from resolved audits or other controversies and
appropriate payments or reimbursements will be made.
OTHER
For a discussion of certain indebtedness repaid to Alan J. Andreini, a
director of the Parent, Astor Holdings II and Astor Corporation, pursuant to the
Petrowax Reorganization Plan, see "Prior Reorganization."
PRIOR REORGANIZATION
Astor Corporation was incorporated as a new venture in 1989 in the State of
Delaware under the name Petrowax for the purpose of developing a wax production
business. As part of its start-up plan of operations,
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Petrowax acquired two lube oil and wax production facilities from Quaker State.
Shortly after the completion of the acquisition in 1990 and prior to the
acquisition of ABI and the contemplated acquisition of ADCO, Petrowax
encountered a number of operational and financial difficulties. First,
management of Petrowax had approved the acquisition of the Quaker State
facilities based on its belief that strong demand existed for microcrystalline
waxes, a high melt point specialty wax, and that one of the Quaker State
facilities could be converted and operated, in a cost-efficient manner, to
process the waxy components of A/B Crude, the principal raw material used in the
production of microcrystalline wax. The conversion of one of such Quaker State
facilities, however, proved significantly more costly and time consuming than
anticipated, and management underestimated the learning curve necessary to
produce microcrystalline wax to required specifications. Second, Petrowax had
entered into an exclusive marketing contract with a reseller of microcrystalline
wax. The contract provided that the reseller would buy microcrystalline wax for
resale at prices that assured compelling production economics. However, the long
lead times required to secure customer approvals, the reseller's inability to
perform its obligations to purchase the wax from Petrowax and the delay in
converting one of the facilities resulted in surplus inventory at Petrowax.
Third, Petrowax's management at the time was unable to develop downstream,
high-margin products due to Petrowax's then lack of extensive process knowledge
and limited product development capabilities. Finally, Petrowax had insufficient
working capital to implement its business plan and was forced to liquidate
inventory to fund day-to-day operations. As a result of these and other
difficulties and inefficiencies, Petrowax voluntarily filed for relief pursuant
to Chapter 11 of the U.S. Bankruptcy Code on February 25, 1992. For the year
ended March 31, 1992, Petrowax had an EBITDA loss of $18.3 million.
Following the Filing, Petrowax took a number of steps to improve its
competitive position. Perhaps most importantly, Petrowax retained a turnaround
management team, which undertook a number of corrective actions, including the
renegotiation of substantially all of Petrowax's material contracts. These
corrective actions included (i) the renegotiation of Petrowax's primary supply
contract to provide for improved pricing and the delivery of higher quality waxy
components of A/B Crude oil, (ii) the termination of Petrowax's exclusive
marketing contract with its reseller, the establishment of a number of
non-exclusive reseller arrangements and the increase of Petrowax's direct sales
of its products, (iii) the arrangement of debtor-in-possession financing and
additional working capital to provide for short-term working capital needs, (iv)
the renegotiation of various transportation and terminaling contracts and (v)
the implementation of a number of overhead reduction measures. These steps by
the new management team resulted in (i) the tailoring of Petrowax's products to
meet market demands, (ii) the expansion of Petrowax's customer base and the sale
of its products at improved prices, (iii) the securing of raw materials for
longer, more efficient production runs and the elimination of inventory
liquidation, (iv) the reduction of Petrowax's transportation and terminaling
costs and (v) the streamlining of operations and the general reduction of
overhead costs. For the year ended March 31, 1994, Petrowax had EBITDA of $0.1
million.
After the above described corrective measures were taken, Petrowax focused
on its emergence from bankruptcy and improving its strategic position in the
marketplace. In June 1994, Mr. Boyd Wainscott, an experienced multinational
chemical company manager, joined Petrowax to lead it in developing and
implementing a strategic business plan. This strategic business plan included
(i) improving marketing functions and product distribution, (ii) developing more
higher-margin, value-added products, (iii) improving manufacturing operations
and increasing manufacturing capacity and (iv) pursuing acquisition
opportunities in the consolidating specialty chemicals industry. By implementing
this strategic plan, Petrowax was able to achieve EBITDA of $3.2 million for the
year ended March 31, 1995. See "Business -- Recent History."
To further its strategic plan, simultaneously with its emergence from
bankruptcy and its recapitalization pursuant to the Reorganization Plan as of
June 28, 1995, Petrowax acquired ABI and changed its name from Petrowax to Astor
Corporation, a trade name of ABI. ABI had $11.4 million in EBITDA for the year
ended March 31, 1995.
The combination of Astor and ABI created one of the largest producers of
specialty waxes in the world, based on sales, and a recognized U.K. manufacturer
of adhesives and sealants. The acquisition of ABI furthered Astor's strategic
plan by providing enhanced marketing capabilities and industry-recognized
product development capabilities. The acquisition and recapitalization also (i)
enabled Astor to increase its
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capital expenditures resulting in improved production capacity and reliability,
(ii) improved Astor's in-house marketing and packaging capabilities resulting in
improved product placement and (iii) improved Astor's applied research and
product development capabilities resulting in the development of better uses for
lower-valued production streams.
The following summary provides additional information concerning the key
elements of the Reorganization Plan. It reflects only certain basic elements of
the Reorganization Plan, which are more fully set forth in the Disclosure
Statement and the Reorganization Plan, copies of which are available from the
Company upon request.
FORMATION OF PARENT. CC 1800, a then-existing creditor and indirect
stockholder of Petrowax, organized the Parent for the purpose of (i) acquiring
100% of the common stock of Petrowax and (ii) simultaneously therewith acquiring
not less than 90% of the capital stock of ABI. Immediately prior to the
Effective Date of the Reorganization Plan, CC 1800 and its affiliates were the
beneficial owners of approximately 42.5% of the outstanding common stock of
Petrowax, had the power to elect all of the directors of Petrowax and were
creditors of Petrowax with claims aggregating approximately $12.9 million. CC
1800 is the general partner of each of the Investment Partnerships that own all
of the outstanding Common Stock of the Parent and all of the Series B Preferred
Stock of the Parent and is itself controlled by Gerald L. Parsky, a director of
the Parent, Astor Holdings II and Astor Corporation. See "Ownership of Voting
Securities."
CAPITAL INFUSION. Immediately prior to the Effective Date, the Parent
issued its currently outstanding shares of Common Stock and Preferred Stock for
an aggregate of $30.7 million. Of this amount $10.0 million was used to purchase
shares of capital stock of Petrowax, $17.2 million was contributed to the
capital of corporations that became subsidiaries of Astor Corporation upon
consummation of the ABI Acquisition, and the balance was used to pay a portion
of the fees and expenses incurred in connection with the Prior Transactions.
Pursuant to the Reorganization Plan, the shares of capital stock of Petrowax
were canceled without the payment of any consideration, and thus after the
effectiveness of the Reorganization Plan, the reorganized entity was a
wholly-owned subsidiary of the Parent. In connection with the effectiveness of
the Reorganization Plan and the Prior Transactions, Astor Corporation and
certain of its subsidiaries entered into the UBS Credit Facility, which included
a term loan facility in the principal amount of $57.5 million and a revolving
facility in the principal amount of $20.0 million. See "Certain Transactions."
PURCHASE OF ASTOR AND ABI. On the Effective Date, the Parent, through its
subsidiaries, acquired all of the outstanding shares of ABI for L40.0 million,
including the issuance of approximately L3.7 million of 8% Subordinated Notes
due 2003 (the "ABI Acquisition"). As a result of a series of subsequent
reorganization transactions, all of the U.S. assets and businesses of ABI were
transferred to Astor Corporation.
TREATMENT OF CREDITORS. The Reorganization Plan provided for the following
resolution and treatment of specific types and classes of claims:
(i) PRIORITY CLAIMS. Priority claims of the kind described in Sections
507(a)(1) through 507(a)(7) of the Bankruptcy Code, consisting generally of
professional fees and taxes, totaled approximately $1.6 million and were
paid in full under the Reorganization Plan.
(ii) SECURED CLAIMS OF SANWA. In connection with borrowings by Petrowax
under a loan agreement with Sanwa Business Credit Corporation ("Sanwa"),
Sanwa and Petrowax agreed, based on the value of certain collateral for this
indebtedness, that Sanwa had a secured claim of $7.6 million and an
unsecured claim of approximately $29.8 million. In satisfaction of Sanwa's
secured claim, Sanwa received $7.6 million in cash under the Reorganization
Plan.
(iii) SECURED AND ADMINISTRATIVE CLAIMS OF CC 1800. In connection with
borrowings by Petrowax from CC 1800 under a revolving loan facility entered
into in October 1990 and a debtor-in-possession financing entered into in
February 1992, CC 1800 and Petrowax agreed, based on the value of certain
collateral for this indebtedness, that CC 1800 had secured and
administrative claims of approximately $3.5 million and a total unsecured
claim of approximately $9.4 million. In full satisfaction of CC 1800's
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secured and administrative claims, CC 1800 received $3.5 million in cash
under the Reorganization Plan plus cash in an amount equal to the accrued
but unpaid interest owed on the debtor-in-possession financing.
(iv) SECURED AND ADMINISTRATIVE CLAIMS OF BRIDGE LENDERS. In connection
with borrowings in April 1990 by Petrowax under a bridge loan agreement with
certain bridge lenders (including WSGP International, Inc. (an affiliate of
CC 1800) and Alan J. Andreini, a director of the Parent, Astor Holdings II
and Astor Corporation) the bridge lenders and Petrowax agreed, based on the
value of certain collateral for this indebtedness, that the bridge lenders
had secured and administrative claims of $4.75 million and an unsecured
claim of approximately $1.3 million. In full satisfaction of their secured
and administrative claims, the bridge lenders received $4.75 million in cash
under the Reorganization Plan plus cash in an amount equal to the accrued
but unpaid interest owed on the bridge loan.
(v) UNSECURED CLAIMS. Unsecured claims consisting of trade claims,
claims for damages arising from the rejection of executory contracts,
contingent claims, certain environmental claims, litigation awards,
deficiency claims and all other unsecured claims totaled an estimated $48
million. Each holder of an unsecured claim received its pro rata share of
$875,000, payable in cash, except that no payments were made to Sanwa, CC
1800 or the bridge lenders, whose unsecured claims totaled approximately
$29.8 million, $9.4 million and $1.3 million, respectively.
The above-described reorganization transactions undertaken pursuant to the
Reorganization Plan, including the establishment of the UBS Credit Facility and
the completion of the ABI Acquisition, are collectively referred to in this
Memorandum as the "Prior Transactions."
SENIOR BANK FACILITY
Astor Corporation has entered into a Senior Secured Credit Agreement (the
"Senior Bank Facility") with The Chase Manhattan Bank (the "Bank") providing for
a six-year term loan (the "Bank Term Loan") denominated in eurosterling in an
amount not exceeding the U.S. dollar equivalent of $20.0 million and a six-year
revolving credit facility (the "Revolving Credit Facility") in an amount not
exceeding the U.S. dollar equivalent of $30.0 million (subject to borrowing base
limitations), which will be available in U.S. dollars or eurosterling on a
revolving basis. The Bank, which is acting as agent for the lenders (the
"Lenders"), is an affiliate of one of the Initial Purchasers. The following
description summarizes the principal terms of the Senior Bank Facility and is
qualified in its entirety by reference to such agreement.
The Bank Term Loan was made in a single drawing concurrent with the closing
of the Transactions and all of the proceeds were lent by Astor Corporation to
Astor Stag Ltd. and used to repay to UBS existing indebtedness of Astor Stag
Ltd. and ABI Acquisition 2 plc, both of which are subsidiaries of Astor
Corporation based in the U.K. The note evidencing the intercompany loan (the
"Intercompany Term Loan") by Astor Corporation to Astor Stag Ltd. is secured by
substantially all the assets of Astor Stag Ltd. and pledged in favor of the
Lenders. The Bank Term Loan is repayable in 21 quarterly installments, beginning
with a $1,000,000 installment on October 31, 1997 and continuing with
installments totaling $1,500,000 in 1998, $2,500,000 in 1999, $4,500,000 in
2000, $4,500,000 in 2001 and $6,000,000 in 2002. The final maturity of the Bank
Term Loan is October 31, 2002. The Intercompany Term Loan is repayable on
demand.
Subject to the satisfaction of customary conditions and meeting certain
borrowing base requirements, advances under the Revolving Credit Facility may be
made at any time prior to October 31, 2002 (the "Termination Date") to be used
(i) to finance permitted acquisitions, (ii) to refinance existing indebtedness
of Astor Corporation, ABI Acquisition 2 plc and Astor Stag Ltd. and (iii) to
finance the working capital needs of the Astor Corporation and its subsidiaries.
Up to $10.0 million of the Revolving Credit Facility will be available for
letters of credit. The funds available to be advanced may not exceed the
aggregate of 85% of the eligible accounts receivable of Astor Corporation and
certain of its subsidiaries and 50% of the eligible inventory of Astor
Corporation and its U.S. subsidiaries and certain of its foreign subsidiaries,
in each case as defined in the Senior Bank Facility and provided that eligible
inventory cannot constitute over half the borrowing base. All amounts advanced
under the Revolving Credit Facility become due and payable on the
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Termination Date. Astor Corporation may pre-pay outstanding advances in whole or
in part without incurring any premium or penalty. Proceeds from revolver
advances to be used by subsidiaries in Europe will be lent by Astor Corporation
to Astor Stag Ltd. and the note evidencing such intercompany advances (the
"Intercompany Advances") will be secured and pledged on the same basis as the
note evidencing the Intercompany Term Loan. The Intercompany Advances will be
repayable on demand and there can be no assurance that they will remain
outstanding at any time.
The Senior Bank Facility is secured by a first priority security interest in
all assets of Astor Corporation, all of the capital stock of Astor Corporation's
direct and indirect U.S. subsidiaries, 65% of the voting capital stock and 100%
of the non-voting capital stock of ABI Acquisition 2 plc and all of the capital
stock of Astor Corporation. The obligations of Astor Corporation under the
Senior Bank Facility are guaranteed on a senior secured basis by each of Astor
Corporation's existing and future U.S. subsidiaries.
The Bank Term Loan bears interest at the Eurosterling Rate plus 2.5%. At
Astor Corporation's election, amounts advanced under the Revolving Credit
Facility will bear interest at (i) the Alternate Base Rate plus 1.25%, (ii) the
Eurodollar Rate plus 2.5% or (iii) the Eurosterling Rate plus 2.5%. The
foregoing margins are subject to reduction to specified amounts if the ratio of
Total Debt to EBITDA (as such terms are defined in the Senior Bank Facility) is
3.5 or lower for the most recent four-quarter period. The "Alternate Base Rate"
is equal to the highest of (a) the Bank's prime rate, (b) the secondary market
rate for three-month certificates of deposit plus 1.0% and (c) the federal funds
rate plus 0.5%, in each case as in effect from time to time. The "Eurodollar
Rate" is the rate offered to the Bank for eurodollar deposits for one, three or
six months (as selected by Astor Corporation) in the interbank eurodollar market
in the approximate amount of the Bank's share of the advance under the Revolving
Credit Facility. The "Eurosterling Rate" is the rate offered to the Bank for
eurosterling deposits for one, three or six months (as selected by Astor
Corporation) in the interbank eurosterling market in the approximate amount of
the Bank's share of the Bank Term Loan or the advance under the Revolving Credit
Facility. Interest payments on advances which bear interest based upon the
Alternate Base Rate are due quarterly in arrears and on the Termination Date,
and interest payments on the Bank Term Loan or advances which bear interest
based upon the Eurodollar Rate or the Eurosterling Rate are due on the last day
of each relevant interest period (or, if such period exceeds three months,
quarterly after the first day of such period).
Astor Corporation is required to prepay the Bank Term Loan (or if the Bank
Term Loan is fully repaid, to repay and permanently reduce the Revolving Credit
Facility) with (i) 100% of the net proceeds of sales of equity or incurrence of
certain indebtedness (provided that up to 50% of the net proceeds of any
issuance of equity may be used by the Parent to repurchase its preferred stock),
(ii) 100% of the net proceeds of asset sales (with exceptions set forth in the
Senior Bank Facility) and (iii) 50% of annual excess cash flow (as defined in
the Senior Bank Facility) of Astor Corporation and its subsidiaries, beginning
with the fiscal year ended March 31, 1999.
The Senior Bank Facility contains extensive affirmative and negative
covenants, including among others, covenants relating to leverage, interest and
fixed charge coverage and certain limits on, among other things, the ability of
Astor to incur indebtedness, make capital expenditures, create liens, engage in
mergers and consolidations, make restricted payments, make asset sales, make
capital expenditures or investments, make optional payments and modifications of
subordinated and other debt instruments, engage in transactions with affiliates,
engage in sale/leasebacks, effect changes in fiscal year end, grant negative
pledges or agree to restrictions on Astor subsidiaries' ability to pay dividends
or make distributions. The Senior Bank Facility also contains customary events
of default provisions, including upon a change of control. Astor Corporation
will pay various fees and closing costs in connection with the arrangement of
the Senior Bank Facility customary for transactions of this type.
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DESCRIPTION OF NOTES
Set forth below is a summary of certain provisions of the Notes. The Notes
will be issued pursuant to an indenture (the "Indenture"), dated as of October
8, 1996, by and among the Company, the Guarantor and State Street Bank and Trust
Company, as trustee ( the "Trustee"). The terms of the Indenture are also
governed by certain provisions contained in the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). The following summaries of certain
provisions of the Indenture are summaries only, do not purport to be complete
and are qualified in their entirety by reference to all of the provisions of the
Indenture. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the Indenture. Wherever particular provisions
of the Indenture are referred to in this summary, such provisions are
incorporated by reference as a part of the statements made, and such statements
are qualified in their entirety by such reference. A copy of the Indenture is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. The definitions of certain terms used in the following summary are set
forth below under "-- Certain Definitions."
The description of the Notes contained herein assumes that all Old Notes are
exchanged for Notes in the Offer. To the extent that Old Notes remain
outstanding after the consummation of the Offer, Old Notes and Notes will be
repurchased PRO RATA purusant to the repurchase provisions contained herein.
GENERAL
The Notes will be unsecured senior subordinated obligations of the Company,
limited in aggregate principal amount to $110.0 million, subordinated in right
of payment to all existing and future Senior Debt of the Company, including
Indebtedness pursuant to the Senior Bank Facility, and will be unconditionally
Guaranteed by the Guarantors pursuant to Note Guarantees that will be
subordinated in right of payment to all Senior Debt of the Guarantors. The Notes
will be effectively subordinated to all indebtedness and liabilities of the
Company's Subsidiaries which are not Guarantors. See "Subordination."
As of the Issue Date, all of the Company's Subsidiaries will be Restricted
Subsidiaries. However, under certain circumstances, the Company will be able to
designate current or future Subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes will be limited in aggregate principal amount to $110.0 million
and will mature on October 15, 2006. Interest on the Notes will accrue at the
rate of 10 1/2% per annum and will be payable semi-annually in arrears on each
October 15 and April 15, commencing on April 15, 1997, to Noteholders of record
on the immediately preceding October 1 and April 1. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
Principal of and, premium, if any, and interest and Liquidated Damages (as
defined herein), if any, on the Notes will be payable at the office or agency of
the Company maintained for such purpose within the City and State of New York
or, at the option of the Company, payment of interest may be made by check
mailed to the Noteholders at their respective addresses set forth in the
register of Noteholders. Interest payable on the Notes held through DTC will be
available to DTC participants (as defined herein) on the business day following
payment thereof by the Company. Until otherwise designated by the Company, the
Company's office or agency in New York will be the office of the Trustee
maintained for such purpose. The Notes will be issued in denominations of $1,000
in principal amount and integral multiples thereof; provided that Notes will
initially be issued only to Institutional Accredited Investors (as defined
herein) in denominations of $250,000 of principal amount and any integral
multiple of $1,000 in excess thereof.
NOTE GUARANTEES
The Company's payment obligations under the Notes will be jointly and
severally Guaranteed by Astor Holdings II and Restricted Subsidiaries that
become Subsidiary Guarantors in accordance with the Indenture after the Issue
Date (collectively, the "Guarantors"). See "Certain Covenants -- Future
Subsidiary
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Guarantors." The Note Guarantee of each Guarantor will be subordinated to the
prior payment in full of all Senior Debt of such Guarantor on substantially the
same terms as the Notes are subordinated to the Senior Debt of the Company. The
obligations of each Subsidiary Guarantor under its Note Guarantee will be
limited so as not to constitute a fraudulent conveyance under applicable law.
The obligations of any future Restricted Subsidiary of the Company that
Guarantees the Notes may be subject to avoidance under state or federal
fraudulent transfer laws in the event of the bankruptcy, insolvency or other
financial difficulty of such Guarantor. Under those laws, if a court in a
lawsuit by an unpaid creditor (or representative of creditors of such Guarantor,
such as a trustee in bankruptcy or such Guarantor as debtor-in-possession) were
to find that at the time such Guarantor incurred its obligations under its Note
Guarantee, (a) it did not receive reasonably equivalent value for incurring such
Guarantee and (b) it either (i) was insolvent, (ii) was rendered insolvent,
(iii) was engaged in a business or transaction for which its remaining
unencumbered assets constituted unreasonably small capital or (iv) intended to
incur or believed that it would incur debts beyond its ability to pay as such
debts matured, such court could avoid the Guarantee and such Guarantor's
obligations thereunder and direct the return of any amounts paid thereunder to
the Guarantor or to a fund for the benefit of its creditors. In addition,
regardless of the factors identified in the foregoing clauses (a) and (b), the
court could avoid the Note Guarantee and direct such repayment if it found that
the Note Guarantee was entered into with actual intent to hinder, delay or
defraud such Guarantor's creditors. The measure of insolvency for purposes of
the foregoing will vary depending on the law of the jurisdiction being applied.
Generally, however, an entity would be considered insolvent if the sum of its
debts (including contingent, disputed and unliquidated debts) is greater than
all of its property at a fair valuation or if the present fair salable value of
its assets is less then the amount that will be required to pay its probable
liability on its existing debts as they become due.
SUBORDINATION
The payment by the Company of principal of, and premium, if any, interest
and Liquidated Damages, if any, on the Notes, and by the Guarantors of such
amounts under their respective Note Guarantees (pursuant to the terms thereof or
by acceleration), will be subordinated in right of payment, as set forth in the
Indenture, to the prior payment in full of all Senior Debt of such obligor,
whether outstanding on the Issue Date or thereafter incurred. As of June 30,
1996, on a pro forma basis after giving effect to the issuance of the Old Notes
and the application of the estimated net proceeds therefrom, the completion of
the ADCO Acquisition, the funding of the Senior Bank Facility and the repayment
of amounts outstanding under the UBS Credit Facility, the aggregate amount of
outstanding Senior Debt of the Company and its Subsidiaries would be $21.8
million.
Upon any distribution to creditors of the Company or any Guarantor in a
liquidation or dissolution of the Company or such Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or such Guarantor or its property, any assignment for the benefit of
creditors or any marshalling of the assets and liabilities of the Company or
such Guarantor, the holders of Senior Debt of such entity will be entitled to
receive payment from such entity in full of all Obligations due in respect of
such Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt, whether or not
payable or allowable in such proceeding) before the Noteholders will be entitled
to receive any payment or distribution with respect to the Notes, and until all
Obligations of such entity with respect to Senior Debt are paid in full, any
payment or distribution to which the Noteholders would be entitled shall be made
to the holders of Senior Debt of such entity (except Noteholders may receive
Permitted Junior Securities and payments made from the trust described under
"Legal Defeasance and Covenant Defeasance").
The Company and each Guarantor also may not make any payment upon or in
respect of the Notes, including the principal of, premium, if any, or interest
on the Notes, or to repurchase or redeem any Notes or to pay any Liquidated
Damages (except in such Permitted Junior Securities or from the trust described
under "Legal Defeasance and Covenant Defeasance") if (i) a default in the
payment of the principal of, premium, if any, or interest on Designated Senior
Debt (or, in the case of Senior Debt under the Senior Bank Facility, any other
monetary obligations in respect thereof) occurs and is continuing beyond any
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applicable period of grace (whether at maturity, at a date of required
prepayment, by declaration or otherwise) or (ii) any other default occurs and is
continuing with respect to Designated Senior Debt that permits holders of the
Designated Senior Debt as to which such default relates to accelerate its
maturity (or, in the case of letters of credit, to require cash
collateralization) and the Trustee receives a notice of such default (a "Payment
Blockage Notice") from the Company or the holders of any Designated Senior Debt.
Payments on the Notes may and shall be resumed (a) in the case of a payment
default, upon the date on which such default is cured or waived and (b) in case
of a nonpayment default, the earlier of the date on which such nonpayment
default is cured or waived or 179 days after the date on which the applicable
Payment Blockage Notice is received, unless the maturity of any Designated
Senior Debt has been accelerated (or cash collateral is required for letters of
credit). No new period of payment blockage under clause (ii) above may be
commenced pursuant to a Payment Blockage Notice unless and until 360 days have
elapsed since the effectiveness of the immediately prior Payment Blockage
Notice. No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice.
The Indenture further requires that the Company promptly notify holders of
Designated Senior Debt if payment of the Notes is accelerated because of an
Event of Default. Neither the Company nor any Guarantor may pay the Notes until
five Business Days after such holders receive notice of acceleration and,
thereafter, may not pay the Notes unless the subordination provisions of the
Indenture otherwise permit payment at that time.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or any Guarantor (other than Permitted
Junior Securities) shall be received by the Trustee or the Noteholders at a time
when such payment or distribution is prohibited by the subordination provisions
of the Indenture, such payment or distribution shall be held in trust for the
benefit of the holders of such Senior Debt, and shall be paid or delivered by
the Trustee or such Noteholders, as the case may be, to the holders of such
Senior Debt remaining unpaid or to their representative or representatives, or
to the trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Debt may have been issued, ratably according to
the aggregate principal amounts remaining unpaid on account of such Senior Debt
held or represented by each, for application to the payment of all such Senior
Debt in full after giving effect to any concurrent payment or distribution to
the holders of such Senior Debt.
As a result of the subordination provisions described above, in the event of
a liquidation, insolvency or similar proceeding, Noteholders may recover less
ratably than creditors of the Company or a Guarantor who are holders of Senior
Debt of the Company or such Guarantor or who are not subject to similar
subordination provisions. See "Risk Factors -- Subordination."
OPTIONAL REDEMPTIONS
The Notes will not be redeemable at the Company's option prior to October
15, 2001, except in connection with Public Equity Offerings as set forth below.
Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below, together with accrued and unpaid interest and Liquidated
Damages thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on October 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ------------------------------------------------------------------------ -----------
<S> <C>
2001.................................................................... 105.25%
2002.................................................................... 103.50%
2003.................................................................... 101.75%
2004 and thereafter..................................................... 100.00%
</TABLE>
Until October 15, 1999, upon one or more Public Equity Offerings, up to $35.0
million aggregate principal amount of the Notes may be redeemed at the option of
the Company within 75 days after such Public Equity Offering, on not less than
30 days' but not more than 60 days' notice to each holder of the Notes to be
redeemed, with cash from the net cash proceeds of such Public Equity Offering in
the case of an offering by
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the Company, or from such proceeds invested directly or indirectly by the Parent
or Astor Holdings II in Qualified Capital Stock in the case of an offering by
the Parent or Astor Holdings II, as the case may be, at 109.5% of principal,
together with accrued and unpaid interest to the date of redemption; PROVIDED
that immediately following each such redemption not less than $75.0 million
aggregate principal amount of the Notes is outstanding.
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a PRO RATA basis, by lot
or by such other method as the Trustee deems fair and appropriate; PROVIDED that
no Notes with a principal amount of $1,000 or less shall be redeemed in part.
Notice of redemption shall be mailed by first class mail at least 30 but not
more than 60 days before the redemption date to each Noteholder of Notes to be
redeemed at its registered address. If any Note is to be redeemed in part only,
the notice of redemption that relates to such Note shall state the portion of
the principal amount thereof to be redeemed. A new Note in principal amount
equal to the unredeemed portion thereof will be issued in the name of the
Noteholder thereof upon cancellation of the original Note. On and after the
redemption date, interest will cease to accrue on Notes or portions thereof
called for redemption.
Except as set forth below under "Change of Control" and "Certain Covenants
- -- Asset Sales and Sales of Subsidiary Stock," the Company is not required to
make any mandatory redemption or sinking fund payments with respect to the
Notes.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Noteholder will have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of such Noteholder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon to the date of purchase (the "Change of
Control Payment"). Within 30 days following any Change of Control, the Company
will mail a notice to each Noteholder describing the transaction or transactions
that constitute the Change of Control and offering to repurchase Notes pursuant
to the procedures required by the Indenture and described in such notice. The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the Notes as
a result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the foregoing provisions, the
Company shall comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under the Change of Control
provisions in the Indenture.
On the date upon which the Company is to make a Change of Control Payment
(the "Change of Control Payment Date"), the Company will, to the extent lawful,
(1) accept for payment all Notes or portions thereof properly tendered pursuant
to the Change of Control Offer, (2) deposit with the Paying Agent an amount
equal to the Change of Control Payment in respect of all Notes or portions
thereof so tendered and (3) deliver or cause to be delivered to the Trustee the
Notes so accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being purchased by the Company.
The Paying Agent will promptly mail to each Noteholder of Notes so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each
Noteholder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any, PROVIDED that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Indenture provides that, prior to complying with the provisions of this
covenant, but in any event within 30 days following a Change of Control, the
Company will either repay all outstanding Senior Debt or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Debt to
permit the
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repurchase of Notes required by this covenant. The Company may be prohibited in
certain circumstances, including, without limitation, if it fails to obtain such
requisite consents, from making such repurchases. See "Risk Factors -- Control
of the Company; Change of Control Put."
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Noteholders to require that the Company repurchase or
redeem the Notes in the event of a takeover, recapitalization or similar
restructuring.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Restricted Subsidiaries taken as a whole,
of the assets of Astor Holdings II, the Company and its Restricted Subsidiaries
taken as a whole and of the assets of the Parent, Astor Holdings II, the Company
and its Restricted Subsidiaries taken as a whole. Although there is a developing
body of case law interpreting the phrase "substantially all," there is no
precise established definition of the phrase under applicable law. Accordingly,
the ability of a Noteholder to require the Company to repurchase such Notes as a
result of a sale, lease, transfer, conveyance or other disposition of less than
all of the assets of the Company and its Restricted Subsidiaries taken as a
whole, of the assets of Astor Holdings II, the Company and its Restricted
Subsidiaries taken as a whole and of the assets of the Parent, Astor Holdings
II, the Company and its Restricted Subsidiaries taken as a whole to another
Person or group may be uncertain.
CERTAIN COVENANTS
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, and Astor Holdings II will not, directly or
indirectly, create, incur, issue, assume, Guarantee or otherwise become directly
or indirectly liable with respect to (collectively, "incur") any Indebtedness
(including as a result of an acquisition) and will not issue any Disqualified
Stock; PROVIDED that the Company and the Subsidiary Guarantors may incur
Indebtedness or issue shares of Disqualified Stock if (i) no Default or Event of
Default shall have occurred and be continuing at the time of, or would occur
after giving effect on a pro forma basis to, such incurrence of Indebtedness or
issuance of Disqualified Stock and (ii) the Fixed Charge Coverage Ratio for
Astor Holdings II's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least (x) 2.0 to 1 if such incurrence or issuance
occurs on or before October 8, 1998 or (y) 2.25 to 1 if such incurrence or
issuance occurs at any time thereafter, in each case determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom) as if
the additional Indebtedness had been incurred or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.
The foregoing provisions will not apply to:
(i) the incurrence by the Company and any Domestic Restricted Subsidiary
of Indebtedness pursuant to the Senior Bank Facility in a maximum amount not
to exceed at any time (A) an aggregate principal amount of $20.0 million (or
its foreign currency equivalent) under the Bank Term Loan LESS the aggregate
amount of all Net Proceeds applied to permanently reduce principal
Indebtedness under the Bank Term Loan pursuant to the covenant entitled
"Asset Sales and Sales of Subsidiary Stock" and (B) in the case of other
Indebtedness under the Senior Bank Facility consisting of revolving credit,
working capital and/or letters of credit issued thereunder, in an aggregate
principal amount (with letters of credit being deemed to have a principal
amount equal to the maximum reimbursement obligation of the Company or the
relevant Restricted Subsidiary thereunder) outstanding at any time not
greater than the greater of (such greater amount, the "Working Capital
Amount") (1) $30.0 million (or its
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foreign currency equivalent), LESS the amount of all Net Proceeds applied to
permanently reduce the commitments under the Revolving Credit Facility and
(2) the Borrowing Base; PROVIDED that a change in currency exchange rates
which causes the amount of Indebtedness of the Company and its Domestic
Restricted Subsidiaries outstanding to exceed the levels specified above
shall not be deemed an incurrence of Indebtedness;
(ii) the incurrence by the Company and any Restricted Subsidiary of
Indebtedness that is fully secured by letters of credit permitted pursuant
to clause (i)(B) above or clause (vi) below;
(iii) the incurrence by the Company and any Guarantor of Indebtedness
represented by the Notes and the Note Guarantees;
(iv) the incurrence by the Company or any Restricted Subsidiary of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund
Existing Indebtedness, Existing Disqualified Stock or other Indebtedness
that was permitted by the Indenture to be incurred;
(v) the incurrence (a) by any Wholly Owned Restricted Subsidiary of
Indebtedness owing to and held by the Company, (b) by the Company or any
Wholly Owned Restricted Subsidiary of Indebtedness owing to and held by any
Wholly Owned Restricted Subsidiary or (c) by ABI Acquisition 2 plc of
Indebtedness owing to and held by ABI Acquisition 1 plc, by ABI Acquisition
1 plc of Indebtedness owing to and held by Astor Holdings II or by Astor
Holdings II of Indebtedness owing to and held by the Parent, in each case
pursuant to the provisions of the ABI Shareholder Intercompany Notes;
PROVIDED that such Indebtedness owed by the Company or any Wholly Owned
Restricted Subsidiary that is a Guarantor to any Wholly Owned Restricted
Subsidiary that is not a Guarantor is made expressly subordinate to the
payment in full of all Obligations with respect to the Notes and the Note
Guarantees;
(vi) the incurrence by Restricted Subsidiaries, other than Domestic
Restricted Subsidiaries, of Indebtedness incurred for working capital
purposes and any Guarantee thereof by the Company or Astor Holdings II in an
aggregate outstanding principal amount for all such Indebtedness permitted
solely pursuant to this clause (vi), and together with the aggregate
outstanding principal amount of Indebtedness permitted pursuant to clause
(i)(B) above, does not exceed at any time the Working Capital Amount; and
(vii) the incurrence by the Company, Astor Holdings II or any Restricted
Subsidiary of Indebtedness (in addition to Indebtedness permitted by clauses
(i) - (vi)) in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding not to exceed $10 million (or its
foreign currency equivalent).
For purposes of this covenant each of the following events (but not solely
the following events) shall be deemed to constitute an "incurrence" of
Indebtedness upon the happening thereof: (i) any event that causes any
Unrestricted Subsidiary to be a Restricted Subsidiary shall be deemed to be the
incurrence of such former Unrestricted Subsidiary's Indebtedness by such
Restricted Subsidiary and (ii) any sale of equity or other event that results in
any Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted
Subsidiary or a transfer of any such Indebtedness by the Company to a Person
that is not the Company, or by a Wholly Owned Restricted Subsidiary to a Person
that is not a Wholly Owned Restricted Subsidiary, shall be deemed to be an
incurrence by such former Wholly Owned Restricted Subsidiary or such Person upon
the happening of such event.
RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, and Astor Holdings II will not, directly or
indirectly; (i) declare or pay any dividend or make any other payment or
distribution on account of any Equity Interests of Astor Holdings II, the
Company or any Restricted Subsidiary including, without limitation, any payment
in connection with any merger or consolidation involving the Company (other than
(x) dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company, Astor Holdings II or a Restricted Subsidiary
and (y) dividends or distributions payable to the Company or any other
Restricted Subsidiary (and, if such Restricted Subsidiary has shareholders other
than the Company or another Restricted Subsidiary, to its other shareholders on
a
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PRO RATA basis to such other shareholders); (ii) purchase, redeem or otherwise
acquire or retire for value any Equity Interests of Astor Holdings II, the
Company or any Restricted Subsidiary; (iii) make any principal payment on, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes, except at the original final
maturity thereof or in accordance with the scheduled mandatory redemption or
repayment provisions set forth in the documentation governing such Indebtedness
at the Issue Date or, if later, the date such Indebtedness was incurred or (iv)
make any Restricted Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments"), unless:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto (including, in the case of a Restricted
Investment, the pro forma effect thereof) as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of the
covenant entitled "Incurrence of Indebtedness and Issuance of Disqualified
Stock;" and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and any Restricted Subsidiary and
Astor Holdings II, without duplication, after the Issue Date (excluding
Restricted Payments permitted by any of clauses (ii), (iv), (v)(B), (vi),
(vii) and (viii) of the next succeeding paragraph), is less than the sum of
(1) 50% of the Consolidated Net Income for the period (taken as one
accounting period) from the beginning of the fiscal quarter during which the
Indenture is executed to the end of Astor Holdings II's most recently ended
fiscal quarter for which internal financial statements are available at the
time of such Restricted Payment (or, if such Consolidated Net Income for
such period is a deficit, minus 100% of such deficit) PLUS (2) 100% of the
aggregate net cash proceeds received by the Company from the issue or sale
since the Issue Date of Equity Interests of the Company or of debt
securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or convertible debt securities) sold
to a Restricted Subsidiary and other than Disqualified Stock or debt
securities that have been converted into Disqualified Stock) or by way of
other capital contributions to the Company PLUS (3) to the extent that any
Restricted Investment that was made after the Issue Date is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (A) the cash return
of capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted
Investment; PROVIDED that no amounts received by the Company by way of
capital contributions will be counted in determining the amount available
for Restricted Payments under this clause (c) to the extent such proceeds or
amounts are excluded in accordance with clause (ii) of the next succeeding
paragraph.
The foregoing provisions will not prohibit the following:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would have
complied with the provisions of the Indenture;
(ii) the defeasance, redemption or repurchase of subordinated
Indebtedness with (A) the proceeds from an incurrence of Permitted
Refinancing Indebtedness or (B) the proceeds from the substantially
concurrent sale (other than to a Subsidiary of the Parent) of Equity
Interests of the Parent received by the Company by way of capital
contributions; PROVIDED that the amounts of any such capital contributions
that are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(2) of the preceding paragraph;
(iii) the payment of dividends by the Company or ABI Acquisition 1 plc
to Astor Holdings II and by Astor Holdings II to the Parent, solely in
amounts and at the times necessary, to permit payment of amounts required
for any repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of the Parent (or of Equity Interests of Astor
Holdings II) held by any member of the Company's, Astor Holdings II's or the
Parent's management pursuant to any management equity
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subscription agreement or stock option agreement or similar agreement, or
otherwise upon their death, disability, retirement or termination of
employment or departure from the Board of Directors of the Parent, Astor
Holdings II or the Company; PROVIDED that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed (A) $500,000 in any twelve-month period and (B) $2.0 million in the
aggregate from and after the Issue Date;
(iv) the repurchase or other acquisition of Existing Disqualified Stock
held by ABI Corporation or Astor Holdings II;
(v) the payment of dividends by the Company or ABI Acquisition 1 plc to
Astor Holdings II, or by Astor Holdings II to the Parent, in amounts and at
times necessary to permit payment of (A) unless prohibited and not waived by
or on behalf of the lenders under the Senior Bank Facility, amounts payable
by the Parent under the Management Services Agreement, consisting of (1)
management fees in aggregate amount not to exceed $412,000 in any
twelve-month period (as adjusted in proportion to increases in the consumer
price index), (2) transaction fees equal to not more than 2% of the
aggregate acquisition consideration (as the amount of such consideration is
determined in accordance with the Management Services Agreement as in effect
on the Issue Date) in connection with merger and acquisition services
rendered by certain financial advisors in connection with acquisitions by
Astor Holdings II and its Subsidiaries and (3) certain reasonable expenses
incurred by such advisors in connection with the performance of their
obligations under such Management Services Agreement, (B) amounts due under
the Tax Sharing Agreement, (C) administrative fees in respect of certain
partnerships that are investors in the Parent, in an aggregate amount not
exceeding $28,000 in any twelve-month period, and (D) operating expenses of
the Parent and Astor Holdings II incurred in the ordinary course of business
in an aggregate amount not to exceed $50,000 in any twelve-month period PLUS
audit fees and fees paid with respect to filings by the Parent or Astor
Holdings II with the Commission;
(vi) the payment of dividends on Existing Disqualified Stock owned by
ABI Corporation or Astor Holdings II;
(vii) subject to the subordination provisions contained in the ABI
Shareholder Intercompany Notes, payments under the ABI Shareholder
Intercompany Notes by ABI Acquisition 2 plc to ABI Acquisition 1 plc, by ABI
Acquisition 1 plc to Astor Holdings II and by Astor Holdings II to the
Parent, in each case of amounts due and payable under the terms of the ABI
Shareholder Notes and necessary for any required repurchase, payment of
principal or payment of interest of or on the ABI Shareholder Notes; and
(viii) the purchase of the remaining Equity Interests of Rheochem owned
by RCI such that Rheochem becomes a Wholly Owned Restricted Subsidiary that
is a Subsidiary Guarantor pursuant to the Rheochem Shareholders' Agreement,
if the Company delivers to the Trustee an Officer's Certificate certifying
that such purchase has been approved by a majority of the disinterested
members of the Board of Directors and attaching a resolution of the Board of
Directors (A) to such effect and (B) to the effect that it has determined in
good faith that such purchase is at a price no less favorable to the Company
than the fair market value of such Equity Interests;
PROVIDED that, in the case of clauses (ii), (iii), (iv), (v)(C) and (vi) of this
paragraph, no Default or Event of Default shall have occurred or be continuing
at the time of such Restricted Payment or would occur as a consequence thereof.
The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default. For purposes of making such determination, all outstanding
Investments by the Company and any Restricted Subsidiary and Astor Holdings II
(except to the extent repaid in cash) in the Subsidiary so designated will be
deemed to be Restricted Payments at the time of such designation and will reduce
the amount available for Restricted Payments under the first paragraph of this
covenant. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the greater of (x) the net book value of such
Investments at the time of such designation and (y) the
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fair market value of such Investments at the time of such designation. Such
designation will only be permitted if such Restricted Payment would be permitted
at such time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
Not later than the date of making any Restricted Payment under the
provisions described in the first paragraph of "Restricted Payments," the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the covenant "Restricted Payments" were computed, which
calculations shall be based upon the Astor Holdings II's latest available
financial statements; PROVIDED that the Company shall not have to deliver such
an Officer's Certificate in connection with Restricted Payments of less than
$200,000 in aggregate amount in any twelve-month period.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, and Astor Holdings II will not, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to: (i)(a) pay dividends or make any other distributions to the
Company or any Restricted Subsidiary (1) on its Capital Stock or (2) with
respect to any other interest or participation in, or measured by, its profits
or (b) pay any Indebtedness owed to the Company or any Restricted Subsidiary;
(ii) make loans or advances to the Company or any Restricted Subsidiary; or
(iii) transfer any of its properties or assets to the Company or any Restricted
Subsidiary, except for such encumbrances or restrictions existing under or by
reasons of (a) Existing Indebtedness; (b) the Senior Bank Facility as in effect
on the Issue Date and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof,
PROVIDED that the applicable restrictions in such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are not materially more restrictive with respect to such
transactions than those contained in the Senior Bank Facility as in effect on
the Issue Date; (c) the Indenture, the Note Guarantees, the Notes, Pari Passu
Debt and any notes with substantially identical terms as the Notes issued in
exchange for the Notes or the Pari Passu Debt; (d) applicable law; (e) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any Restricted Subsidiary, as in effect at the time of acquisition
(except to the extent such Indebtedness was incurred in connection with, or in
contemplation of, such acquisition), which encumbrance or restriction is not
applicable to the Company, any Restricted Subsidiary (other than the Person
acquired) or Astor Holdings II, or the properties or assets thereof (other than
the properties or assets of the Person so acquired), PROVIDED that, in the case
of Indebtedness, such Indebtedness was permitted by the terms of the Indenture
to be incurred; (f) by reason of customary non-assignment or no-subletting
provisions in leases or other contracts entered into in the ordinary course of
business and consistent with past practices; (g) purchase money obligations or
Capital Lease Obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii) above
on the property so acquired; (h) Permitted Liens on assets securing permitted
Senior Debt; (i) Permitted Refinancing Indebtedness, PROVIDED that the
applicable restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are not materially more restrictive than those
contained in the agreements governing the Indebtedness being refinanced; (j)
restrictions with respect solely to a Restricted Subsidiary imposed pursuant to
a binding agreement which has been entered into for the sale or disposition
(including by merger or consolidation) of all or substantially all of the
Capital Stock or assets of such Restricted Subsidiary, PROVIDED such
restrictions apply solely to the Capital Stock or assets of such Restricted
Subsidiary; or (k) the agreement governing Indebtedness permitted pursuant to
the provision described in clause (vi) of the second paragraph of "Incurrence of
Indebtedness and Issuance of Disqualified Stock" to the extent such agreement
restricts transfers of collateral securing such Indebtedness.
ANTI-LAYERING
The Indenture provides that (i) the Company will not incur, create, issue,
assume, Guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt and senior in any
respect in right of payment to the Notes, (ii) no Guarantor will incur, create,
issue,
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assume, Guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to its Senior Debt and senior in any
respect in right of payment to the Note Guarantee executed by such Guarantor and
(iii) no Restricted Subsidiary which is not a Guarantor will incur, create,
issue, assume, Guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to its Senior Debt (other than
Indebtedness owing to Astor Holdings II, the Company or any Restricted
Subsidiary as permitted under the Indenture).
ASSET SALES AND SALES OF SUBSIDIARY STOCK
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, and Astor Holdings II will not, engage in any Asset
Sale unless (i) the Company delivers to the Trustee an Officers' Certificate
stating that such officers have determined in good faith that the Company, the
Restricted Subsidiary or Astor Holdings II, as the case may be, will receive
consideration (including by way of relief from, or by any other Person assuming
sole responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Sale at least equal to the fair market value of the assets or
Equity Interests issued or sold or otherwise disposed of and (ii) at least 80%
of the consideration therefor (excluding contingent liabilities assumed by the
transferee of any such assets) received by the Company, such Restricted
Subsidiary or Astor Holdings II, as the case may be, is in the form of cash paid
at the closing thereof, PROVIDED that the amount of (x) any liabilities as shown
on the most recent balance sheet of the Company or such Restricted Subsidiary or
Astor Holdings II, as the case may be (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any Guarantee
thereof) that are assumed by the transferee of any such assets pursuant to an
agreement that releases the Company or such Restricted Subsidiary or Astor
Holdings II, as the case may be, from further liability with respect thereto
will be deemed to be cash for purposes of this provision and (y) any notes,
securities or other items of property received by the Company or any such
Restricted Subsidiary or Astor Holdings II, as the case may be, from such
transferee that are promptly and in any event within 30 days converted by the
Company or such Restricted Subsidiary or Astor Holdings II, as the case may be,
into cash (to the extent of the cash received) will be deemed to be cash for
purposes of this provision and (iii) the Company delivers to the Trustee (a)
with respect to any Asset Sale or series of related Asset Sales involving
aggregate consideration in excess of $1.0 million, an Officers' Certificate
certifying that such Asset Sale has been approved by a majority of the
disinterested members of the applicable Board of Directors, and attaching a
resolution of such Board of Directors (x) to such effect and (y) to the effect
that it has determined in good faith that the consideration to be received by
the Company, the Restricted Subsidiary or Astor Holdings II at the time of such
Asset Sale is at least equal to the fair market value of the assets or Equity
Interests to be issued or otherwise disposed of and (b) with respect to any
Asset Sale or series of related Asset Sales involving aggregate consideration in
excess of $5.0 million, a written opinion as to the fairness to the Company or
such Restricted Subsidiary or Astor Holdings II, as the case may be, of such
Asset Sale from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing. Notwithstanding the foregoing
provision, if the Company is required to sell all of its Equity Interests in
Rheochem in accordance with the terms of the Rheochem Shareholders' Agreement,
the consideration received by the Company therefor shall be deemed to be fair
market value, and the Company shall not have to provide any evidence to the
Trustee as to the fairness of the consideration so received.
Within 300 days after the receipt of any Net Proceeds from an Asset Sale,
the Company and Astor Holdings II may or may cause the relevant Restricted
Subsidiary to apply such Net Proceeds, at the Company's option, (a) to
permanently reduce Indebtedness under the Senior Bank Facility (and, in the case
of revolving Indebtedness under the Senior Bank Facility, to permanently reduce
the commitments thereunder), (b) to permanently reduce Senior Debt of the
Company or a Subsidiary Guarantor or (c) to make an investment in a Permitted
Business or to make capital expenditures or to acquire other long-term/tangible
assets, in each case, engaged or used in a Permitted Business (or make a binding
commitment to make such investment, subject only to reasonable and customary
closing conditions, and in fact to make such investment within 60 additional
days). Pending the final application of any such Net Proceeds, the Company or
Astor Holdings II may or may cause the relevant Restricted Subsidiary to
temporarily reduce revolving indebtedness under the Senior Bank Facility or
otherwise invest such Net Proceeds in any manner that is not
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prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the two immediately preceding sentences of
this paragraph will be deemed to constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds received by the Company, if any, any
Restricted Subsidiary, if any, and Astor Holdings II, if any, exceeds $5.0
million, Astor Holdings II and the relevant Restricted Subsidiaries will pay to
the Company all Excess Proceeds, and the Company will be required to make an
offer to all Noteholders and to holders of Pari Passu Debt (an "Asset Sale
Offer") to purchase, on a PRO RATA basis from the Noteholders and the holders of
Pari Passu Debt, the maximum principal amount of Notes and Pari Passu Debt that
may be purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the principal amount thereof PLUS accrued and unpaid
interest and liquidated damages, if any, thereon to the date of purchase, in
accordance with the procedures set forth in the Indenture (the "Excess Proceeds
Payment"). The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with such a
repurchase of the Notes. To the extent that the aggregate amount of Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds for general corporate purposes. If
the aggregate principal amount of Notes and Pari Passu Debt surrendered by
Noteholders and holders of Pari Passu Debt exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and Pari Passu Debt to be purchased
on a PRO RATA basis. Upon completion of such Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero. In certain circumstances, the Company
may be prohibited from purchasing the Notes. See "Risk Factors -- Subordination"
and "Risk Factors -- Control of the Company; Change of Control Put."
LIENS
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, and Astor Holdings II will not, directly or
indirectly, create, incur, assume or suffer to exist any Lien on any property or
asset now owned or hereafter acquired, or on any income or profits therefrom or
assign or convey any right to receive income therefrom except Permitted Liens,
unless the Obligations due under the Indenture and the Notes are secured, on an
equal and ratable basis (or on a senior basis, in the case of Obligations under
Indebtedness subordinated in right of payment to the Notes), with the
Obligations so secured.
TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, and Astor Holdings II will not, make any payment to,
or sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend any
contract, agreement, understanding, loan, advance or Guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or such Restricted Subsidiary or Astor Holdings II, as the case may
be, than those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary or Astor Holdings II, as the case may be,
with an unrelated Person and (ii) the Company delivers to the Trustee (a) with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $500,000, an Officers'
Certificate certifying that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors, and attaching a
resolution of the Board of Directors (x) to such effect and (y) to the effect
that it has determined in good faith that such transaction complies with clause
(i) above, and (b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, a written opinion as to the fairness to the Company or such
Restricted Subsidiary or Astor Holdings II, as the case may be, of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing; provided that
transactions with Rheochem in the ordinary course of business consistent with
past practice will not be subject to clause (ii) above (see "Business --
Rheochem Joint Venture"), and PROVIDED FURTHER that the following shall not be
deemed Affiliate Transactions: (a) any reasonable and customary employment
agreement, employment benefit plan or other compensation plan entered into by
the Company or any Restricted Subsidiary or Astor Holdings II, as the case may
be, in the ordinary course of business, (b) reasonable and customary directors'
fees and indemnification
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arrangements in the ordinary course of business, (c) reasonable and customary
payment of compensation to employees, officers, directors or consultants in the
ordinary course of business, (d) loans or advances to officers or employees of
the Company or any Restricted Subsidiary to pay business related travel expenses
or reasonable relocation costs of such officers or employees in connection with
their employment by the Company or any Restricted Subsidiary, (e) transactions
between or among any combination of the Company and the Guarantors, (f) any
transfer of tax benefits and any tax sharing or tax loss surrender arrangements
and any intercompany sales of inventory between or among any combination of the
Company, Astor Holdings II and any Restricted Subsidiary or between or among one
or more Restricted Subsidiaries, (g) payments under the Management Services
Agreement, (h) payments under the Tax Sharing Agreement, (i) payment of
administrative fees in respect of certain partnerships that are investors in the
Parent, in an aggregate amount not exceeding $28,000 per twelve-month period,
(j) payments to the Parent or Astor Holdings II to pay operating expenses of the
Parent and Astor Holdings II incurred in the ordinary course of business in an
aggregate amount not to exceed $50,000 in any twelve-month period, (k) payments
made to the Parent or Astor Holdings II to reimburse the Parent or Astor
Holdings II for costs, fees and expenses incident to a registration of any of
the capital stock of the Parent or Astor Holdings II for an offering under the
Securities Act, so long as (A) a portion of the proceeds of such offering (if it
is completed) are contributed to, or otherwise used for the benefit of, the
Company and (B) the costs, fees and expenses are allocated among the Parent or
Astor Holdings II and any selling shareholders in such proportions as is
required by the Stockholders Agreement as in effect on the Issue Date or, if or
to the extent that the Stockholders Agreement is not applicable, as is
appropriate to reflect the relative proceeds received by the Parent or Astor
Holdings II and such selling shareholders and (l) Restricted Payments permitted
by the provisions of the Indenture described above under clauses (i), (iii),
(iv), (v), (vi) and (vii) of the second paragraph of the covenant entitled
"Restricted Payments."
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company and Astor Holdings II may not
consolidate or merge with or into (whether or not the Company or Astor Holdings
II, as the case may be, is the surviving entity), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions to, another corporation, Persons
or entity unless (i) the Company or Astor Holdings II, as the case may be, is
the surviving corporation or entity or the Person formed by or surviving any
such consolidation or merger (if other than the Company or Astor Holdings II, as
the case may be) or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company or Astor Holdings II, as the
case may be) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition will have been made assumes all the
obligations of the Company or Astor Holdings II, as the case may be, under the
Notes and the Indenture pursuant to a supplemental indenture in form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction, no
Default or Event of Default exists; and (iv) except in the case of a merger of
the Company or Astor Holdings II, as the case may be, with or into the Company
or Astor Holdings II, as the case may be, or the entity or Person formed by or
surviving any such consolidation or merger, or to which such sale, assignment,
transfer, lease, conveyance or other disposition will have been made (A) will
have Consolidated Net Worth immediately after the transaction equal to or
greater than the Consolidated Net Worth of the Company or Astor Holdings II, as
the case may be, immediately preceding the transaction and (B) will, at the time
of such transaction after giving pro forma effect thereto as if such transaction
had occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of the
covenant entitled "Incurrence of Indebtedness and Issuance of Disqualified
Stock."
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company or Astor Holdings II in accordance with the
foregoing, the successor corporation formed by such consolidation or into which
the Company or Astor Holdings II is merged or to which such transfer is made,
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company or Astor
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Holdings II, as the case may be, under the Indenture with the same effect as if
such successor corporation had been named therein as the Company or Astor
Holdings II, as the case may be, and the Company or Astor Holdings II, as the
case may be, shall be released from the obligations under the Notes, the Note
Guarantees and the Indenture except with respect to any obligations that arise
from, or are related to, such transaction.
LINE OF BUSINESS
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than a Permitted Business. Astor Holdings II will
hold the Capital Stock of and certain instruments representing the Indebtedness
of the Company and/or Restricted Subsidiaries, but will not have any other
assets.
FUTURE SUBSIDIARY GUARANTORS
The Indenture provides that if the Company shall acquire or create after the
Issue Date, directly or indirectly, another Domestic Restricted Subsidiary
(including upon any Unrestricted Subsidiary ceasing to be an Unrestricted
Subsidiary and becoming a Domestic Restricted Subsidiary), then such newly
acquired or created Domestic Restricted Subsidiary shall execute a Note
Guarantee and deliver an opinion of counsel in accordance with the terms of the
Indenture. The Company may elect, from time to time, on or after the Issue Date,
to cause one or more other Restricted Subsidiaries to become a Subsidiary
Guarantor by executing a Note Guarantee and delivering an opinion of counsel in
accordance with the terms of the Indenture.
As of the Issue Date, (i) ABI Corporation holds Capital Stock of the Company
and (ii) ABI Acquisitions 1 plc holds Capital Stock of a Restricted Subsidiary
and certain instruments representing Indebtedness of ABI Acquisition 2 plc. The
Indenture provides that the Company will not permit either of ABI Corporation or
ABI Acquisition 1 plc to have any other assets or to conduct any other business
activities until such time as such entity executes a Note Guarantee in
accordance with the terms of the Indenture.
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Subsidiary Guarantor by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the capital stock of any
Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a sale or
other disposition, by way of such a merger, consolidation or otherwise, of all
of the capital stock of such Subsidiary Guarantor) or the corporation acquiring
the property (in the event of a sale or other disposition of all of the assets
of such Subsidiary Guarantor) will be released and relieved of any obligations
under its Note Guarantee, PROVIDED that such sale or other disposition is
permitted by and the Net Proceeds of such sale or other disposition are applied
in accordance with the applicable provisions of the Indenture. See "Certain
Covenants -- Asset Sales and Sales of Subsidiary Stock."
STATUS AS INVESTMENT COMPANY
The Indenture prohibits the Company and its Subsidiaries and Astor Holdings
II from being required to register as an "investment company" (as that term is
defined in the Investment Company Act of 1940, as amended) or from otherwise
becoming subject to regulation under the Investment Company Act.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any Notes are outstanding, Astor Holdings II will furnish to the
Noteholders (at their addresses set forth in the Register of Notes) (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if Astor
Holdings II were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of Astor Holdings II
and its Consolidated Subsidiaries and, with respect to the annual information
only, a report thereon by Astor Holdings II's certified independent accountants
and (ii) all current reports that would be required to be filed with the
Commission on Form 8-K if Astor Holdings II were required to file such reports.
In addition, whether or not required by the rules and regulations of the
Commission, Astor Holdings II will file a copy of all such information and
reports with the Commission for public availability (unless the Commission will
not accept such a filing) and make such information available
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to securities analysts and prospective investors upon request. In addition, the
Company and the Guarantors will be required, for so long as any Notes remain
outstanding, to furnish to the Noteholders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default:
(i) default for 30 days in the payment when due of interest or
Liquidated Damages, if any, on the Notes (whether or not prohibited by the
subordination provisions of the Indenture);
(ii) default in payment when due of principal of, or premium, if any,
on the Notes when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise (whether or not prohibited by the
subordination provisions of the Indenture) including, without limitation,
payments of any required Change of Control Payment or Excess Proceeds
Payment;
(iii) failure by the Company or any Guarantor to comply with its
obligations with respect to the making of a Change of Control Offer or an
Asset Sale Offer as described under "Change of Control" or under "Asset
Sales and Sales of Subsidiary Stock";
(iv) failure by the Company or any Guarantor to comply with its other
obligations described under "Change of Control" or "Asset Sales and Sales of
Subsidiary Stock" or its obligations described under "Incurrence of
Indebtedness and Issuance of Disqualified Stock" or "Restricted Payments"
and such failure continues for a period of 30 consecutive days after written
notice by the Trustee or the holders of at least 25% in aggregate principal
amount of the Notes then outstanding;
(v) failure by the Company or any Guarantor to comply with its other
agreements in the Indenture or the Notes and such failure continues for 60
consecutive days after written notice by the Trustee or the holders of at
least 25% in aggregate principal amount of the Notes then outstanding;
(vi) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any Restricted Subsidiary
or Astor Holdings II (or the payment of which is Guaranteed by the Company
or any Restricted Subsidiary or Astor Holdings II) whether such Indebtedness
or Guarantee exists on the Issue Date, or is created after the Issue Date,
which default (a) is caused by a failure to pay any such Indebtedness at its
stated final maturity after giving effect to any grace period provided in
such Indebtedness on the date of such default (the amount of such missed
payment of principal, a "Payment Default Amount") or (b) results in the
acceleration of such Indebtedness prior to its express maturity and, in each
case, the aggregate principal amount of all such Indebtedness referred to in
clause (b) together with the aggregate Payment Default Amount at such time
aggregates $5.0 million or more;
(vii) failure by the Company or any Restricted Subsidiary or Astor
Holdings II to pay final judgments aggregating in excess of $5.0 million,
which judgments are not stayed, bonded or discharged within 60 days after
their entry;
(viii) except as permitted by the Indenture, any Note Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor, or any
Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Note Guarantee; and
(ix) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries or Astor Holdings II.
If any Event of Default occurs and is continuing, the Trustee or the
Noteholders holding at least 25% in aggregate principal amount of the then
outstanding Notes may declare, by notice in writing to the Company (and to the
Trustee if given by Noteholders) all the Notes to be due and payable
immediately. If any Senior Debt is outstanding pursuant to the Senior Bank
Facility, upon a declaration of such acceleration, such principal and interest
shall be due and payable upon the earlier of (x) the day that is five Business
Days after
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the provision to the Company and the Agent under the Senior Bank Facility of
such written notice, unless such Event of Default is cured or waived prior to
such date and (y) the date of acceleration of any Senior Debt under the Senior
Bank Facility. Noteholders holding more than 50% in aggregate principal amount
of the then outstanding Notes generally are authorized to rescind any
acceleration if all existing Events of Default, other than the non-payment of
the principal of, premium, if any, and interest on the Notes which have become
due solely by such acceleration, have become cured or waived. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to (i) the Company, (ii) any Subsidiary
that would constitute a Significant Subsidiary or any group of Subsidiaries
that, taken together, would constitute a Significant Subsidiary or (iii) Astor
Holdings II, all outstanding Notes will become due and payable without further
action or notice. Noteholders holding the Notes may not enforce the Indenture or
the Notes except as provided in the Indenture. Subject to certain limitations,
Noteholders holding more than 50% in aggregate principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
October 15, 2001 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to October 15, 2001, then the
premium specified in the Indenture with respect to an optional redemption of the
Notes shall also become immediately due and payable to the extent permitted by
law upon the acceleration of the Notes.
The Noteholders of at least 50% in aggregate principal amount of the Notes
then outstanding, by notice to the Trustee, may on behalf of the Noteholders of
all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture, except a continuing Default or Event of
Default in the payment of interest, premium or Liquidated Damages on, or
principal of, the Notes. The Trustee may withhold from Noteholders notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in such Noteholders' interest.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with certain provisions of the Indenture, and the Company
is required upon becoming aware of any Default or Event of Default to deliver to
the Trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator, direct or indirect stockholder
or affiliate (other than the Company and the Guarantors) as such of the Company
or any Guarantor shall have any liability for any obligations of the Company or
any Guarantor under the Notes, the Note Guarantees or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Noteholder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations with respect to the outstanding Notes and all of the Guarantor's
obligations with respect to the Note Guarantees discharged ("Legal Defeasance")
except for (i) the rights of Noteholders of outstanding Notes to receive
payments in respect of the principal of, and premium, if any, and interest and
Liquidated Damages, if any, on such Notes when such payments are due from the
trust referred to below, (ii) the Company's obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust,
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(iii) the rights, powers, trusts, duties and immunities of the Trustee and the
Company's obligations in connection therewith and (iv) the Legal Defeasance
provisions of the Indenture. In addition, the Company may, at its option and at
any time, elect to have the obligations of the Company and the Guarantors
released with respect to certain covenants that are described in the Indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Noteholders of the outstanding Notes, cash in U.S. dollars, noncallable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, and premium, if any, and interest and
Liquidated Damages, if any, on the outstanding Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date; (ii) in the case of Legal Defeasance prior to April 15, 2006,
the Company shall have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the Issue Date there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Noteholders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts in the same manner and at the same times as would
have been the case if such Legal Defeasance had not occurred; (iii) in the case
of Covenant Defeasance prior to April 15, 2006, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably acceptable
to the Trustee confirming that the Noteholders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred; (iv) no Default or Event of Default
shall have occurred and be continuing on the date of such deposit (other than a
Default or Event of Default resulting from the borrowing of funds to be applied
to such deposit) or, insofar as certain insolvency-related Events of Default
specified in the Indenture are concerned, at any time in the period ending on
the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant
Defeasance will not result in a breach or violation of or constitute a default
under any material agreement or instrument (other than the Indenture) to which
Astor Holdings II, the Company or any Restricted Subsidiary is a party or by
which any of such Persons is bound; (vi) the Company must deliver to the Trustee
an Officers' Certificate stating that the deposit was not made by the Company
with the intent of preferring the Noteholders over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and (vii) the Company must deliver to the
Trustee an Officers' Certificate and an opinion of counsel, each stating that
all conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been met.
TRANSFER AND EXCHANGE
A Noteholder may transfer or exchange Notes in accordance with the
Indenture. The Registrar and the Trustee may require a Noteholder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Noteholder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or exchange
any Note selected for redemption. Also, the Company is not required to transfer
or exchange any Note for a period of 15 days before a selection of Notes to be
redeemed.
The registered Noteholder of a Note will be treated as the owner of it for
all purposes.
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AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Noteholders of
at least a majority in aggregate principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes).
Without the consent of each Noteholder affected, however, an amendment or
waiver may not (with respect to any Note held by a non-consenting Noteholder):
(i) reduce the principal amount of Notes whose Noteholders must consent to an
amendment, supplement or waiver; (ii) reduce the principal of or change the
fixed maturity of any Note; (iii) reduce the rate of or change the time for
payment of interest on any Notes; (iv) waive a Default or Event of Default in
the payment of principal of or premium, if any, or interest or Liquidated
Damages, if any, on the Notes (except that the Noteholders of more than 50% in
aggregate principal amount of the Notes may rescind acceleration of the Notes
and waive the payment default that resulted from such acceleration); (v) make
any Note payable in money other than that stated in the Notes; (vi) reduce the
price (including any premium) payable upon or change the time (other than
changes required by applicable law) of any required redemption or repurchase
with respect to any Note; or (vii) release any Note Guarantee. In addition, any
amendment to the provisions of Article XII of the Indenture (which relate to
subordination) and any amendment or waiver which would alter the provisions
(other than a change of time not required by applicable law or a reduction of
price) obligating the Company to purchase Notes described under "Change of
Control" and "Asset Sales and Sales of Subsidiary Stock" will require the
consent of the Noteholders of at least 75% in aggregate principal amount of the
Notes then outstanding if such amendment should adversely affect the rights of
Noteholders.
Notwithstanding the foregoing, without the consent of any Noteholder, the
Company and the Trustee may amend or supplement the Indenture or the Notes or
the Note Guarantees to cure any ambiguity, defect or inconsistency, to provide
for uncertificated Notes in addition to or in place of certificated Notes, to
provide for additional Guarantors of the Notes or the release, in accordance
with the Indenture, of any Guarantor or the Note Guarantees, to provide for the
assumption of the Company's or any Guarantor's obligations to Noteholders of the
Notes in the case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Noteholders of the Notes or
that does not adversely affect the legal rights under the Indenture of any such
Noteholder, or to comply with requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should the Trustee become a creditor of the Company, to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions with the Company; PROVIDED that, if the Trustee acquires any
conflicting interest, it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue as Trustee or resign.
The Noteholders of at least 50% in aggregate principal amount of the then
outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur and not be cured, the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Noteholder unless such Noteholder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to the Company at 8521
Forks Road, North Carolina 27615, Attention: Corporate Secretary.
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BOOK-ENTRY, DELIVERY AND FORM
The certificates representing the Notes will be issued in fully registered
form without interest coupons. Notes sold in offshore transactions in reliance
on Regulation S under the Securities Act will initially be represented by one or
more permanent global Notes in definitive, fully registered form without
interest coupons (each a "Regulation S Global Note") and will be deposited with
the Trustee as custodian for, and registered in the name of, a nominee of The
Depository Trust Company ("DTC") for the accounts of Euroclear and Cedel. Prior
to the commencement of the Exchange Offer or the effectiveness of a Shelf
Registration Statement with respect to the Notes, beneficial interests in the
Regulation S Global Note may only be held through Euroclear or Cedel, and any
resale or transfer of such interests to U.S. Persons shall not be permitted
during such period unless such resale or transfer is made pursuant to Rule 144A
or Regulation S under the Securities Act.
Notes sold in reliance on Rule 144A will be represented by one or more
permanent global Notes in definitive, fully registered form without interest
coupons (each a "Restricted Global Note", and together with the Regulation S
Global Note, the "Global Notes") and will be deposited with the Trustee as
custodian for, and registered in the name of, a nominee of DTC.
Each Global Note (and any Notes issued in exchange therefor) will be subject
to certain restrictions on transfer set forth therein as described under "Notice
to Investors." Except in the limited circumstances described below under
"Certificated Notes," owners of beneficial interests in a Restricted Global Note
will not be entitled to receive physical delivery of Certificated Notes (as
defined below).
Notes originally purchased by or transferred to Institutional Accredited
Investors who are not QIBs ("Non-Global Purchasers") will be in registered form
without interest coupons ("Certificated Notes"). Upon the transfer of
Certificated Notes initially issued to a Non-Global Purchaser to a QIB, such
Certificated Notes will, unless the Restricted Global Note has previously been
exchanged in whole for Certificated Notes, be exchanged for an interest in such
Restricted Global Note. For a description of the restrictions on the transfer of
Certificated Notes, see "Notice to Investors."
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interest in a Global
Note will be shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). QIBs may hold their interests in a Restricted
Global Note directly through DTC if they are participants in such system, or
indirectly through organizations which are participants in such system.
Investors may hold their interests in a Regulation S Global Note directly
through Cedel or Euroclear, if they are participants in such systems, or
indirectly through organizations that are participants in such systems. Upon the
commencement of the Exchange Offer, but not earlier, investors may hold such
interests through organizations other than Cedel or Euroclear that are
participants in the DTC system. Cedel and Euroclear will hold interests in the
Regulation S Global Notes on behalf of their participants through DTC.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by such Global Note for all
purposes under the Indenture and the Notes. No beneficial owner of an interest
in a Global Note will be able to transfer that interest except in accordance
with DTC's applicable procedures, in addition to those provided for under the
Indenture and, if applicable, those of Euroclear and Cedel.
Payments of the principal of, and premium, if any, interest and Liquidated
Damages, if any, on a Global Note will be made to DTC or its nominee, as the
case may be, as the registered owner thereof. Neither the Company, the Trustee
nor any Paying Agent will have any responsibility or liability for any aspects
of the records relating to or payments made on account of beneficial ownership
interests in a Global Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, interest or Liquidated Damages, if any, in respect
of a Global Note, will credit participants' accounts
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with payments in amounts proportionate to their respective beneficial interests
in the principal amount of such Global Note as shown on the records of DTC or
its nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Note held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. Transfers
between participants in Euroclear and Cedel will be effected in the ordinary way
in accordance with their respective rules and operating procedures.
The Company expects that DTC will take any action permitted to be taken by a
Noteholder only at the direction of one or more participants to whose account
the DTC interests in a Global Note is credited and only in respect of such
portion of the aggregate principal amount of the Note as to which such
participant or participants has or have given direction. However, if there is an
Event of Default under the Notes, DTC will exchange the applicable Global Note
for Certificated Notes, which it will distribute to its participants and which
may be legended as set forth under the heading "Notice to Investors."
DTC had advised the Company that it is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its participants
and to facilitate the clearance and settlement of securities transactions
between participants through electronic book-entry changes in accounts of its
participants. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC, Euroclear and Cedel are expected to follow the foregoing
procedures in order to facilitate transfers of interests in a Global Note among
participants of DTC, Euroclear and Cedel, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC, Euroclear or Cedel or their
respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as depositary for the
Global Notes and a successor depositary is not appointed by the Company within
90 days, the Company will issue Certificated Notes in exchange for the Global
Notes. Holders of an interest in a Restricted Global Note may receive
Certificated Notes, which may bear the legend referred to under "Notice to
Investors," in accordance with the DTC's rules and procedures in addition to
those provided for under the Indenture.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definitions are provided.
"ABI CORPORATION" means ABI Corporation, a Delaware corporation, and its
successors and assigns.
"ABI SHAREHOLDER INTERCOMPANY NOTES" means the amended and restated notes
dated October 1, 1996 of ABI Acquisition 2 plc, ABI Acquisition 1 plc and Astor
Holdings II to ABI Acquisition 1 plc, Astor Holdings II and the Parent,
respectively, in connection with the acquisition of ABI and each in a principal
amount equal to L3,736,295 PLUS the principal amount of all ABI Shareholder
Notes issued from time to time in payment of interest on the then outstanding
ABI Shareholder Notes pursuant to the terms thereof.
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"ABI SHAREHOLDER NOTES" means the Series A L2,285,307 8% Subordinated Notes
due 2003 and the Series B L1,450,988 8% Subordinated Notes due 2003 issued by
the Parent to the former shareholders of Associated British Industries Limited.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"AGENT" means The Chase Manhattan Bank and its successors and assigns under
the Senior Credit Facility.
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback)
(PROVIDED that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of Astor Holdings II or of the Company and its
Restricted Subsidiaries taken as a whole will be governed by the provisions of
the Indenture described above under the covenant entitled "Change of Control"
and/or the provisions described above under the covenant entitled "Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset Sale
covenant) and (ii) the issue or sale by Astor Holdings II of Equity Interests of
the Company or any Restricted Subsidiary or by the Company or any Restricted
Subsidiary of Equity Interests of any Restricted Subsidiary, in the case of
either of the foregoing clauses, whether in a single transaction or a series of
related transactions (a) that have a fair market value in excess of $250,000 or
(b) for net proceeds in excess of $250,000. Notwithstanding the foregoing the
following will not be deemed to be Asset Sales: (i) a transfer of assets by the
Company to a Guarantor, by a Guarantor or a Subsidiary to the Company or to
another Guarantor or by a Restricted Subsidiary that is not a Guarantor to
another Restricted Subsidiary or the Company, (ii) the sale, lease, conveyance
or other disposition of inventory or cash management or hedging investments by
the Company or a Restricted Subsidiary of the Company in the ordinary course of
business, (iii) the sale, lease, conveyance or other disposition of property or
equipment that has become worn out, obsolete or damaged or otherwise unusable
for use in connection with the business of the Company or any Restricted
Subsidiary, as the case may be, (iv) an issuance of Equity Interests by a
Restricted Subsidiary to the Company or to any Guarantor, (v) a sale or other
disposition pursuant to and permitted by the covenant described above entitled
"Merger, Consolidation or Sale of Assets," (vi) the transfer by the Company to
any Restricted Subsidiary, or by any Restricted Subsidiary to the Company or any
other Restricted Subsidiary, of non-exclusive rights to use proprietary product
formulations, (vii) the merger of a Restricted Subsidiary into a Subsidiary
Guarantor or into the Company (provided that the Person surviving any such
merger must be either a Subsidiary Guarantor or the Company), (viii) the merger
of a Restricted Subsidiary that is not a Subsidiary Guarantor into another
Restricted Subsidiary that is not a Subsidiary Guarantor, and (ix) a Restricted
Payment that is permitted by the covenant described above entitled "Restricted
Payments."
"ASTOR HOLDINGS II" means Astor Holdings II, Inc., a Delaware corporation,
and its successors and assigns.
"BANK TERM LOAN" means the term loan facility provided under the Senior Bank
Facility.
"BORROWING BASE" means, as of any date of determination (and expressed in
dollars or foreign currency as appropriate), the sum of (i) 85% of the aggregate
unpaid portions of accounts receivable of the Company and its Restricted
Subsidiaries arising in the ordinary course of business from the sale of
products or the provision of services (after allowance for doubtful accounts and
net of any credits, rebates, offsets and similar adjustments) and (ii) 50% of
the value (determined at the lower of cost or market on a basis consistent with
the consolidated financial statements of the Company, after appropriate
write-downs for obsolescence, quality problems and the like) of inventories of
the Company and its Restricted Subsidiaries held in the ordinary course of
business; PROVIDED that the amount determined pursuant to clause (ii) above
shall not constitute over 50% of the sum of the foregoing clauses.
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"CAPITAL LEASE OBLIGATION" means rental obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of indebtedness represented by such obligations shall be
the capitalized amount of such obligations as determined in accordance with
GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"CASH EQUIVALENT" means (i) securities issued or directly and fully
Guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits,
certificates of deposit and money market deposits issued by and commercial paper
issued by the parent corporation of, any domestic commercial bank of recognized
standing having capital and surplus in excess of $500 million and commercial
paper issued by others rated at least A-2 or the equivalent thereof by S&P or at
least P-2 or the equivalent thereof by Moody's and in each case maturing within
one year after the date of acquisition, (iii) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clause (i) or deposits of the type described in clause (ii) above entered into
with a bank meeting the qualifications described in clause (ii) above and (iv)
investments in money market funds substantially all of whose assets comprise
securities of the types described in clauses (i), (ii) and (iii) above.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) any
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation) in one or a series of related transactions, of all or
substantially all of the assets of (A) the Company and its Restricted
Subsidiaries taken as a whole or (B) Astor Holdings II, the Company and its
Restricted Subsidiaries taken as a whole or (C) the Parent, Astor Holdings II,
the Company and its Restricted Subsidiaries taken as a whole to any "person" (as
defined in Section 13(d)(3) of the Exchange Act) or "group" (as defined in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) unless the "beneficial
owners" (as defined in Rule 13d-3 under the Exchange Act) of the Voting Stock of
the Parent, Astor Holdings II or the Company immediately prior to such
transaction own, directly or indirectly, more than 50% of the total Voting Stock
of such person immediately after such transaction, (ii) the adoption of a plan
for the liquidation or dissolution of the Parent, Astor Holdings II or the
Company, (iii) the Parent, Astor Holdings II or the Company consolidates with,
or merges with or into, another "person" (as defined above) or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any "person" (as defined above) or "group" (as defined above) in a
transaction or series of related transactions in which the Voting Stock of the
Parent, Astor Holdings II or the Company is converted into or exchanged for
cash, securities or other property, other than any transaction where (A) the
outstanding Voting Stock of the Parent, Astor Holdings II or the Company is
converted into or exchanged for (1) Voting Stock (other than Disqualified Stock)
of the surviving or transferee corporation and/or (2) cash, securities and other
property in an amount which could be paid by Astor Holdings II or the Company as
a Restricted Payment under the Indenture and (B) the "beneficial owners" (as
defined in Rule 13d-3 under the Exchange Act) of the Voting Stock of the Parent,
Astor Holdings II or the Company immediately prior to such transaction own,
directly or indirectly, more than 50% of the total Voting Stock of the surviving
or transferee corporation immediately after such transaction, (iv) the
consummation of any transaction or series of related restrictions (including,
without limitation, by way of merger or consolidation) the result of which is
that any "person" (as defined above) or "group" (as defined above), other than
Excluded Persons, becomes the "beneficial owner" (as defined above) of more than
50% of the Voting Stock of the Parent, Astor Holdings II or the Company or (v)
the first day on which a majority of the members of the Board of Directors of
the Parent, Astor Holdings II or the Company are not Continuing Directors.
"COMPANY" means Astor Corporation, a Delaware corporation, and its
successors and assigns.
"CONSOLIDATED NET INCOME" means, for any period, the aggregate of the Net
Income of Astor Holdings II and its Consolidated Subsidiaries for such period,
on a consolidated basis, determined in accordance with GAAP, PROVIDED that (i)
the Net Income (but not loss) of any Person that is not a Consolidated
Subsidiary or
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that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid in cash to Astor
Holdings II or a Consolidated Subsidiary thereof, (ii) the Net Income of any
Restricted Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary of
that Net Income is not, at the date of determination, permitted without any
prior governmental approval (which has not been obtained) or directly or
indirectly by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, (iii) the Net
Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its Consolidated Subsidiaries as of such date plus, (ii) the respective
amounts reported on, such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that is
outstanding on the date of this Indenture or, if not then outstanding, by its
terms is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within twelve months after the
acquisition of such business) subsequent to the Issue Date in the book value of
any asset owned by such Person or a Consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments) and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing being determined in accordance with GAAP.
"CONSOLIDATED SUBSIDIARY" means, as to any Person at any date, the
Subsidiaries of such Person the accounts of which would be consolidated with
those of such Person in accordance with GAAP at such date, but excluding any
Unrestricted Subsidiary (except that the interest of Astor Holdings II, the
Company or any Restricted Subsidiary in any Unrestricted Subsidiary shall be
acccounted for as an investment).
"CONTINUING DIRECTORS" means, as of any date of determination, any member of
the Board of Directors of the Parent, Astor Holdings II or the Company who (i)
was a member of such Board of Directors on the Issue Date or (ii) was nominated
for election or elected to such Board of Directors with the approval of a
majority of the Continuing Directors who were members of such Board at the time
of such nomination or election.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"DESIGNATED SENIOR DEBT" means (i) so long as the Company has any Obligation
under the Senior Bank Facility, the Senior Bank Facility and (ii) any other
Senior Debt of the Company permitted under the Indenture the aggregate principal
amount of which is $5.0 million or more and that has been designated by the
Company by notice to the Trustee as "Designated Senior Debt."
"DISQUALIFIED STOCK" means (a) any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to date on
which the Notes mature and (b) with respect to any Restricted Subsidiary, any
Capital Stock other than any common stock with no preference, privilege, or
redemption or repayment provisions.
"DOMESTIC RESTRICTED SUBSIDIARY" means any Restricted Subsidiary that is
incorporated or organized under the laws of a jurisdiction in the United States
of America.
"EBITDA" means, for any period, the Consolidated Net Income of Astor
Holdings II for such period PLUS (i) an amount equal to any extraordinary loss
plus any net loss realized in connection with an Asset Sale (to the extent such
losses were deducted in computing such Consolidated Net Income) PLUS (ii)
provision for taxes based on income or profits of Astor Holdings II and its
Consolidated Subsidiaries for such period to
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the extent that such provision for taxes was included in computing such
Consolidated Net Income PLUS (iii) consolidated interest expense of Astor
Holdings II and its Consolidated Subsidiaries for such period, whether paid or
accrued and whether or not capitalized but without duplication (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to operating leases, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, the interest expense actually paid on Indebtedness of
another Person that is Guaranteed by, or secured by a Lien on assets of Astor
Holdings II or a Consolidated Subsidiary and net payments (if any) pursuant to
Hedging Obligations) to the extent that any such expense was deducted in
computing such Consolidated Net Income PLUS (iv) depreciation and amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) of Astor
Holdings II and its Consolidated Subsidiaries for such period to the extent that
such depreciation and amortization were deducted in computing such Consolidated
Net Income, in each case, on a consolidated basis and determined in accordance
with GAAP. Notwithstanding the foregoing, the provision for taxes on the income
or profits of, and the depreciation and amortization of, a Consolidated
Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to
the extent (and in same proportion) that the Net Income of such Restricted
Subsidiary was included in calculating such Consolidated Net Income and only if
a corresponding amount would be permitted at the date of determination to be
dividended (or paid pursuant to the Tax Sharing Agreement) to Astor Holdings II
by such Consolidated Subsidiary without prior approval (that has not been
obtained) pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Restricted Subsidiary or its stockholders.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for Capital Stock).
"EXCLUDED PERSON" means (a) the Parent, (b) Astor Holdings II, (c) the
Company, (d) Century City 1800 Partners L.P. (provided the current general
partner of Century City 1800 Partners L.P. remains the general partner or
controls the general partner of such partnership), (e) any partnership of which
Century City 1800 Partners L.P. is the general partner or controls the general
partner of such partnership (provided the current general partner of Century
City 1800 Partners L.P. remains the general partner or controls the general
partner of Century City 1800 Partners L.P.) and (f) all Related Persons of any
of the foregoing.
"EXISTING DISQUALIFIED STOCK" means Disqualified Stock in existence on the
Issue Date of the Company or any Restricted Subsidiary or Astor Holdings II
until such Disqualified Stock is redeemed or retired.
"EXISTING INDEBTEDNESS" means Indebtedness in existence on the Issue Date of
the Company and its Restricted Subsidiaries and Astor Holdings II until such
amounts are repaid.
"FIXED CHARGES" means, for any period, the sum of (i) the consolidated
interest expense of Astor Holdings II and its Consolidated Subsidiaries for such
period, whether paid or accrued and whether or not capitalized but without
duplication (including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to operating leases,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, the interest expense actually paid
on Indebtedness of another Person that is Guaranteed by, or secured by a Lien on
assets of Astor Holdings II or a Consolidated Subsidiary and net payments (if
any) pursuant to Hedging Obligations) and (ii) the product of (a) all cash
dividend payments (other than dividends on the Disqualified Stock of the Company
owned by ABI Corporation to the extent such dividends are returned by dividends
to the Company) on any series of Disqualified Stock of Astor Holdings II, the
Company or any Restricted Subsidiary that is not owned by Astor Holdings II, the
Company or a Restricted Subsidiary, times (b) a fraction, the numerator of which
is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of Astor Holdings II, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP.
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"FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio of EBITDA for
such period to Fixed Charges for such period. In the event that Astor Holdings
II or any Consolidated Subsidiary incurs, assumes, Guarantees or repays or
redeems any Indebtedness (other than revolving Indebtedness under the Senior
Bank Facility) or issues or redeems Disqualified Stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but on or prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee, repayment or redemption of
Indebtedness, or such issuance or redemption of Disqualified Stock (and the
application of the proceeds therefrom to the extent used to refinance or retire
other Indebtedness or Disqualified Stock), as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by Astor Holdings II or any Consolidated Subsidiary, including through
mergers or consolidations and including any related financing transactions,
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have occurred on the
first day of the four-quarter reference period and EBITDA for such reference
period shall be calculated without giving effect to clause (iii) of the proviso
set forth in the definition of Consolidated Net Income, (ii) the EBITDA
attributable to discontinued operations as determined in accordance with GAAP
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, and (iii) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed or
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of
Astor Holdings II or any Consolidated Subsidiary following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States of America which are in effect on the Issue
Date.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
Guaranteed by the United States of America for the payment of which Guarantee or
obligations the full faith and credit of the United States of America is
pledged.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness. The term "Guarantee" used as a verb has a corresponding meaning.
"GUARANTORS" means Astor Holdings II and all Restricted Subsidiaries that
become Subsidiary Guarantors in accordance with the Indenture after the Issue
Date.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such person against fluctuations in interest
rates.
"INDEBTEDNESS" means, with respect to any Person, (i) any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments, (ii) letters of
credit (or reimbursement agreements in respect thereof), (iii) Capital Lease
Obligations, (iv) the balance deferred and unpaid of the purchase price of any
property, (v) any Hedging Obligations and Oil and Currency Obligations, other
than Hedging Obligations and Oil and Currency Obligations incurred in accordance
with such Person's customary practices for bona fide risk hedging purposes and
not for speculative purposes, (vi) Indebtedness referred to in the preceding
clauses of others secured by a Lien on any asset of such Person (whether or not
such Indebtedness is assumed by such Person) and (vii) to the extent not
otherwise included, any Guarantee by such Person of any Indebtedness referred to
in the preceding clauses of any other Person. The principal amount of
Indebtedness represented by letters of credit shall be deemed to be equal to the
maximum potential liability thereunder. With respect to the Company, issuances
by the
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Company of subordinated promissory notes in an aggregate principal amount not to
exceed $2.75 million to Quaker State Company in respect of certain environmental
liabilities of the Company under the Asset Purchase and Sale Agreement dated as
of March 30, 1990, as amended by the Amendment Agreement and Joint Release dated
April 22, 1994 between the Company and Quaker State Company shall not be deemed
to be an incurrence of Indebtedness. Notwithstanding the foregoing, items
referred to in clauses (i), (iii) and (iv) above shall not constitute
Indebtedness to the extent that such items constitute an accrued expense or
trade payable of such Person arising in the ordinary course of business, and
items referred to in clauses (i), (iii) and (iv) above shall constitute
Indebtedness of such Person only if and to the extent any of such Indebtedness
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP at such time.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees or other Indebtedness but excluding
Guarantees and other Indebtedness permitted by the covenant described in
"Incurrence of Indebtedness and Issuance of Disqualified Stock"), advances or
capital contributions (excluding commission, travel, relocation and similar
loans or advances to officers and employees, accounts receivable and bank demand
deposits made or arising in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; PROVIDED that
an acquisition of Indebtedness, Equity Interests or other securities by the
Company for consideration consisting of Equity Interests (other than
Disqualified Stock) of the Company or Astor Holdings II shall not be deemed to
be an Investment and a redemption or repurchase of the Notes or other
Indebtedness of the Company or any Restricted Subsidiary or Astor Holdings II
shall not be deemed an Investment. If the Company or any Restricted Subsidiary
sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary
or Wholly Owned Restricted Subsidiary such that, after giving effect to any such
sale or disposition, such Person is no longer a Restricted Subsidiary or a
Wholly Owned Restricted Subsidiary (as the case may be), the Company and/or such
Restricted Subsidiary making such sale or disposition shall be deemed to have
made an Investment on the date of any such sale or disposition equal to the fair
market value of the Equity Interests of such former Restricted Subsidiary not
sold or disposed of.
"ISSUE DATE" means the date and time at which the Notes are originally
issued under the Indenture.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement (other than
precautionary filings by lessors in respect of operating leases) under the
Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"MANAGEMENT SERVICES AGREEMENT" means the Management Services Agreement
dated June 28, 1995 among the Parent, UBS Capital Corporation and Century City
1800 Partners, L.P., a Delaware limited partnership, as in effect on the Issue
Date and as it may be amended from time to time; PROVIDED that no such amendment
shall increase any obligation thereunder in a manner that would create a
Restricted Payment.
"MOODY'S" means Moody's Investors Service, Inc. and its successors.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any deduction in
respect of Disqualified Stock dividends, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale or (b) the disposition of
any securities by such Person or the extinguishment of any Indebtedness of such
Person and (ii) any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the Company or
any Restricted Subsidiary or Astor Holdings II in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs
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relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits, tax loss carryforwards or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness (other than Senior Debt) secured by a Lien on the
asset or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the Company
nor any Restricted Subsidiary nor Astor Holdings II (a) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes being offered hereby) of the Company or any Restricted Subsidiary or
Astor Holdings II to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any Restricted
Subsidiary or Astor Holdings II.
"NOTE GUARANTEES" means the Guarantees of Astor Holdings II and any
Restricted Subsidiaries that become Subsidiary Guarantors in accordance with the
Indenture after the Issue Date with respect to the Company's payment obligations
under the Notes.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFICER" means the Chairman of the Board, the Chief Executive Officer, the
Chief Financial Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers.
"OIL AND CURRENCY OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) agreements designed to protect such Person
against fluctuations in the price of oil or oil-related products and (ii)
agreements designed to protect such Person against fluctuations in foreign
currencies.
"PARENT" means Astor Holdings, Inc., a Delaware corporation, and its
successors and assigns.
"PARI PASSU DEBT" means Indebtness that is PARI PASSU with the Notes
maturing on the same day as the Notes.
"PERMITTED BUSINESS" means any business engaged in the development,
manufacture, distribution or sale of (i) adhesives and sealants, (ii) special
waxes and other waxes or (iii) specialty chemicals; and businesses that are
reasonable extensions or reasonably incidental to the foregoing.
"PERMITTED INVESTMENTS" means (i) any Investment in the Company or in a
Subsidiary Guarantor that is a Wholly Owned Restricted Subsidiary, (ii) any
Investment in Cash Equivalents, (iii) any Investments by the Company or any
Restricted Subsidiary in a Person if, as a result of such Investment, (a) such
Person becomes a Subsidiary Guarantor that is a Wholly Owned Restricted
Subsidiary, or (b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets (or all or
substantially all the assets of a Subsidiary or operating division) to, or is
liquidated into, the Company or a Subsidiary Guarantor that is a Wholly Owned
Restricted Subsidiary, (iv) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described under "Asset Sales and Sales of
Subsidiary Stock," (v) Investments received as part of the settlement of
litigation or in satisfaction of extensions of credit to any Person otherwise
permitted under the Indenture pursuant to the reorganization, bankruptcy or
liquidation of such Person or a good faith settlement of debts with such Person,
(vi) any Investment in a Restricted Subsidiary, other than a Domestic Restricted
Subsidiary, which Investment is represented by a Guarantee of Indebtedness
incurred by such Restricted Subsidiary pursuant to and in compliance with the
provision described in clause (vi) of the second paragraph of "Incurrence of
Indebtedness and Issuance of Disqualified Stock," (vii) any Investment not
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permitted by the foregoing clauses of this definition by the Company or its
Restricted Subsidiaries in a Person that is, or immediately after giving effect
to such Investment becomes, a Wholly Owned Restricted Subsidiary that is not a
Subsidiary Guarantor in aggregate amount not exceeding $9.0 million (or its
foreign currency equivalent) and (viii) any Investment not permitted by the
foregoing clauses of this definition by the Company or its Restricted
Subsidiaries in (a) a Person in which the Company and/or its Restricted
Subsidiaries owns, or immediately after giving effect to such Investment will
own, more than 20% of such Person's outstanding Capital Stock (but which Person
is not, and will not be, after giving effect to such Investment, a Subsidiary)
and (b) an Unrestricted Subsidiary in aggregate amount for all such Investments
permitted solely by this clause (viii) not exceeding $1.0 million (or its
foreign currency equivalent).
"PERMITTED JUNIOR SECURITIES" means any Qualified Capital Stock and debt
securities of the Company or any Guarantor, as the case may be, that (i) are
subordinated at least to the same extent as the Notes to Senior Debt of the
Company or the Note Guarantee of such Guarantor to the Senior Debt of such
Guarantor, as the case may be, and (ii) have no scheduled installment of
principal due, by redemption, sinking fund payment or otherwise, on or prior to
the stated maturity of the Notes; PROVIDED that the effect of any such security
is not to cause the Notes to be treated in any case or proceeding or similar
event related to bankruptcy, insolvency or receivership as part of the same
class of claims as the Senior Debt or any class of claims on a parity with or
senior to the Senior Debt for any payment or distribution and, PROVIDED FURTHER,
that if any such security includes any shares of stock of the Company or any
Guarantor as reorganized or readjusted, or securities of the Company or any
Guarantor or any other corporation provided for by a plan of arrangement,
reorganization or readjustment, (a) the Senior Debt is assumed by the new
corporation, if any, resulting from any such arrangement, reorganization or
adjustment, and (b) the rights of the holders of the Senior Debt are not,
without the consent of such holders, altered by such arrangement, reorganization
or readjustment.
"PERMITTED LIENS" means (i) Liens on assets securing Senior Debt permitted
under the Indenture; (ii) Liens on assets securing Indebtedness incurred
pursuant to and in compliance with clause (vi) or (vii) of the second paragraph
of "Incurrence of Indebtedness and Issuance of Disqualified Stock"; (iii) Liens
in favor of the Company, (iv) Liens on assets of any Restricted Subsidiary that
is not a Subsidiary Guarantor in favor of Astor Holdings II or a Subsidiary
Guarantor; (v) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company or any Restricted Subsidiary,
PROVIDED, that such Liens (x) were not incurred in connection with, or in
contemplation of, such merger or consolidation and (y) do not extend to any
assets other than those of the Person merged into or consolidated with the
Company or such Restricted Subsidiary; (vi) Liens on property existing at the
time of acquisition thereof by the Company or any Restricted Subsidiary
(including (A) Liens securing or comprising Capital Lease Obligations and (B)
Liens securing Oil and Currency Obligations that do not constitute Indebtedness;
PROVIDED that such Liens do not extend to any assets of the Company or any
Restricted Subsidiary other than the property that is the subject of such Oil
and Currency Obligations); (vii) Liens to secure the performance of statutory
obligations, surety or appeal bonds or performance bonds, or landlords',
carriers', warehousemen's, mechanics', suppliers', materialmen's or other like
Liens, in any case incurred in the ordinary course of business and with respect
to amounts not yet delinquent or being contested in good faith by appropriate
process of law, if a reserve or other appropriate provision, if any, as is
required by GAAP shall have been made therefor; (viii) Liens existing on the
Issue Date; (ix) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded; PROVIDED
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (x) Liens securing
Indebtedness incurred to refinance Indebtedness that has been secured by a Lien
permitted under the Indenture; PROVIDED that (a) any such Lien shall not extend
to or cover any assets or property not securing the Indebtedness so refinanced
and (b) the refinancing Indebtedness secured by such Lien shall have been
permitted to be incurred under the covenant entitled "Incurrence of Indebtedness
and Issuance of Disqualified Stock"; and (xi) Liens to secure the Obligations
under the Notes, the Indenture or the New Notes (or Indebtedness evidenced by
instruments that rank PARI PASSU in right of payment with the Notes as permitted
under the Indenture).
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"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness or Disqualified
Stock of the Company or any Restricted Subsidiary of the Company or Astor
Holdings II issued in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund other Indebtedness or
Disqualified Stock of the Company or any Restricted Subsidiary or Astor Holdings
II, as the case may be, or constituting an amendment, modification or supplement
thereto (but such new or modified Indebtedness shall have only the same obligor
or obligors as the Indebtedness so extended, refinanced, renewed, replaced,
defeased, refunded, amended, modified or supplemented); PROVIDED that: (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness or the liquidation value of
Disqualified Stock so extended, refinanced, renewed, replaced, defeased,
refunded, amended, modified or supplemented (plus the amount of reasonable
expenses incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness or Disqualified Stock
being extended, refinanced, renewed, replaced, defeased, refunded, amended,
modified or supplemented and (iii) if the Indebtedness or Disqualified Stock
being extended, refinanced, renewed, replaced, defeased, refunded, amended,
modified or supplemented is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness has a final maturity date not earlier than
and is subordinated in right of payment to the Notes on terms at least as
favorable to the Noteholders as those contained in the documentation governing
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"PUBLIC EQUITY OFFERING" means an underwritten offering of common stock of
the Company, Astor Holdings II or the Parent pursuant to an effective
registration statement under the Securities Act after which the common stock of
the Company, Astor Holdings II or the Parent, as applicable, is listed on a
national securities exchange or quoted on the Nasdaq National Market.
"QUALIFIED CAPITAL STOCK" means any Capital Stock of the Company that is not
Disqualified Stock.
"RCI" means Rheochem Inc., a New Jersey corporation, and its successors and
assigns.
"RELATED PERSON" means, with respect to any Excluded Person, (a) any Person
who controls, is controlled by or under common control with such Excluded
Person; PROVIDED that for purposes of this definition "control" means the
beneficial ownership of more than 50% of the total voting power of a Person
normally entitled to vote in the election of directors, managers or trustees, as
applicable of a Person and (b) as to any natural person, (i) such Person's
spouse, parents and descendants (whether by blood or adoption, and including
stepchildren) and the spouses of any of such natural persons and (ii) any
corporation, partnership, trust or other Person in which no one has any interest
(directly or indirectly) except for any of such natural person, such spouse,
parents and descendants (whether by blood or adoption, and including
stepchildren) and the spouses of any of such natural persons.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" means a Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"REVOLVING CREDIT FACILITY" means the revolving credit facility provided
under the Senior Bank Facility.
"RHEOCHEM" means Rheochem Technologies, Inc., a Delaware corporation, and
its successors and assigns.
"RHEOCHEM SHAREHOLDERS' AGREEMENT" means the Rheochem Shareholders'
Agreement dated as of June 30, 1994 by and among ABI Corporation, Rheochem Inc.
and Rheochem, as in effect on the Issue Date and as it may be amended from time
to time; PROVIDED that no such amendment shall increase any obligation
thereunder in a manner that would create a Restricted Payment.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"SENIOR BANK FACILITY" means the credit agreement, dated on October 8, 1996,
by and among the Company, The Chase Manhattan Bank, as administrative agent, and
the lenders (and their successors and assigns) from
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time to time party thereto, including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith and in
each case as amended, modified, renewed, extended, refunded, replaced or
refinanced from time to time, whether or not with the same agent, trustee,
representative lenders or holders and irrespective of any changes in the terms
and conditions thereof. Without limiting the generality of the foregoing, the
term "Senior Bank Facility" shall include agreements in respect of Hedging
Obligations entered into with respect to loans thereunder with lenders party to
the Senior Bank Facility and shall also include any amendment, amendment and
restatement, renewal, extension, restructuring, supplement or modification to
any Senior Bank Facility and all refundings, refinancings and replacements of
any Senior Bank Facility, including any agreement (i) extending the maturity of
any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or
deleting borrowers, issuers or guarantors thereunder, (iii) increasing the
amount of Indebtedness incurred thereunder or available to be borrowed
thereunder or (iv) otherwise altering the terms and conditions thereof.
"SENIOR DEBT" means (i) with respect to the Company (A) Obligations under
the Senior Bank Facility and (B) any other Indebtedness permitted to be incurred
by the Company under the terms of the Indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it is PARI PASSU
with or subordinated in right of payment to the Notes and (ii) with respect to
any Guarantor (A) Obligations under the Senior Bank Facility and (B) any other
Indebtedness permitted to be incurred by such Guarantor under the terms of the
Indenture unless the instrument under which such Indebtedness is incurred
expressly provides that such Indebtedness is PARI PASSU with or subordinated in
right of payment to the Note Guarantee of such Guarantor, including in any event
in the case of all such Obligations of the Company or any Guarantor, interest
accruing on Indebtedness after the filing of a petition initiating any
proceeding under any bankruptcy, insolvency or similar law, whether or not
allowable as a claim in any such proceeding. Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not include (w) any liability for
federal, state, local or other taxes, (x) any Indebtedness of the Company or any
Guarantor to any Affiliates, (y) any trade payables or (z) that portion of any
Indebtedness that is incurred in violation of the Indenture.
"SIGNIFICANT SUBSIDIARY" means, with respect to any Person, any Subsidiary
of such Person that would be a "significant subsidiary" as defined in Article 1,
Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such
Regulation is in effect on the date hereof.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of Voting Stock is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or the managing general partner of which is such Person or a Subsidiary
of such Person or (b) the only general partners of which are such Person or one
or more Subsidiaries of such Person (or any combination thereof). ABI
Acquisition 1 plc shall be deemed to be a Subsidiary of the Company for all
purposes of this Agreement at any time if at such time it is a Subsidiary (as
determined above) of the Company and/or Astor Holdings II. Because on the Issue
Date, the Company owns, directly or indirectly, no more than 50% of the Voting
Stock of Rheochem, on the Issue Date Rheochem is not a Subsidiary of the
Company.
"SUBSIDIARY GUARANTOR" means any Restricted Subsidiary that executes a Note
Guarantee in accordance with the provisions of the Indenture, and their
respective successors and assigns.
"TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated June 28, 1995
among the Parent, Astor Holdings II and the Company.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company that at the
time of determination shall be designated by the Board of Directors of the
Company as an Unrestricted Subsidiary pursuant to a Board Resolution, but only
if such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is
not party to any material agreement, contract, arrangement or understanding with
the Company or any Restricted Subsidiary unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to the Company or
such Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; and (c) is a Person with respect
to which neither the Company nor any Restricted Subsidiary has any direct or
indirect obligation (x) to subscribe for additional
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Equity Interests or (y) to maintain or preserve such Person's financial
condition or to cause such Person to achieve any specified levels of operating
results. Any such designation by the Board of Directors shall be evidenced to
the Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions and was permitted by the
covenant entitled "Restricted Payments." If, at any time, any Unrestricted
Subsidiary, would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under the covenant
entitled "Incurrence of Indebtedness and Issuance of Disqualified Stock," the
Company shall be in default of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; PROVIDED that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of
such Unrestricted Subsidiary and such designation shall only be permitted if (i)
such Indebtedness is permitted under the covenant entitled "Incurrence of
Indebtedness and Issuance of Disqualified Stock," and (ii) no Default or Event
of Default would be in existence following such designation.
"VOTING STOCK" means any class or classes of Capital Stock pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
any Person (irrespective of whether or not, at the time, stock of any other
class or classes shall have or might have, voting power by reason of the
happening of any contingency).
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the then outstanding
principal amount of such Indebtedness into (ii) the total of the product
obtained by multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means a Restricted Subsidiary all of
the outstanding Capital Stock or other ownership interests of which (other than
directors' qualifying shares or one share held by a director for statutory
purposes) shall at the time be owned by the Company, Astor Holdings II or by one
or more Wholly Owned Restricted Subsidiaries of the Company, or by the Company,
Astor Holdings II and one or more Wholly Owned Restricted Subsidiaries.
113
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives Notes for its own account pursuant to the
Offer (a "Participating Broker") must acknowledge that it will deliver a
prospectus in connection with any resale of such Notes. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a Participating
Broker in connection with any resale of Notes received in exchanged for Old
Notes where such Old Notes were acquired as a result of market-making activities
or other trading activities. The Company has agreed that for a period of 180
days from the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any Participating Broker for use in connection with
any such resale. In addition, until , 1996 (90 days from the date of
this Prospectus), all dealers effecting transactions in the Notes may be
required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Notes by
broker-dealers. Notes received by any Participating Broker may be sold from time
to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such Notes.
Any Participating Broker that resells Notes that were received by it for its own
account pursuant to the Offer and any broker or dealer that participates in a
distribution of such Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any such resale of Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver, and by delivering, a
prospectus as required, a Participating Broker will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days from the Expiration Date, the Company will send a
reasonable number of additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker that requests such
documents in the Letter of Transmittal. The Company will pay all the expenses
incident to the Offer (which shall not include the expenses of any Holder in
connection with resales of the Notes). The Company has agreed to indemnify
Holders of the Notes, including any Participating Broker, against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Notes offered hereby and the Guarantee will be passed
upon for the Company by Gibson, Dunn & Crutcher LLP, Los Angeles, California.
INDEPENDENT AUDITORS
The Consolidated Financial Statements of Astor Holdings II as of March 31,
1995 and 1996 and for each of the three years ended March 31, 1996 included in
this Memorandum have been audited by Ernst & Young LLP, independent auditors, as
stated in their report appearing herein. The Consolidated Financial Statements
of Associated British Industries Limited as of March 31, 1994 and 1995 and for
the periods then ended included in this Memorandum have been audited by KPMG,
independent auditors, as stated in their report appearing herein. The
Consolidated Financial Statements of Adco Technologies, Inc. as of December 31,
1994 and 1995 and for each of the two years ended December 31, 1995 and the
period of May 14, 1993 to December 31, 1993 included in this Memorandum have
been audited by Ernst & Young LLP, independent auditors, as stated in their
report appearing herein. The Consolidated Financial Statements of Adco Products,
Inc. for the period January 1, 1993 to May 13, 1993 (date of sale) included in
this Memorandum have been audited by Ernst & Young LLP, independent auditors, as
stated in their report appearing herein.
114
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
ASTOR HOLDINGS II, INC.
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Auditors............................................................................. F-2
Consolidated Balance Sheets at March 31, 1996 and 1995..................................................... F-3
Consolidated Statements of Operations for the years ended March 31, 1996, 1995 and 1994.................... F-5
Consolidated Statements of Stockholder's Equity (Deficit) for the years ended March 31, 1996, 1995 and
1994...................................................................................................... F-6
Consolidated Statements of Cash Flows for the years ended March 31, 1996, 1995 and 1994.................... F-7
Notes to Consolidated Financial Statements................................................................. F-8
Consolidated Balance Sheets at June 30, 1996 and 1995 (unaudited).......................................... F-20
Consolidated Statements of Operations and Retained Earnings (Deficit) for the three months ended June 30,
1996 and 1995 (unaudited)................................................................................. F-22
Consolidated Statements of Cash Flows for the three months ended June 30, 1996 and 1995 (unaudited)........ F-23
Notes to Consolidated Financial Statements................................................................. F-24
ASSOCIATED BRITISH INDUSTRIES LIMITED
Report of Independent Auditors............................................................................. F-25
Consolidated Profit and Loss Account for the periods ended March 31, 1995 and 1994......................... F-26
Consolidated Cash Flow Statement for the periods ended March 31, 1995 and 1994............................. F-27
Notes...................................................................................................... F-28
ADCO TECHNOLOGIES INC.
Report of Independent Auditors............................................................................. F-35
Consolidated Balance Sheets at December 31, 1995 and 1994.................................................. F-36
Consolidated Statements of Income for the years ended December 31, 1995 and 1994 and for the period May 14,
1993 to December 31, 1993................................................................................. F-38
Consolidated Statements of Redeemable Preferred Stock of Subsidiary and Stockholders' Equity for the years
ended December 31, 1995 and 1994 and for the period May 14, 1993 to December 31, 1993..................... F-39
Consolidated Statements of Cash Flows for the years ended December 31, 1995 and 1994 and for the period May
14, 1993 to December 31, 1993............................................................................. F-40
Notes to Consolidated Financial Statements................................................................. F-41
Consolidated Balance Sheets at June 30, 1996 and 1995 (unaudited).......................................... F-49
Consolidated Statements of Income for the six months ended June 30, 1996 and 1995 (unaudited).............. F-50
Consolidated Statements of Cash Flows for the six months ended June 30, 1996 and 1995 (unaudited).......... F-51
Notes to Consolidated Financial Statements................................................................. F-52
ADCO PRODUCTS, INC.
Report of Independent Auditors............................................................................. F-54
Statement of Income for the period January 1, 1993 to May 13, 1993......................................... F-55
Statement of Stockholders' Equity for the period January 1, 1993 to May 13, 1993........................... F-56
Statement of Cash Flows for the period January 1, 1993 to May 13, 1993..................................... F-57
Notes to Financial Statements.............................................................................. F-58
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Astor Holdings II, Inc.
We have audited the accompanying consolidated balance sheets of Astor
Holdings II, Inc. (formerly Petrowax PA Inc.) as of March 31, 1996 and 1995, and
the related consolidated statements of operations, stockholder's equity, and
cash flows for each of the three years in the period ended March 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Astor Holdings
II, Inc. at March 31, 1996 and 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
March 31, 1996 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Buffalo, New York
June 7, 1996
F-2
<PAGE>
ASTOR HOLDINGS II, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
-----------------------------
1996 1995
-------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................................... $ 1,156,622 $ 718,744
Cash escrow..................................................................... -- 102,169
Accounts receivable (net of allowance for doubtful accounts of $725,638 and
$208,000, respectively)........................................................ 23,810,998 4,651,366
Receivable from Rheochem Technologies, Inc...................................... 566,000 --
Inventory....................................................................... 18,586,188 7,434,825
Prepaid expenses................................................................ 1,754,867 410,019
Other current assets............................................................ 1,603,917 157,724
-------------- -------------
Total current assets.......................................................... 47,478,592 13,474,847
Restricted cash................................................................... -- 175,000
Deposits.......................................................................... -- 51,000
Property, plant and equipment:
Land and improvements........................................................... 7,441,900 582,084
Buildings and improvements...................................................... 7,078,157 1,240,273
Machinery and equipment......................................................... 40,895,658 14,197,717
-------------- -------------
Total cost........................................................................ 55,415,715 16,020,074
Less accumulated depreciation................................................... (4,461,309) (1,344,115)
-------------- -------------
Property, plant and equipment -- net.............................................. 50,954,406 14,675,959
Investment in Rheochem Technologies, Inc.......................................... 4,039,987 --
Goodwill.......................................................................... 29,940,493 --
Other intangible assets........................................................... 6,572,429 1,789,547
Deferred tax asset................................................................ 3,919,644 --
-------------- -------------
Total assets.................................................................. $ 142,905,551 $ 30,166,353
-------------- -------------
-------------- -------------
</TABLE>
See accompanying notes.
F-3
<PAGE>
ASTOR HOLDINGS II, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
MARCH 31,
------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable............................................................... $ 16,271,224 $ 3,717,141
Accrued interest payable....................................................... 815,953 618,086
Accrued reorganization costs................................................... -- 1,008,019
Accrued wages and other payroll related items.................................. 1,408,614 443,147
Accrued vacation............................................................... 1,090,684 673,349
Accrued taxes.................................................................. 746,411 147,331
Accrued professional fees...................................................... 1,245,901 --
Other accrued liabilities...................................................... 1,278,060 --
PCDR inventory financing....................................................... -- 3,600,000
Current portion of long-term debt.............................................. 4,746,683 3,500,000
-------------- --------------
Total current liabilities.................................................... 27,603,530 13,707,073
Long-term debt................................................................... 66,069,960 6,436,721
Due to affiliated company........................................................ 5,435,662 --
Deferred income taxes............................................................ 4,781,652 --
Other long-term liabilities...................................................... 2,657,076 --
Prepetition liabilities subject to compromise.................................... -- 54,137,966
Stockholder's Equity (Deficit):
Redeemable preferred stock:
Senior preferred, par value $.0001 per share; authorized, 260,000 shares;
issued and outstanding, 190,000 shares in 1995 at stated value, $100 per
share....................................................................... -- 19,000,000
Junior preferred, par value $.0001 per share; authorized, issued and
outstanding, 100,000 shares in 1995 at stated value, $100 per share......... -- 10,000,000
-------------- --------------
Total redeemable preferred stock............................................... -- 29,000,000
Common stock:
Par value $.01 per share; authorized 10,000 shares; issued and outstanding,
1,000 shares in 1996........................................................ 10 --
Class A, par value $.0001 per share; authorized, 1,000,000 shares; issued and
outstanding, 102,779 shares in 1995......................................... -- 10
Class B, par value $.0001 per share; non-voting; authorized, 100,000 shares;
issued and outstanding, 2,164 shares in 1995................................ -- --
Class C, par value $.0001 per share; non-voting; authorized, 1,000,000
shares; no shares issued and outstanding in 1995............................ -- --
Additional paid-in capital..................................................... 36,670,838 1,157,924
Retained earnings (deficit) -- net of transfer of $23,863,808 accumulated
deficit as a result of the March 31, 1996 quasi-reorganization................ -- (74,273,341)
Foreign currency translation adjustment........................................ (313,177) --
-------------- --------------
Total stockholder's equity (deficit)......................................... 36,357,671 (44,115,407)
-------------- --------------
Total liabilities and stockholder's equity................................. $ 142,905,551 $ 30,166,353
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes.
F-4
<PAGE>
ASTOR HOLDINGS II, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------------------
1996 1995 1994
-------------- ------------- --------------
<S> <C> <C> <C>
Sales............................................................. $ 135,418,195 $ 61,852,091 $ 54,665,017
Cost of goods sold................................................ 108,176,220 54,549,640 50,906,000
-------------- ------------- --------------
Gross profit before depreciation and amortization................. 27,241,975 7,302,451 3,759,017
Selling, general and administrative expenses...................... 13,767,202 4,132,225 3,652,121
-------------- ------------- --------------
Operating profit before interest, taxes, depreciation,
amortization, reorganization expense and extraordinary item...... 13,474,773 3,170,226 106,896
Income from Rheochem Technologies, Inc............................ 91,000 -- --
Depreciation and amortization..................................... (5,416,228) (1,992,559) (4,041,275)
Interest expense.................................................. (5,251,079) (1,605,985) (1,470,716)
Reorganization expense............................................ (856,335) (1,087,944) (1,255,660)
Asset impairment write-down....................................... -- -- (25,882,953)
-------------- ------------- --------------
Income (loss) before taxes and extraordinary item................. 2,042,131 (1,516,262) (32,543,708)
Benefit from income taxes......................................... 3,434,166 -- --
-------------- ------------- --------------
Income (loss) before extraordinary item........................... 5,476,297 (1,516,262) (32,543,708)
Extraordinary item -- gain on cancellation of debt................ 44,933,236 -- --
-------------- ------------- --------------
Net income (loss)................................................. $ 50,409,533 $ (1,516,262) $ (32,543,708)
-------------- ------------- --------------
-------------- ------------- --------------
</TABLE>
See accompanying notes.
F-5
<PAGE>
ASTOR HOLDINGS II, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
<TABLE>
<CAPTION>
REDEEMABLE
PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------------ ------------------------------------------------ PAID-IN
SENIOR JUNIOR CLASS A CLASS B CLASS C CAPITAL
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at April 1, 1993................. $19,000,000 $10,000,000 $ 10 $ -- $ -- $ -- $ 1,157,924
Net loss................................. -- -- -- -- -- -- --
----------- ----------- ----------- ----- ----- --------- -----------
Balance at March 31, 1994................ 19,000,000 10,000,000 10 -- -- -- 1,157,924
Net loss................................. -- -- -- -- -- -- --
----------- ----------- ----------- ----- ----- --------- -----------
Balance March 31, 1995................... 19,000,000 10,000,000 10 -- -- -- 1,157,924
Cancellation of shares upon adoption of
plan of reorganization.................. (19,000,000) (10,000,000) (10) -- -- -- 29,000,010
Sale of common stock..................... -- -- -- -- -- 10 30,376,712
Net income............................... -- -- -- -- -- -- --
Foreign currency translation
adjustment.............................. -- -- -- -- -- -- --
Effect of quasi-reorganization as of
March 31, 1996.......................... -- -- -- -- -- (23,863,808)
----------- ----------- ----------- ----- ----- --------- -----------
Balance March 31, 1996................... $ -- $ -- $ -- $ -- $ -- $ 10 $36,670,838
----------- ----------- ----------- ----- ----- --------- -----------
----------- ----------- ----------- ----- ----- --------- -----------
<CAPTION>
FOREIGN TOTAL
CURRENCY RETAINED STOCKHOLDER'S
TRANSLATION EARNINGS EQUITY
ADJUSTMENT (DEFICIT) (DEFICIT)
----------- ----------- ------------
<S> <C> <C> <C>
Balance at April 1, 1993................. $ -- $(40,213,371) ($10,055,437)
Net loss................................. -- (32,543,708) (32,543,708)
----------- ----------- ------------
Balance at March 31, 1994................ -- (72,757,079) (42,599,145)
Net loss................................. -- (1,516,262) (1,516,262)
----------- ----------- ------------
Balance March 31, 1995................... -- (74,273,341) (44,115,407)
Cancellation of shares upon adoption of
plan of reorganization.................. -- -- --
Sale of common stock..................... -- -- 30,376,722
Net income............................... -- 50,409,533 50,409,533
Foreign currency translation
adjustment.............................. (313,177) -- (313,177)
Effect of quasi-reorganization as of
March 31, 1996.......................... -- 23,863,808 --
----------- ----------- ------------
Balance March 31, 1996................... $(313,177) $ -- $36,357,671
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
See accompanying notes.
F-6
<PAGE>
ASTOR HOLDINGS II, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------------------
1996 1995 1994
-------------- ------------- --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................................. $ 50,409,533 $ (1,516,262) $ (32,543,708)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization................................... 5,416,228 1,992,559 4,041,275
Income from debt cancellation................................... (44,933,236) -- --
Write down for impairment of assets............................. -- -- 25,882,953
Equity in income of Rheochem Technologies, Inc.................. (91,000) -- --
Changes in operating assets and liabilities (net of business
acquired in 1996):
Cash escrow................................................... 102,169 25,082 (31,901)
Accounts receivable........................................... (2,322,833) (921,870) (394,973)
Receivable from Rheochem Technologies, Inc.................... (566,000) -- --
Inventory..................................................... (17,668) (290,077) 539,055
Prepaid and other current assets.............................. 867,478 472,402 (937,968)
Accounts payable.............................................. 1,326,103 1,161,213 2,458,141
Accrued reorganization costs.................................. (1,008,019) 192,452 815,567
Deferred taxes................................................ (4,452,809) -- --
Other long-term liabilities................................... (508,000) -- --
Accrued interest payable...................................... 335,854 603,593 14,493
Accrued expenses.............................................. (3,026,198) (860,225) 548,267
-------------- ------------- --------------
Net cash provided by operating activities......................... 1,531,602 858,867 391,201
INVESTING ACTIVITIES
Additions to property, plant and equipment........................ (4,639,815) (273,979) (259,819)
Acquisition of business........................................... (66,776,922) -- --
Dividends received from Rheochem Technologies, Inc................ 110,000 -- --
-------------- ------------- --------------
Net cash used in investing activities............................. (71,306,737) (273,979) (259,819)
FINANCING ACTIVITIES
Capital lease payments............................................ (95,040) (113,594) (146,996)
Increase in deferred debt issuance costs.......................... -- -- (40,000)
Proceeds from long-term debt, net of fees......................... 63,520,877 -- --
Payments of long-term debt........................................ (26,656,840) -- --
Issuance of stock, net of fees.................................... 30,376,722 -- --
Decrease in PCDR inventory financing.............................. (3,600,000) -- --
Decrease in post-petition debt.................................... -- -- (14,330)
Decrease in pre-petition liabilities.............................. -- -- (306,388)
Increase in due to affiliated company............................. 5,435,662 -- --
-------------- ------------- --------------
Net cash provided by (used in) financing activities............... 68,981,381 (113,594) (507,714)
Effect of exchange rate changes on cash........................... 1,231,632 -- --
-------------- ------------- --------------
Net increase (decrease) in cash and cash equivalents.............. 437,878 471,294 (376,332)
Cash and cash equivalents at beginning of period.................. 718,744 247,450 623,782
-------------- ------------- --------------
Cash and cash equivalents at end of period........................ $ 1,156,622 $ 718,744 $ 247,450
-------------- ------------- --------------
-------------- ------------- --------------
Supplementary cash flows data:
Interest paid................................................... $ 5,053,000 $ 1,002,000 $ 1,461,000
Income taxes paid............................................... $ 2,411,000 -- --
</TABLE>
See accompanying notes.
F-7
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND BASIS OF PRESENTATION
Astor Holdings II, Inc. ("Astor Holdings II") is a wholly-owned subsidiary
of Astor Holdings, Inc. (the "Parent") and the holding company of Astor
Corporation. Astor Holdings II's operations primarily include the manufacturing
of specialty wax products for sale to end users, in a diverse range of
industries both domestically and internationally, whose applications require
specialized products and blends. Astor Holdings II performs periodic credit
evaluations of its customers' financial condition and generally does not require
collateral.
Astor Corporation was incorporated in 1989 as Petrowax PA Inc. ("Petrowax").
On June 28, 1995 certain investors (including certain former stockholders of
Petrowax) capitalized MSC Holdings I, Inc. (whose name was subsequently changed
to Astor Holdings, Inc.) which then capitalized MSC Holdings II, Inc. (whose
name was subsequently changed to Astor Holdings II, Inc.). Astor Holdings II
then acquired shares of common stock of Petrowax for $10 million and the shares
of common stock held by the former stockholders of Petrowax were cancelled for
no consideration. As a result, Astor Corporation is a wholly-owned subsidiary of
Astor Holdings II. Petrowax had operated as a debtor-in-possession under Chapter
11 of the United States Bankruptcy Code from February 1992 until June 1995.
Effective June 28, 1995, Petrowax emerged from bankruptcy. The funds necessary
to pay claims in accordance with Petrowax's plan of reorganization
("Reorganization Plan") were generated from the $10 million capital contribution
noted above and term loan borrowings of $14 million. As a result of implementing
the Reorganization Plan, Petrowax recorded a gain on the forgiveness of debt of
$44.9 million, net of the write-off of related deferred financing costs of $1.6
million. The net gain has been recorded as an extraordinary item in the
accompanying statement of operations. Subsequent to the implementation of the
Reorganization Plan, Petrowax's name was changed to Astor Corporation.
2. ACQUISITION OF ASSOCIATED BRITISH INDUSTRIES LIMITED
On June 28, 1995, Astor Holdings II through its wholly-owned subsidiaries,
purchased 100% of the outstanding stock of Associated British Industries Limited
("ABI") for cash of $57.4 million plus expenses and notes of $5.9 million. ABI
is a United Kingdom manufacturer of petroleum wax blends marketed to end users
located throughout the world. ABI included the following wholly-owned active
subsidiaries at the date of the acquisition: Astor Stag Ltd. (United Kingdom)
and its wholly-owned subsidiary Astor Stag SA (Belgium), and ABI Corporation
(United States).
The acquisition has been accounted for using the purchase method of
accounting and, accordingly, the purchase price has been allocated to the assets
purchased and the liabilities assumed based upon the fair values at the date of
acquisition. The excess of the purchase price over the fair values of the net
assets acquired has been recorded as goodwill, which is being amortized on a
straight-line basis over 25 years.
The operating results of this acquired business have been included in the
consolidated statement of operations from the date of the acquisition. If the
acquisition had taken place at the beginning of fiscal 1996 rather than at June
28, 1995, pro forma consolidated net sales would have been $158.8 million for
fiscal 1996. Consolidated pro forma income before extraordinary item would have
been $6.1 million for fiscal 1996. If the acquisition had taken place at the
beginning of fiscal 1995 pro forma consolidated net sales would have been $146.7
million and pro forma consolidated net income would have been $1.5 million for
fiscal 1995. Such pro forma amounts are not necessarily indicative of what the
actual consolidated results of operations might have been if the acquisition had
been effective at the beginning of fiscal 1996.
3. QUASI-REORGANIZATION
Effective March 31, 1996, having attained consistent earnings for the
nine-month period since its emergence from bankruptcy, Astor Holdings II, with
stockholder approval, effected a quasi-reorganization. Astor Holdings II
revalued its assets and liabilities resulting in no significant adjustments to
the financial
F-8
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. QUASI-REORGANIZATION (CONTINUED)
statements and transferred its retained earnings deficit of $23.9 million to
additional paid-in capital. As a result, retained earnings had a zero balance at
March 31, 1996 and in the future will represent accumulated earnings from that
date forward.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Astor Holdings
II and its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
INVENTORY
Inventory is stated at the lower of cost or market, with cost determined
using the first-in, first-out (FIFO) method of inventory valuation.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less the recognition of
permanent impairment and depreciation recorded subsequent to such recognition.
Depreciation is provided principally on the straight-line method over the
respective estimated useful lives of the assets. Capital leases are amortized
over the estimated useful life of the asset or lease term, as appropriate, using
the straight-line method. Depreciation expense includes amortization of assets
recorded under capital leases. For income tax purposes, accelerated methods of
depreciation are used. Depreciation expense for the years ended March 31, 1996,
1995 and 1994 was $3,528,000, $1,078,000 and $1,941,000, respectively.
DEFERRED COSTS
The costs related to the issuance of debt and certain organizational costs
of Astor Holdings II have been deferred and are being amortized on a straight
line basis over their respective estimated useful lives primarily ranging from 5
to 7 years.
GOODWILL
Goodwill represents the excess of acquisition cost over the value of net
assets acquired and is being amortized over a period of 25 years. At March 31,
1996, accumulated amortization amounted to $926,000. The carrying value of
goodwill will be reviewed if the facts and circumstances suggest that it may be
impaired. If this review indicates that goodwill will not be recoverable, as
determined based on the undiscounted cash flows of the entity acquired over the
remaining amortization period, Astor Holdings II's carrying value of the
goodwill will be reduced by the estimated shortfall of cash flows.
REVENUE RECOGNITION
Revenue is recognized when products are delivered or when title is passed to
the customers.
TRANSLATION OF FOREIGN CURRENCIES
The functional currency for the majority of Astor Holdings II's and its
subsidiaries' foreign operations is the applicable local currency. The
translation from the applicable foreign currency to U.S. dollars is performed
for balance sheet accounts using current exchange rates in effect at the balance
sheet date and for revenue and expense accounts using a weighted average
exchange rate during the period. Translation adjustments resulting from such
translation are included as a separate component of stockholder's equity. Gains
or losses resulting from foreign currency transactions are included in income.
CASH ESCROW
Cash escrow represents segregated cash funds to satisfy tax obligations, in
accordance with the bankruptcy code.
F-9
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RESTRICTED CASH
Restricted cash includes cash pledged as collateral for an irrevocable
letter of credit in favor of one of Astor Holdings II's feedstock suppliers.
CASH EQUIVALENTS
Astor Holdings II considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
INCOME TAXES
Astor Holdings II accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 ("SFAS No. 109"), ACCOUNTING FOR INCOME
TAXES. Under SFAS No. 109, deferred income taxes are recognized for the tax
consequences of temporary differences by applying enacted statutory rates
applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities. The
effect of a change in tax rates is recognized in the period that includes the
enactment date.
FAIR VALUE OF FINANCIAL INSTRUMENTS
In estimating the fair value of its fixed rate long-term debt instruments,
Astor Holdings II used a discounted cash flow analysis, based upon the current
incremental borrowing rate for similar types of borrowing arrangements. At March
31, 1996, the carrying amounts of debt instruments approximate fair value.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
5. INVENTORY
Inventory consists of the following at March 31:
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Raw materials.................................................. $ 7,428,538 $ 1,666,271
Work-in-progress............................................... 4,761,551 4,138,785
Finished goods................................................. 6,766,970 1,749,769
Allowance for inventory obsolescence........................... (370,871) (120,000)
------------- -------------
$ 18,586,188 $ 7,434,825
------------- -------------
------------- -------------
</TABLE>
6. INTANGIBLE ASSETS
Intangible assets consists of the following at March 31:
<TABLE>
<CAPTION>
1996 1995
------------ -------------
<S> <C> <C>
Trade names...................................................... $ 479,986 $ --
Deferred organization costs...................................... 24,482 --
Deferred debt issuance costs..................................... 6,800,561 5,532,079
------------ -------------
7,305,029 5,532,079
Less accumulated amortization.................................... (732,600) (3,742,532)
------------ -------------
$ 6,572,429 $ 1,789,547
------------ -------------
------------ -------------
</TABLE>
Amortization expense for the years ended March 31, 1996, 1995 and 1994 was
$732,600, $915,000 and $806,000, respectively. During the fiscal year ended
March 31, 1996, the $1,789,547 deferred debt issuance
F-10
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INTANGIBLE ASSETS (CONTINUED)
costs that remained unamortized at March 31, 1995 was written off upon the
emergence of Petrowax from bankruptcy and concurrent forgiveness of debt. In
addition, during the fiscal year ended March 31, 1996, $6,800,561 of deferred
debt issuance costs were recorded in connection with Astor Corporation's
incurrence of debt related to the emergence from bankruptcy and the acquisition
of ABI.
7. LONG-TERM DEBT
Long-term debt at March 31, 1996 consists of the following:
<TABLE>
<S> <C>
Term Note payable to Union Bank of Switzerland ("UBS") up to
$37,500,000 plus L12,500,000 in the aggregate. The term note
matures on June 28, 2002. Interest is due on the last day of
each interest period and on the date three months after the
first date of such interest period in the case of interest
periods of six months. Interest set at a LIBOR based rate plus
2.25% (L12,282,625 at 8.875%, $18,195,550 at 7.6875% and
$18,000,000 at 7.875% at March 31, 1996). Astor Corporation has
entered into swap agreements, the effect of which is to fix the
interest rate on L9,000,000 at 9.48%, $10,000,000 at 8.22%, and
$18,000,000 at 8.23% through September 1998. Principal is due
in equal quarterly payments commencing December 28, 1995....... $54,959,916
Revolving Credit Note payable to UBS up to $20,00,000 in the
aggregate. Revolving Credit Facility matures on June 28, 2002.
Interest is due on the last day of each interest period and on
the date three months after the first date of such interest
period in the case of interest periods of six months. Interest
set at prime plus 1%, or LIBOR plus 2.25% (L2,400,000 at 8.5%
and $9,800,000 at 7.875%)...................................... 13,466,480
Swing Line Credit Note payable to UBS. Interest at prime plus
1.75% (10.25%). Principal due April 4, 1996.................... 700,000
Subordinated environmental note payable to Quaker State
Corporation. Principal due in one installment on December 31,
2008. Interest due monthly at the rate of 9%................... 148,097
Obligations under capital leases............................... 172,430
Mortgage....................................................... 150,000
Revolving line of credit....................................... 1,219,720
----------
Long term debt................................................. 70,816,643
Less current portion........................................... (4,746,683)
----------
$66,069,960
----------
----------
</TABLE>
On June 16, 1995 ABI Acquisition 2 plc ("ABI A2") and Astor Corporation
entered into a facility agreement (the "facility") with UBS. A term loan
facility in the amounts of $23,500,000 and L12,500,000 was granted to ABI A2.
The term loans were intended for the purpose of financing part of the purchase
of the entire issued share capital of ABI, the payment of interest on such
borrowings and the payment of transaction fees and expenses up to $7,500,000. A
term loan facility in the amount of $14,000,000 was granted to Astor Corporation
for the purpose of paying claims in accordance with the Reorganization Plan.
A revolving credit and letter of credit facility in an aggregate principal
amount of $20,000,000 was granted to Astor Corporation and any additional
borrower provided that the dollar amount of the revolving
F-11
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. LONG-TERM DEBT (CONTINUED)
advances made or to be made by way of the issue of a letter of credit shall at
no time exceed $5,000,000 and any swing-line advances made shall reduce the
revolving advances available. The facility was intended for the purpose of
refinancing certain existing indebtedness of ABI and its subsidiaries up to a
maximum aggregate amount of $9,500,000, for the general working capital
requirements of each borrower, to refinance swing-line advances, to pay
transaction fees and expenses up to $400,000 in connection with the merger of
the U.S. subsidiaries of ABI into Astor Corporation, and to pay transaction fees
and expenses of up to $1,500,000 in connection with the acquisition of ABI.
Availability is subject to a borrowing base for each borrower. The borrowing
base shall equal a percentage to be established by UBS from time to time in its
sole reasonable discretion (initially 80% and 50%, respectively) of certain
accounts receivable and inventory, subject to eligibility requirements and
reserves to be established and revised by UBS from time to time in its sole
discretion. At March 31, 1996, the borrowing base was $21.7 million.
A swing-line credit facility in an aggregate principal amount of $2,000,000
was granted to Astor Corporation for its general working capital requirements.
The above domestic facilities are secured by substantially all of the
domestic assets of Astor Corporation and its subsidiaries, while the foreign
facilities are secured by substantially all of the worldwide assets of Astor
Corporation and its subsidiaries.
The facility agreement subjects Astor Corporation and its subsidiaries to
various affirmative and negative covenants and prohibits, among other things,
the payment of dividends on any class of stock. As of March 31, 1996, Astor
Corporation and its subsidiaries were in compliance with these covenants.
Scheduled maturities on long-term debt for each of the next five years as of
March 31, 1996 are as follows:
<TABLE>
<S> <C>
Year ending March 31, 1997..................................... $4,746,683
1998....................................... 6,711,070
1999....................................... 7,383,704
2000....................................... 9,598,781
2001....................................... 11,075,439
Thereafter................................. 31,300,966
----------
$70,816,643
----------
----------
</TABLE>
8. LONG-TERM POST-PETITION DEBT
Long-term post-petition debt consisted of the following at March 31, 1995:
<TABLE>
<S> <C>
Debtor in possession financing from Century City 1800 Partners
LP ("Century City")............................................ $3,500,000
Assumed obligations -- bridge loan.............................. 6,038,624
Notes payable, secured.......................................... 250,000
Environmental note.............................................. 148,097
---------
9,936,721
Less current portion............................................ 3,500,000
---------
$6,436,721
---------
---------
</TABLE>
On February 29, 1992, Petrowax entered into a secured debtor-in-possession
financing arrangement ("DIP loan") pursuant to which Petrowax borrowed $3.5
million which was secured by liens on Petrowax's accounts receivable and
inventory. The DIP loan was repaid upon reorganization of Petrowax.
F-12
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. LONG-TERM POST-PETITION DEBT (CONTINUED)
On April 27, 1990, Petrowax entered into a bridge loan agreement pursuant to
which the bridge lenders loaned Petrowax $5.0 million. The principal amount
outstanding under this facility was $4.75 million at March 31, 1995. The bridge
lenders' asserted secured claim relating to this facility, which included
accrued interest and fees, totaled $6,038,624 at March 31, 1995. This obligation
was settled upon reorganization of Petrowax.
9. PCDR INVENTORY FINANCING
In November 1992, Petrowax entered into a tolling agreement with PCDR, an
affiliated entity. The agreement allowed PCDR to purchase selected crude oil and
inventories aggregating $3.6 million from Petrowax, for later re-sale back to
Petrowax. This agreement resulted in increased working capital available to
Petrowax for use in its manufacturing operations. The agreement required
Petrowax to re-purchase all inventories upon confirmation of a plan of
reorganization. For financial reporting purposes at March 31, 1995, the
agreement is considered a financing arrangement, and the inventory and
corresponding PCDR borrowings are included in the balance sheet. The PCDR
borrowings were paid upon the reorganization of Petrowax.
10. PRE-PETITION LIABILITIES
Pre-petition liabilities consisted of the following at March 31, 1995:
<TABLE>
<S> <C>
Secured debt................................................... $45,398,186
Unsecured debt................................................. 1,366,354
Taxes payable.................................................. 196,377
Capital lease obligations...................................... 29,471
Unsecured trade payables....................................... 7,147,578
----------
$54,137,966
----------
----------
</TABLE>
These liabilities were settled upon reorganization of Petrowax.
11. LEASES
Astor Corporation is obligated under noncancelable operating leases expiring
on various dates through March 31, 2003. Future minimum annual lease payments as
of March 31, 1996 are as follows:
<TABLE>
<S> <C>
Year ending March 31, 1997...................................... $1,656,000
1998....................................... 1,528,000
1999....................................... 1,179,000
2000....................................... 936,000
2001....................................... 923,000
</TABLE>
Rent expense for all operating leases for the years ended March 31, 1996,
1995 and 1994 was $1.6 million, $1.4 million and $1.3 million, respectively.
12. INCOME TAXES
The components of income before taxes and extraordinary item are as follows
at March 31:
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------- --------------
<S> <C> <C> <C>
Domestic......................................... $ 2,053,901 $ (1,516,262) $ (32,543,708)
Foreign.......................................... (11,770) -- --
------------ ------------- --------------
$ 2,042,131 $ (1,516,262) $ (32,543,708)
------------ ------------- --------------
------------ ------------- --------------
</TABLE>
F-13
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. INCOME TAXES (CONTINUED)
In 1994 and 1995, no provision for federal income taxes was recorded as
Astor Holdings II incurred net losses for financial reporting as well as income
tax purposes. Income tax expense (credits) consist of the following at March 31,
1996:
<TABLE>
<S> <C>
Current:
Federal....................................................... $ 339,350
State......................................................... 312,520
Foreign....................................................... 200,662
Deferred:
Federal....................................................... (4,865,981)
State......................................................... 946,337
Foreign....................................................... (367,054)
----------
$(3,434,166)
----------
----------
</TABLE>
Deferred taxes available to Astor Holdings II as of March 31 are as follows:
<TABLE>
<CAPTION>
1996 1995
---------------------------- --------------
DOMESTIC FOREIGN DOMESTIC
------------- ------------- --------------
<S> <C> <C> <C>
Deferred tax liabilities:
Property, plant and equipment........................... $ (4,229,030) $ (4,156,585) $ --
Intangible assets....................................... -- (881,000) --
Other................................................... (8,231) (135,110) --
------------- ------------- --------------
$ (4,237,261) $ (5,172,695) $ --
Deferred tax assets:
Federal net operating loss carryforward................. $ 8,413,560 $ -- $ 14,620,000
Accounts receivable..................................... 145,278 70,704 --
Inventory............................................... 32,000 88,434 --
Property, plant and equipment........................... -- -- 5,408,000
Intangible assets....................................... -- -- 3,046,000
Accrued expenses and other long-term liabilities........ 1,151,067 231,905 --
Other................................................... -- -- 487,000
Valuation allowance..................................... (1,585,000) -- (23,561,000)
------------- ------------- --------------
$ 8,156,905 $ 391,043 $ --
------------- ------------- --------------
Net deferred taxes........................................ $ 3,919,644 $ (4,781,652) $ --
------------- ------------- --------------
------------- ------------- --------------
</TABLE>
At March 31, 1996, Astor Holdings II had an operating loss carryforward for
tax reporting purposes of approximately $24 million expiring in years 2007
through 2009, which was available to offset future federal taxable income.
F-14
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. INCOME TAXES (CONTINUED)
Total income tax expense for the fiscal year ended March 31, 1996 differed
from the amounts computed by applying the U.S. federal income tax rate to income
before taxes and extraordinary item as a result of the following:
<TABLE>
<S> <C>
Income tax expense at the 34% statutory federal income tax
rate........................................................... $ (694,325)
State and local income taxes, net of federal income tax
benefit........................................................ (1,152,837)
Realization of the net operating losses previously subject to
valuation allowance............................................ 920,091
Non-deductibility of goodwill amortization...................... (315,000)
Reduction of the valuation allowance on unused net operating
loss carryforward.............................................. 4,865,981
Other........................................................... (189,744)
----------
Total income tax benefit........................................ $3,434,166
----------
----------
</TABLE>
13. EMPLOYEE BENEFIT PLANS
Astor Corporation, through its acquisition of ABI, has a contributory,
defined-benefit pension plan covering certain employees in the United Kingdom.
Benefits are based on length of service and a negotiated benefit rate. Astor
Corporation's policy is to fund the plan based upon statutory requirements.
Plan assets are primarily invested in domestic and international stocks and
bonds.
The following tables present the funded status and amounts recognized in the
balance sheet at March 31, 1996:
<TABLE>
<S> <C>
Actuarial present value of benefit obligations
Vested....................................................... $10,541,000
Non-vested................................................... --
----------
Accumulated benefit obligation................................. $10,541,000
----------
----------
Projected benefit obligation................................... $12,150,000
Plan assets at fair value...................................... 13,172,000
----------
Plan assets in excess of projected benefit obligation.......... 1,022,000
Unrecognized net gain.......................................... (613,000)
----------
Net pension asset.............................................. $ 409,000
----------
----------
</TABLE>
Net pension expense for the fiscal year ended March 31, 1996 was comprised
of the following:
<TABLE>
<S> <C>
Service cost..................................................... $ 209,000
Interest cost on projected benefit obligation.................... 718,000
Expected return on plan assets................................... (816,000)
---------
$ 111,000
---------
---------
</TABLE>
At March 31, 1996, the assumed long-term rates of return on assets and
settlement rate used in determining net pension expense were 9% and 8%,
respectively. The assumed rate of increase in the future compensation level was
6%.
Astor Corporation also sponsors defined-contribution plans under Section
401(k) of the Internal Revenue Code. These plans cover employees at the Refining
and Blending divisions in the United States. Employees may elect to contribute
up to 15% of their annual compensation to the plans, subject to limits
established by the Internal Revenue Code. Astor Corporation's contributions to
the plans are based on
F-15
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. EMPLOYEE BENEFIT PLANS (CONTINUED)
100% of the first 3% of compensation contributed by employees. Astor Corporation
also may make discretionary contributions. Astor Corporation's contributions to
the plans for the year ended March 31, 1996 was $47,000. There were no
contributions to these plans for the years ended March 31, 1995 and 1994.
14. POSTRETIREMENT MEDICAL BENEFITS
Astor Corporation provides certain health insurance benefits to eligible and
formerly full-time retired United States employees. Participants generally
become eligible for these benefits after achieving certain age and years of
service requirements.
The United States Blending Division will provide 100% of eligible employees'
premium coverage for individuals retiring between the ages of 62 and 65 under
the group health plan, and will provide premium coverage for eligible retirees
greater than age 65 for coverage supplemental to Medicare.
Effective February 1, 1996, the United States Refining Division ratified a
new union contract which provides for Astor Corporation to continue to pay for
80% of eligible individual employee group health and dental plan coverage for
employees who retire between the ages of 62 and 65 with coverage ending upon
attainment of age 65. The accumulated postretirement benefit obligation at the
effective date was $538,000 and will be recognized over 20 years.
Astor Corporation's current policy is to fund these benefits on a
pay-as-you-go basis.
The amounts recognized in Astor Holdings II's March 31, 1996 balance sheet
are as follows:
<TABLE>
<S> <C>
Accumulated postretirement benefits obligation:
Retirees...................................................... $ 291,936
Fully eligible active......................................... 564,599
Other, not fully eligible..................................... 247,965
---------
Total accumulated postretirement benefits obligation............ 1,104,500
Unrecognized prior service costs................................ (533,500)
---------
Accrued postretirement benefit obligation....................... $ 571,000
---------
---------
</TABLE>
These obligations are included in other long-term liabilities on Astor
Holdings II's March 31, 1996 balance sheet.
Net periodic postretirement benefit costs for the fiscal year ended March
31, 1996 included the following components:
<TABLE>
<S> <C>
Service cost -- benefits earned during the period.................. $ 13,000
Interest cost...................................................... 37,000
Amortization....................................................... 4,482
---------
Net periodic postretirement benefit cost........................... $ 54,482
---------
---------
</TABLE>
For measuring the postretirement benefit obligation, an initial 8% annual
rate of increase in the net medical claims cost was assumed. The rate was
assumed to decrease by 1% per year commencing in the fiscal year ended March 31,
1997 to an ultimate rate of 5%. Increasing the annual rate of increase in the
net medical claims cost by one percentage point in each year would increase the
accumulated postretirement benefit obligation by 12.4% or $137,000 and would
increase the service cost and interest cost components of net periodic
postretirement benefit cost by 15.2% or $7,600 in the aggregate. The discount
rate used in determining the accumulated postretirement benefit obligation was
7% per annum.
F-16
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. SWAP AGREEMENTS
Astor Corporation has entered into a series of price swap contracts to fix
the purchase price of crude oil, primarily through October 31, 1996. The
contracts are intended to mitigate the impact of market fluctuations related to
the cost of crude oil on feedstock costs. Gains and losses on the contracts are
deferred and are recognized in income during the periods affected. At March 31,
1996, Astor Corporation had open price swap contracts covering a notional amount
of crude oil equivalent to 571,000 barrels.
16. COMMITMENTS AND CONTINGENCIES
As is prevalent in the refining industry, Astor Corporation has
environmental issues that it is addressing. The United States Refining Division
has issues related to the remediation of contaminated soils and ground water.
Quaker State Corporation (QSC) is responsible for the vast majority of the costs
associated with the issues. Astor Corporation's potential liability is limited
to sharing fifty percent of the first $5,500,000 of non-ground water remediation
with QSC. Astor Corporation will pay for its share of the above costs by issuing
subordinated 9% notes payable to QSC, which will be due December 31, 2008. As of
March 31, 1996, Astor Corporation has issued environmental notes to Quaker State
in the amount of $148,097 for shared costs (Note 7). The future cost to Astor
Corporation for non-ground water remediation, if any, is not known at this time.
The United States Blending Division has environmental issues related to
contamination at its Titusville, Pa. facility. Under the terms of the L1,450,988
of 8% subordinated debt issued to ABI's former shareholders by the Parent, the
Parent is entitled to set-off costs in excess of $350,000 relating to this site
against the principal and interest otherwise payable, so long as the Parent
notifies the shareholders by June 28, 1999 of the existence of a condition that
could give rise to a set-off claim. Astor Corporation believes it has provided
for probable losses with respect to these issues and does not anticipate a
material impact on future operating results.
17. INVESTMENT IN RHEOCHEM TECHNOLOGIES, INC.
Astor Corporation's investment in Rheochem Technologies, Inc. ("Rheochem")
represents its 50% ownership of Rheochem, which was obtained through the
acquisition of ABI. Rheochem, whose operations are based in Columbia, Missouri,
develops and manufactures products such as paraffin lubricants, synthetic
stearate and other lubricating systems which are used in the extrusion of
polyvinyl chloride (PVC) products. Astor Corporation accounts for its investment
using the equity method.
During the fiscal year ended March 31, 1996, Astor Corporation had sales to
Rheochem of approximately $4,300,000 and at March 31, 1996 has a receivable from
Rheochem of $566,000. Also during the fiscal year ended March 31, 1996, Astor
Corporation received a management fee from Rheochem of $1,100,000, which is
netted against selling, general and administrative expenses in the accompanying
consolidated statement of operations.
The differences between the carrying amount of the investment on Astor
Holdings II's books and the amount of Astor Corporation's share of Rheochem's
underlying equity in net assets of approximately $2,889,000 is being amortized
over 25 years by Astor Corporation.
F-17
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. INVESTMENT IN RHEOCHEM TECHNOLOGIES, INC. (CONTINUED)
The following summarized financial statement information for Rheochem is for
the year ending or as of December 31, 1995:
<TABLE>
<S> <C>
Assets:
Current...................................................... $4,446,000
Non-current.................................................. $1,818,000
Liabilities:
Current...................................................... $3,524,000
Non-current.................................................. $ 268,000
Net sales...................................................... $25,908,000
Gross profit................................................... $4,676,000
Net income..................................................... $ 416,000
</TABLE>
18. RELATED PARTIES
As discussed in Note 17, Astor Corporation transacts business with Rheochem
in which it has a 50% ownership.
The Parent has issued redeemable preferred stock. The series A preferred
stock has a liquidation preference and stated value of $14,250,000 and has a
cumulative 14.5% dividend rate. The holders of the series A preferred stock may
require the Parent to redeem the shares after June 15, 2007 or upon a change in
control. The series B preferred stock has a liquidation preference and stated
value of $8,250,000 and has a cumulative 14.5% dividend rate. The holders of the
series B preferred stock may require the Parent to redeem the shares upon a
change in control. The Parent's source of funds for any redemption or payment of
dividends will likely be distributions received from Astor Corporation.
Astor Holdings II has incurred debt of $5,707,938 payable to the Parent in
conjunction with the purchase of ABI. The intercompany debt accrues interest at
6% per annum, which is payable semi-annually through 2003. The principal balance
is due in one installment on July 5, 2003. The Parent is expected to use the
proceeds from this debt to pay its subordinated notes payable to the former
shareholders of ABI.
The Parent has entered into a management agreement with a company related to
its principal stockholders. The Parent incurred a management fee of $300,000
during the fiscal year ended March 31, 1996 related to this agreement. During
the fiscal year ended March 31, 1996 Astor Corporation advanced approximately
$270,000 to the Parent to provide funds for the management fee and other
expenses. The Parent's sources of funds to repay these advances will likely be
distributions funded by Astor Corporation.
19. MAJOR CUSTOMERS
For the year ended March 31, 1994, sales made to two customers represented
approximately 31% of Astor Corporation's total sales. For the year ended March
31, 1995, sales made to one customer represented approximately 11% of Astor
Corporation's total sales. The related accounts receivable balances from these
customers represented approximately 23% and 2% of total accounts receivable at
March 31, 1994 and 1995, respectively. For the year ended March 31, 1996, there
were no sales to any single customer which exceeded 10% of Astor Corporation's
total sales.
F-18
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
20. FOREIGN OPERATIONS
Prior to the acquisition of ABI in the fiscal year ended March 31, 1996,
substantially all business was conducted domestically and there were no foreign
operations. The following table represents the applicable geographic operations
for the fiscal year ended March 31, 1996:
<TABLE>
<CAPTION>
UNITED
KINGDOM
UNITED AND
STATES BELGIUM ELIMINATIONS CONSOLIDATED
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers......................... $ 89,487,567 $ 45,930,628 $ -- $ 135,418,195
Intra-group sales....................................... 8,631,250 6,764,915 (15,396,165) --
------------ ------------ ------------- -------------
Total net sales..................................... 98,118,817 52,695,543 (15,396,165) 135,418,195
Operating profit before interest, taxes, depreciation,
amortization, reorganization expense and extraordinary
item................................................... 9,000,229 4,474,544 -- 13,474,773
Net income.............................................. 50,254,911 154,622 -- 50,409,533
Identifiable total assets............................... 86,646,993 56,258,558 -- 142,905,551
Total liabilities....................................... 69,361,310 37,186,570 -- 106,547,880
</TABLE>
U.S. operations' sales to unaffiliated customers include approximately
$7,800,000 for the year ended March 31, 1996 for export. Intra-group sales are
recorded at amounts generally above cost and in accordance with the rules and
regulations of the respective governing tax authorities.
21. SUMMARY FINANCIAL INFORMATION
The following represents summarized financial information of Astor Holdings
II and its wholly-owned subsidiary Astor Corporation for the year ended March
31, 1996:
<TABLE>
<CAPTION>
ASTOR
HOLDINGS II, ASTOR
INC. CORPORATION ELIMINATIONS CONSOLIDATED
--------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Current assets..................................... $ 9,175,193 $ 47,478,592 $ (9,175,193) $ 47,478,592
Non current assets................................. 33,059,673 95,406,077 (33,038,791) 95,426,959
--------------- ------------- ------------- -------------
Total assets....................................... $ 42,234,866 $ 142,884,669 $ (42,213,984) $ 142,905,551
--------------- ------------- ------------- -------------
--------------- ------------- ------------- -------------
Current liabilities................................ $ (61,686) $ 27,665,216 $ -- $ 27,603,530
Non current liabilities............................ 5,938,881 82,180,662 (9,175,193) 78,944,350
Preferred stock of subsidiary...................... -- 1,744,721 (1,744,721) --
Stockholder's equity............................... 36,357,671 31,294,070 (31,294,070) 36,357,671
--------------- ------------- ------------- -------------
Total liabilities and stockholder's equity......... $ 42,234,866 $ 142,884,669 $ (42,213,984) $ 142,905,551
--------------- ------------- ------------- -------------
--------------- ------------- ------------- -------------
Sales.............................................. $ -- $ 135,418,195 $ -- $ 135,418,195
Gross profit before depreciation and amortization.. -- 27,241,975 -- 27,241,975
Net income......................................... $ 50,409,533 $ 50,396,989 $ (50,396,989) $ 50,409,533
</TABLE>
22. ASSET IMPAIRMENT
During the fiscal year ended March 31, 1994, as a result of continued
operating losses, Petrowax assessed whether the value of its long lived assets
were impaired. As a result of this process, Petrowax recorded an asset
impairment write-down of approximately $25.9 million, comprised of $22.3 million
pertaining to property, plant and equipment and $3.6 million pertaining to other
intangible assets. Using an estimated 15% incremental borrowing rate, Petrowax
calculated the present value of the expected future cash flows, excluding
interest charges, to determine the fair value of these assets.
23. SUBSEQUENT EVENT (UNAUDITED)
On July 12, 1996, Astor Corporation entered into an agreement to acquire all
of the outstanding capital stock and issued and unexercised stock options of
Adco Technologies, Inc. for an aggregate consideration of approximately $54.4
million.
F-19
<PAGE>
ASTOR HOLDINGS II, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30,
------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 1,034,997 $ 3,557,207
Accounts receivable (net of allowance for doubtful accounts
of $709,689 and $208,000, respectively)....................................... 24,159,284 20,725,762
Receivable from Rheochem Technologies, Inc..................................... 606,000 451,000
Due from affiliate............................................................. 304,000 --
Inventory...................................................................... 21,091,529 19,197,395
Prepaid expenses............................................................... 1,096,800 2,395,903
Other current assets........................................................... 2,537,797 2,367,687
-------------- --------------
Total current assets......................................................... 50,830,407 48,694,954
Property, plant and equipment:
Land and improvements.......................................................... 7,545,202 7,714,108
Buildings and improvements..................................................... 7,032,153 7,155,099
Machinery and equipment........................................................ 41,807,106 37,372,577
-------------- --------------
Total cost....................................................................... 56,384,461 52,241,784
Less accumulated depreciation.................................................. (5,537,125) (1,626,885)
-------------- --------------
Property, plant and equipment -- net............................................. 50,847,336 50,614,899
Investment in Rheochem Technologies, Inc......................................... 4,194,249 4,135,190
Goodwill......................................................................... 29,631,493 30,866,488
Other intangible assets.......................................................... 6,464,961 7,305,026
Deferred tax asset............................................................... 3,298,644 --
-------------- --------------
Total assets................................................................. $ 145,267,090 $ 141,616,557
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes.
F-20
<PAGE>
ASTOR HOLDINGS II, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
AT JUNE 30,
------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable............................................................... $ 18,587,360 $ 14,979,743
Accrued interest payable....................................................... 875,062 9,589
Accrued expenses............................................................... 6,684,617 7,853,506
Current portion of long-term debt.............................................. 4,538,683 3,160,230
-------------- --------------
Total current liabilities.................................................... 30,685,722 26,003,068
Long-term debt................................................................... 63,517,877 70,057,899
Due to affiliated company........................................................ 5,707,686 5,945,940
Deferred income taxes............................................................ 4,771,551 6,243,141
Other long-term liabilities...................................................... 2,519,335 3,027,089
Stockholder's Equity:
Common stock:
Par value $.01 per share; authorized 10,000 shares issued and outstanding,
1,000 shares................................................................ 10 10
Additional paid-in capital................................................... 36,670,838 60,534,646
Retained earnings (deficit) -- net of transfer of $23,863,808 accumulated
deficit as a result of March 31, 1996 quasi-reorganization.................. 1,414,124 (30,195,236)
Foreign currency translation adjustment...................................... (20,053) --
-------------- --------------
Total stockholder's equity................................................. 38,064,919 30,339,420
-------------- --------------
Total liabilities and stockholder's equity................................. $ 145,267,090 $ 141,616,557
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes.
F-21
<PAGE>
ASTOR HOLDINGS II, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS (DEFICIT)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-----------------------------
1996 1995
------------- --------------
<S> <C> <C>
Sales.............................................................................. $ 43,222,626 $ 16,830,009
Cost of goods sold................................................................. 33,318,128 14,583,507
------------- --------------
Gross profit before depreciation and amortization.................................. 9,904,498 2,246,502
Selling, general and administrative expenses....................................... 4,432,859 1,319,016
------------- --------------
Operating profit before interest, taxes, depreciation, amortization, reorganization
expense and extraordinary item.................................................... 5,471,639 927,486
Income from Rheochem Technologies, Inc............................................. 216,000 --
Depreciation and amortization...................................................... (1,553,175) (553,085)
Interest expense................................................................... (1,668,923) (373,168)
Reorganization expense............................................................. -- (856,364)
------------- --------------
Income (loss) before taxes and extraordinary item.................................. 2,465,541 (855,131)
Provision for income taxes......................................................... (1,051,417) --
------------- --------------
Income (loss) before extraordinary item............................................ 1,414,124 (855,131)
Extraordinary item -- gain on cancellation of debt................................. -- 44,933,236
------------- --------------
Net income......................................................................... 1,414,124 44,078,105
Retained earnings (deficit) at beginning of period................................. -- (74,273,341)
------------- --------------
Retained earnings (deficit) at end of period....................................... $ 1,414,124 $ (30,195,236)
------------- --------------
------------- --------------
</TABLE>
See accompanying notes.
F-22
<PAGE>
ASTOR HOLDINGS II, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-----------------------------
1996 1995
------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income......................................................................... $ 1,414,124 $ 44,078,105
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization.................................................... 1,553,175 553,085
Income from debt cancellation.................................................... -- (44,933,236)
Equity in income of Rheochem Technologies, Inc................................... (216,000) --
Changes in operating assets and liabilities (net of business acquired on June 28,
1995):
Cash escrow.................................................................... -- 102,169
Accounts receivable............................................................ (304,068) 333,295
Receivable from Rheochem Technologies, Inc..................................... (40,000) --
Inventory...................................................................... (2,501,454) (264,585)
Prepaid and other current assets............................................... (274,966) (510,008)
Deposits....................................................................... -- 51,000
Restricted cash................................................................ -- 175,000
Accounts payable............................................................... 2,343,277 (460,095)
Accrued reorganization costs................................................... -- (465,998)
Deferred taxes................................................................. 610,899 --
Other long-term liabilities.................................................... (137,741) --
Accrued interest payable....................................................... 59,109 (608,497)
Accrued expenses............................................................... 914,947 1,194,361
------------- --------------
Net cash provided by (used in) operating activities................................ 3,421,302 (755,404)
INVESTING ACTIVITIES
Additions to property, plant and equipment......................................... (850,746) (46,086)
Acquisition of business............................................................ -- (66,776,922)
------------- --------------
Net cash used in investing activities.............................................. (850,746) (66,823,008)
FINANCING ACTIVITIES
Capital lease payments............................................................. -- (18,474)
Proceeds from long-term debt, net of fees.......................................... -- 60,986,467
Payments of long-term debt......................................................... (2,760,083) --
Issuance of stock, net of fees..................................................... -- 30,376,722
Payment of PCDR inventory financing................................................ -- (3,600,000)
Payment of debtor in possession financing.......................................... -- (3,500,000)
Payment of bridge loan payable..................................................... -- (5,000,000)
Payment of pre-petition liabilities................................................ -- (8,827,840)
Decrease in due to affiliated company.............................................. (31,976) --
------------- --------------
Net cash (used in) provided by financing activities................................ (2,792,059) 70,416,875
Effect of exchange rate changes on cash............................................ 99,878 --
------------- --------------
Net (decrease) increase in cash and cash equivalents............................... (121,625) 2,838,463
Cash and cash equivalents at beginning of period................................... 1,156,622 718,744
------------- --------------
Cash and cash equivalents at end of period......................................... $ 1,034,997 $ 3,557,207
------------- --------------
------------- --------------
</TABLE>
See accompanying notes.
F-23
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended June 30, 1996
are not necessarily indicative of the results that may be expected for the year
ended March 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto of Astor Holdings II, Inc. for the
year ended March 31, 1996.
2. INVENTORY
Inventory consists of the following at June 30:
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Raw Materials............................................................ $ 7,423,423 $ 6,543,200
Work-in-progress......................................................... 6,148,252 4,410,053
Finished goods........................................................... 7,894,052 8,716,035
Allowance for inventory obsolescence..................................... (374,198) (471,893)
------------- -------------
$ 21,091,529 $ 19,197,395
------------- -------------
------------- -------------
</TABLE>
3. INCOME TAXES
For the three months ended June 30, 1995, no provision for federal income
taxes was recorded as Astor Holdings II, Inc. had incurred net operating losses
for financial reporting and tax reporting purposes and had available a net
operating loss carryforward which had not been recognized for financial
reporting purposes.
F-24
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the shareholders of Associated British Industries Limited
We have audited the accompanying consolidated profit and loss accounts and
cash flow statements of Associated British Industries Limited and subsidiaries
for the year ended 31 March 1995 and the nine months ended 31 March 1994. These
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United Kingdom and in the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the above statements. An audit also includes assessing the
accounting principles used and significant estimates made by managment, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated operating results and
cash flows of Associated British Industries Limited and subsidiaries for the
year ended 31 March 1995 and the nine months ended 31 March 1994 in conformity
with generally accepted accounting principles in the United Kingdom.
Generally accepted accounting prinicples in the United Kingdom vary in
certain significant respects from generally accepted accounting principles in
the United States. Application of generally accepted accounting principles in
the United States would have affected the results of operations for the periods
ended 31 March 1995 and 1994 to the extent summarized in Note 10 to the
consolidated financial statements.
KPMG
Chartered Accountants
Registered Auditors
London, England
24 October 1996
F-25
<PAGE>
ASSOCIATED BRITISH INDUSTRIES LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
NOTE
----- YEAR ENDED NINE MONTHS
31 MARCH ENDED*
1995 31 MARCH
----------- 1994
(RESTATED)
L000 ------------
L000
<S> <C> <C> <C>
TURNOVER......................................................................... 2 57,099 43,135
Cost of sales.................................................................... (42,569) (32,325)
----------- ------------
GROSS PROFIT..................................................................... 14,530 10,810
Distribution costs............................................................... (3,601) (2,675)
Administrative expenses.......................................................... (6,429) (4,887)
Other operating income........................................................... 468 172
----------- ------------
OPERATING PROFIT................................................................. 4,968 3,420
Provision for loss on disposal of land and buildings............................. -- (73)
----------- ------------
Profit on ordinary activities before interest.................................... 4,968 3,347
Other interest receivable and similar income..................................... 4 16 19
Income from interests in associated undertaking.................................. 442 --
Interest payable and similar charges............................................. 5 (644) (557)
----------- ------------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION.................................... 3 4,782 2,809
Tax on profit on ordinary activities............................................. 6 (1,789) (1,138)
----------- ------------
PROFIT FOR THE FINANCIAL YEAR/PERIOD*............................................ 2,993 1,671
Dividends:
Paid........................................................................... -- (188)
Proposed....................................................................... (244) (239)
----------- ------------
RETAINED PROFIT FOR THE YEAR/PERIOD.............................................. 2,749 1,244
----------- ------------
----------- ------------
EARNINGS PER SHARE............................................................... 7 86.19p 48.26 p
----------- ------------
</TABLE>
There were no material acquisitions or discontinued activities in the year ended
31 March 1995 or in the nine months ended 31 March 1994.
*The profit and loss account for the nine months ended 31 March 1994 includes 12
months' results for ABI Corporation, a subsidiary undertaking (note 1).
See accompanying notes.
F-26
<PAGE>
ASSOCIATED BRITISH INDUSTRIES LIMITED
CONSOLIDATED CASH FLOW STATEMENT
<TABLE>
<CAPTION>
NOTE
---------- 31 MARCH 1995 31 MARCH 1994
-------------------- --------------------
L000 L000 L000 L000
<S> <C> <C> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES.................. 9(I) 7,924 4,339
RETURN ON INVESTMENTS AND SERVICING OF FINANCE
Interest received.......................................... 16 --
Interest paid.............................................. (549) (504)
Interest element of finance lease rental payments.......... (27) (25)
Dividends paid............................................. (239) (412)
--------- ---------
NET CASH OUTFLOW FROM RETURNS ON INVESTMENT AND SERVICING
OF FINANCE................................................ (799) (941)
TAXATION...................................................
Tax paid................................................... (1,311) (1,350)
INVESTMENT ACTIVITIES
Purchase of tangible fixed assets.......................... (1,964) (1,374)
Purchase of investment in associated undertaking........... (1,320) --
Purchase of fixed asset investments........................ (24) --
Sale of tangible fixed assets.............................. 415 47
--------- ---------
NET CASH OUTFLOW FROM INVESTING ACTIVITIES................. (2,893) (1,327)
--------- ---------
NET CASH INFLOW BEFORE FINANCING........................... 2,921 721
--------- ---------
--------- ---------
FINANCING
Issue of share capital..................................... (20) --
Repayment of amounts borrowed.............................. 384 474
Capital element of finance lease rental payments........... 67 46
--------- ---------
NET CASH OUTFLOW FROM FINANCING............................ 9(IV) 431 520
INCREASE IN CASH AND CASH EQUIVALENTS...................... 9(II)/(III) 2,490 201
--------- ---------
2,921 721
--------- ---------
--------- ---------
</TABLE>
See accompanying notes.
F-27
<PAGE>
ASSOCIATED BRITISH INDUSTRIES LIMITED
NOTES
(FORMING PART OF THE FINANCIAL STATEMENTS)
1. ACCOUNTING POLICIES
The following accounting policies have been applied consistently in dealing
with items which are considered material in relation to the Company's financial
statements.
BASIS OF PREPARATION
The financial statements have been prepared in accordance with applicable
accounting standards and under the historical cost accounting rules modified to
include the revaluation of land and buildings.
BASIS OF CONSOLIDATION
The Group financial statements consolidate the financial statements of the
Company and all of its subsidiary undertakings. These financial statements are
made up to 31 March 1995. The consolidated financial statements are based on
financial statements which are coterminous with those of the ultimate parent
company, with the exception of the participating interest in Rheochem
Manufacturing Company Inc acquired in the year, whose year end is 31 December
1994. The results of Rheochem Manufacturing Company Inc for the three month
period to 31 March 1995 have been estimated from management information.
Unless otherwise stated, the acquisition method of accounting has been
adopted for all subsidiary undertakings. Under this method, the results of
subsidiary undertakings acquired or disposed of in the period are included in
the consolidated profit and loss account from the date of acquisition or up to
the date of disposal. For associated undertakings, the equity method of
accounting has been adopted. Goodwill arising on consolidation (representing the
excess of the fair value of the consideration given over the fair value of the
separable net assets required) is written off against reserves on acquisition.
CHANGE OF YEAR END
In 1994 the Company changed the financial year end for its European
subsidiaries and itself from 30 June to 31 March bringing it into alignment with
that of its US subsidiaries. Consequently, the financial statements for the
period to 31 March 1994 contain the results of the Company and its European
subsidiaries for the nine months to that date and those of its US subsidiaries
for the year to that date.
FIXED ASSETS AND DEPRECIATION
Depreciation is provided by the Group to write off the cost or valuation
less the estimated residual value of tangible fixed assets by equal installments
over their estimated useful economic lives as follows:
<TABLE>
<S> <C> <C>
Freehold buildings -- 2% per annum
Leased assets -- life of lease
Plant and
machinery -- between 10% and 33%
</TABLE>
Patents and trade marks are shown at cost less amortization calculated on a
straight line basis at between 10% and 20% per annum.
No depreciation is provided on freehold land.
FOREIGN CURRENCIES
Transactions in foreign currencies are recorded using the rate of exchange
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated using the rate of exchange
ruling at the balance sheet date, except where matched by forward foreign
exchange contracts, and the gains or losses on translation are included in the
profit and loss account.
For consolidation purposes, the assets and liabilities and profit and loss
accounts of overseas subsidiary undertakings are translated at the closing
exchange rates. Exchange differences arising on these translations are taken to
reserves, net of exchange differences arising on related foreign currency
borrowings.
F-28
<PAGE>
ASSOCIATED BRITISH INDUSTRIES LIMITED
NOTES (CONTINUED)
1. ACCOUNTING POLICIES (CONTINUED)
GOVERNMENT GRANTS
Capital based government grants are included within accruals and deferred
income in the balance sheet and credited to trading profit over the estimated
useful economic lives of the assets to which they relate.
LEASES
Where the Group enters into a lease which entails taking substantially all
the risks and rewards of ownership of an asset, the lease is treated as a
"finance lease". The asset is recorded in the balance sheet as a tangible fixed
asset and is depreciated over its estimated useful life or the term of the
lease, whichever is shorter. Future installments under such leases, net of
finance charges, are included with creditors. Rentals payable are apportioned
between the finance element, which is charged to the profit and loss account,
and the capital element which reduces the outstanding obligation for future
installments.
All other leases are accounted for as "operating leases" and the rental
charges are charged to the profit and loss account on a straight line basis over
the life of the lease.
PENSIONS AND OTHER POST-RETIREMENT BENEFITS
Eligible UK employees belong to the Associated British Industries Group
Retirement Benefit Scheme which is operated by Associated British Industries
Limited. The Scheme provides benefits based on final pensionable salary and its
assets are held separately from those of the Group. Contributions to the scheme
are charged to the profit and loss account so as to spread the cost of pensions
over the remaining service lives of employees. Deferred tax has been accounted
for in respect of the Group pension provision.
In addition, the costs of post-employment medical benefits are charged to
the profit and loss account so as to recognize them over the members' working
lives. This represents a change in accounting policy following the adoption of
Urgent Issues Task Force Abstract 6 (see note 8).
RESEARCH AND DEVELOPMENT EXPENDITURE
Expenditure on research and development is written off against profits in
the year in which it is incurred.
STOCKS
Stocks are stated at the lower of cost and net realizable value. For work in
progress and finished goods manufactured by the Group, cost is taken as
production cost, which includes an appropriate proportion of attributable
overheads.
TAXATION
The charge for taxation is based on the profit for the year and takes into
account taxation deferred because of timing differences between the treatment of
certain items for taxation and accounting purposes. Provision is made for
deferred tax only to the extent that it is probable that an actual liability
will crystallize. UK companies make payments for group relief received equal to
the value of loss surrendered. No provision for deferred taxation on the
retained profits of overseas subsidiaries and associates has been made as there
is currently no intention to remit them to the UK.
TURNOVER
Turnover represents the amounts (excluding value added tax) derived from the
provision of goods and services to third party customers during the period.
F-29
<PAGE>
ASSOCIATED BRITISH INDUSTRIES LIMITED
NOTES (CONTINUED)
2. SEGMENTAL INFORMATION
<TABLE>
<CAPTION>
UK REST OF EUROPE AMERICAS OTHER TOTAL
-------------------- -------------------- -------------------- -------------------- ---------
1995 1994 1995 1994 1995 1994 1995 1994 1995
L000 L000 L000 L000 L000 L000 L000 L000 L000
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Turnover by destination:
Sales to third parties....... 18,690 12,047 12,575 7,361 20,253 19,757 5,581 3,970 57,099
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
1994
L000
<S> <C>
Turnover by destination:
Sales to third parties....... 43,135
---------
---------
</TABLE>
Information relating to turnover by geographical segment of origin, profit
on ordinary activities before taxation by geographical segment and net assets by
geographical segment have not been disclosed on the basis that, in the opinion
of the directors, the disclosure of such information would be seriously
prejudicial to the interests of the Group. In the opinion of the directors the
Group only operates in one business segment.
3. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
Profit on ordinary activities before taxation is stated after
charging/(crediting) the following:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
31 MARCH 31 MARCH
1995 1994
------------- -------------
<S> <C> <C>
L000 L000
Depreciation....................................................... 1,992 1,637
Auditors' remuneration
- -- KPMG audit...................................................... 90 85
- -- KPMG non audit.................................................. 52 26
- -- Other auditors.................................................. 5 5
Amortization of fixed asset investments............................ 26 20
Amounts written off current asset investments...................... 6 6
Income from current asset investments.............................. (3) (1)
----- -----
----- -----
</TABLE>
The total amount charged to revenue for the hire of plant and machinery
amounted to L98,000 (1994: L79,000). This comprises depreciation on plant and
machinery held under finance leases together with the related finance charges.
The profit on ordinary activities before taxation for the nine months ended
31 March 1994, as previously reported, amounted to L2,833,000. This has been
revised downwards by L24,000 as a result of the introduction of Urgent Issues
Task Force Abstract 6 -- Accounting for Post-Retirement Benefits other than
Pensions.
Other operating income includes L407,000 (1994:LNIL) of management charges
receivable from Rheochem Manufacturing Co Inc, an associated undertaking.
4. INTEREST RECEIVABLE AND SIMILAR INCOME
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
31 MARCH 31 MARCH
1995 1994
------------- -------------
<S> <C> <C>
L000 L000
Receivable on:
Short term bank deposits......................................... 16 19
----- -----
----- -----
</TABLE>
F-30
<PAGE>
ASSOCIATED BRITISH INDUSTRIES LIMITED
NOTES (CONTINUED)
5. INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
31 MARCH 31 MARCH
1995 1994
------------- -------------
<S> <C> <C>
L000 L000
Payable on:
Bank loans, overdrafts and other loans wholly repayable within
five years...................................................... 617 532
Finance charges payable in respect of finance leases and hire
purchase contracts.............................................. 27 25
----- -----
644 557
----- -----
----- -----
</TABLE>
6. TAXATION
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED 31 31 MARCH
MARCH 1995 1994
------------- -------------
<S> <C> <C>
L000 L000
UK corporation tax at 33% (1994:33%)............................... 465 148
Overseas taxation.................................................. 1,309 924
Share of tax in associated undertaking............................. 69 --
Deferred taxation.................................................. (33) 64
Adjustment relating to an earlier year............................. (21) 2
----- -----
1,789 1,138
----- -----
----- -----
</TABLE>
As at 31 March 1995 the Company was a close company within the meaning of
the Income & Corporation Taxes Act, 1988. In the opinion of the directors no
liability to apportionment arises.
7. EARNINGS PER SHARE
The basic earnings per share is based on 3,472,705 ordinary shares being the
average number of shares in issue during the year (1994: 3,462,664) and on the
profit on ordinary activities after taxation of L2,993,000 (1994 RESTATED:
L1,671,000).
8. PENSIONS
The Group operates a pension scheme for eligible UK employees providing
benefits based upon final pensionable salary. The assets of the Scheme are held
in separate trustee administered funds.
Contributions to the Scheme are charged to the profit and loss account so as
to spread the cost of pensions over the remaining service lives of employees in
the Scheme. The contributions are determined by a qualified actuary on the basis
of valuations which take place at least once every three years using the
attained age method. The valuation used in compiling these financial statements
was that as at 30 June 1994. The assumptions which have the most significant
effect on the results of the valuation are those relating to the rate of return
on investments and the rates of increase in salaries and pensions. It was
assumed that the investment returns would be 10% per annum, that salary
increases would average 8% per annum and that present and future pensions would
increase at the rate of 5% per annum.
The valuation as at 30 June 1994 valued the assets of the Scheme at
L6,560,000 which was sufficient to cover 111% of past service liabilities. This
represents a past service actuarial surplus of L661,000. The actuary recommended
that the past service actuarial surplus be used to take a Group pension
contribution holiday until October 1999 with the Group's contributions returning
to a regular cost of 9.7% of pensionable salaries
F-31
<PAGE>
ASSOCIATED BRITISH INDUSTRIES LIMITED
NOTES (CONTINUED)
8. PENSIONS (CONTINUED)
thereafter. For financial statements purposes the past service actuarial surplus
is being spread over the remaining service lives of the employees in the Scheme
in accordance with Standard Statement of Accounting Practice No. 24.
The Group has chosen to recognize, for the first time, liabilities to
post-retirement medical benefits, following the introduction of Urgent Issues
Task Force Abstract 6 -- Accounting for Post-Retirement Benefits other than
Pensions. These liabilities have been estimated as at 31 March 1995 to be
L284,000 (31 MARCH 1994 (RESTATED): L290,000). The cumulative adjustment has
been charged directly against reserves as a prior year adjustment. The principal
assumptions were a discount rate of 8% and health care trend rates of 8% in
1996-97, 7% in 1998-2000, 6% in 2001-04 and 5% after this date.
9.(I) RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
<TABLE>
<CAPTION>
31 MARCH
31 MARCH 1994
1995 (RESTATED)
----------- -----------
<S> <C> <C>
L000 L000
Operating profit................................................................. 4,968 3,420
Depreciation and amortisation charge............................................. 2,018 1,657
Loss/(profit) on sale of tangible fixed assets................................... 103 (12)
Decrease in stocks............................................................... 318 418
(Increase) in debtors............................................................ (388) (645)
Decrease in current asset investments............................................ 6 11
Increase/(decrease) in creditors................................................. 964 (589)
(Decrease)/increase in provisions for liabilities and charges.................... (65) 79
----- -----
Net cash inflow from operating activities........................................ 7,924 4,339
----- -----
----- -----
</TABLE>
(II) ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS DURING THE YEAR UNDER
REVIEW
<TABLE>
<CAPTION>
L000
<S> <C>
Balance at 31 March 1994....................................................................... (4,934)
Net cash inflow before adjustments for the effect of foreign exchange rate changes............. 2,490
Effect of foreign exchange rate changes........................................................ (65)
---------
Balance at 31 March 1995....................................................................... (2,509)
---------
---------
</TABLE>
(III) ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS AS SHOWN IN THE
BALANCE SHEET
<TABLE>
<CAPTION>
31 MARCH 31 MARCH CHANGE IN
1995 1994 YEAR
----------- ----------- -----------
<S> <C> <C> <C>
L000 L000 L000
Cash at bank and in hand.............................................. 674 694 (20)
Bank overdrafts....................................................... (3,183) (5,628) 2,445
----------- ----------- -----
(2,509) (4,934) 2,425
----------- ----------- -----
----------- ----------- -----
</TABLE>
F-32
<PAGE>
ASSOCIATED BRITISH INDUSTRIES LIMITED
NOTES (CONTINUED)
9.(I) RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM (CONTINUED)
(IV) ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR
<TABLE>
<CAPTION>
SHARE CAPITAL LOANS AND
(INCLUDING FINANCE LEASE
PREMIUM) OBLIGATIONS
--------------- -------------
<S> <C> <C>
L000 L000
Balance at 31 March 1994............................................................. 3,513 2,674
Cash in/(out) flow from financing before adjustments for the effect of foreign
exchange rate changes............................................................... 20 (451)
Effect of foreign exchange rate changes.............................................. -- (106)
Shares issued for non-cash consideration............................................. 47 --
----- -----
Balance at 31 March 1995............................................................. 3,580 2,117
----- -----
----- -----
</TABLE>
Financing comprises share capital, share premium and borrowings due after
more than one year together with finance lease obligations of L189,000 (1994:
L256,000) and borrowings due within one year being a loan L368,000 (1994:
L400,000).
10. SUMMARY OF DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
The Group's financial statements are prepared in accordance with generally
accepted accounting principles in the United Kingdom ("UK GAAP"), which differ
in certain respects from generally accepted accounting principles in the United
States ("US GAAP"). Differences which have a significant effect on the Group's
net income are set out below. While this is not a comprehensive summary of all
differences between UK and US GAAP, other differences would not have a
significant effect on the Group's net income.
GOODWILL
In the Group's financial statements, goodwill arising on the acquisition of
a subsidiary is written off against reserves in the consolidated balance sheet
in the year in which the acquisition is made. Under US GAAP such goodwill is
capitalized and amortized through the consolidated income statement for a period
of up to 40 years. For the purpose of compliance with US GAAP goodwill has been
amortized over a period of 25 years.
REVALUATION OF PROPERTIES
Under UK GAAP properties may be restated in the basis of appraised values in
financial statements prepared in all other respects in accordance with the
historical cost convention. Increases in value are credited directly to the
revaluation reserve and depreciation is calculated on the revalued basis. Under
US GAAP such revaluations of property would not be reflected in the financial
statements and depreciation would be based on historical cost.
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING POLICY
Under UK GAAP the cumulative effect of a change in an accounting policy is
charged/credited to reserves. However, under US GAAP, the general rule is that
such an amount should be charged/credited to the profit and loss account for the
year of the change.
FOREIGN CURRENCY TRANSLATION
In the Group's financial statements revenues, expenses and assets and
liabilities relating to overseas subsidiaries are translated at the year-end
rate. Under US GAAP revenues and expenses are translated at average rates for
the period.
F-33
<PAGE>
ASSOCIATED BRITISH INDUSTRIES LIMITED
NOTES (CONTINUED)
10. SUMMARY OF DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (CONTINUED)
Details of the estimated effect on the Group's net income of differences
between UK GAAP and US GAAP are as follows:
ESTIMATED EFFECT ON NET INCOME OF DIFFERENCES BETWEEN UK AND US GAAP
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED 31
31 MARCH 1995 MARCH 1994
--------------- ---------------------
<S> <C> <C>
L'000 L'000
Net income in accordance with UK GAAP......................................... 2,993 1,671
US GAAP adjustments (net of tax):
Goodwill amortization....................................................... (82) (21)
Revaluation of properties................................................... 201 138
Deferred tax relating to adjustment for revaluation of properties........... (66) (46)
Cumulative effect of change in accounting policy relating to post-retirement
medical benefits (note 8).................................................. (191) --
Foreign currency translation................................................ 49 (5)
----- -----
Net income in accordance with US GAAP......................................... 2,904 1,737
----- -----
----- -----
</TABLE>
11. CONSOLIDATED STATEMENTS OF CASH FLOWS: BASIS OF PREPARATION
The Group's Consolidated Cash Flow Statements are prepared in accordance
with UK Financial Reporting Standard No. I (FRS 1), the objective and principles
of which are similar to those set out in SFAS No. 95, "Statement of Cash Flows".
The principal difference between the standards relates to classification. Under
FRS 1, the Group presents its cash flows for (a) operating activities; (b)
returns on investments and servicing of finance; (c) tax paid; (d) investing
activities; and (e) financing. SFAS No. 95 requires only three categories of
cash flow activity being (a) operating; (b) investing; and (c) financing.
Cash flows from returns on investments and servicing of finance and taxation
under FRS 1 would, with the exception of dividends paid, be included as
operating activities under SFAS No. 95; such distributions would be included as
a financing activity under SFAS No. 95. Under FRS 1, cash and cash equivalents
comprise cash, investments and short-term deposits which were within 3 months of
maturity when acquired and short-term borrowings repayable within 3 months from
the date of their advance. Under SFAS No. 95 short-term borrowings repayable
within 3 months of their advance would not be included within cash and cash
equivalents but movements on those borrowings would be included in financing
activities.
12. SUBSEQUENT EVENT
On 19 June 1995, a recommended offer for the whole of the issued share
capital of the Company was made by Chemical Bank on behalf of ABI Acquisition 2
plc, a wholly owned subsidiary of Astor Holdings, Inc. The offer became wholly
unconditional on 28 June 1995. On 31 August 1995, Associated British Industries
plc re-registered as a private company.
F-34
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Adco Technologies Inc.
We have audited the accompanying consolidated balance sheets of Adco
Technologies Inc. and subsidiary as of December 31, 1995 and 1994, and the
related consolidated statements of income, redeemable preferred stock of
subsidiary and stockholders' equity, and cash flows for the years ended December
31, 1995 and 1994 and the period May 14, 1993 (date of acquisition of Adco
Products, Inc.) to December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Adco
Technologies Inc. and subsidiary at December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1995 and 1994 and the period May 14, 1993 (date of
acquisition of Adco Products, Inc.) to December 31, 1993 in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Detroit, Michigan
February 1, 1996
F-35
<PAGE>
ADCO TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash (NOTE 1).................................................................... $ 2,888,428 $ 336,981
Short term investments (NOTE 1).................................................. 909,222 --
Trade accounts receivable, less allowances ($140,000 and $150,000 at December 31,
1995 and 1994, respectively).................................................... 4,672,127 4,590,553
Inventories (NOTE 1):
Raw materials and packaging.................................................... 2,332,430 1,635,810
Finished goods................................................................. 2,735,782 2,596,855
------------- -------------
5,068,212 4,232,665
Refundable income taxes.......................................................... 176,969 128,314
Deferred income taxes (NOTE 4)................................................... 319,374 170,233
Other current assets............................................................. 139,358 89,025
------------- -------------
Total current assets......................................................... 14,173,690 9,547,771
Property, plant and equipment (NOTE 1):
Land and improvements............................................................ 351,512 307,456
Buildings........................................................................ 4,164,238 4,048,015
Machinery and equipment.......................................................... 5,547,493 5,059,746
Construction in process.......................................................... 965,584 137,664
------------- -------------
11,028,827 9,552,881
Less: Allowances for depreciation and amortization............................... (2,132,976) (1,245,299)
------------- -------------
8,895,851 8,307,582
Intangibles (NOTE 1)............................................................... 8,034,994 8,316,843
Other assets....................................................................... 13,350 11,850
------------- -------------
Total assets................................................................. $ 31,117,885 $ 26,184,046
------------- -------------
------------- -------------
</TABLE>
See accompanying notes.
F-36
<PAGE>
ADCO TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
------------- -------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable........................................................... $ 940,530 $ 1,501,438
Compensation and amounts withheld................................................ 1,014,730 746,538
State taxes payable.............................................................. 130,982 62,622
Other accrued expenses........................................................... 977,878 1,077,470
Current portion of long-term notes payable (NOTE 2).............................. -- 1,106,462
------------- -------------
Total current liabilities.................................................... 3,064,120 4,494,530
Long-term notes payable (NOTE 2)................................................... -- 4,901,614
Deferred income taxes (NOTE 4)..................................................... 1,006,570 858,215
Redeemable preferred stock of subsidiary (NOTE 5).................................. 3,850,000 3,710,000
Stockholders' equity (NOTES 1 AND 6):
Preferred stock, par value $.01 per share -- Authorized 100,000; no shares issued
and outstanding................................................................. -- --
Common stock, par value $.01 per share -- Authorized 9,000,000; issued and
outstanding 5,150,000 and 4,000,000 shares at December 31, 1995 and 1994,
respectively.................................................................... 51,500 40,000
Additional paid-in capital -- common............................................. 15,140,750 8,275,000
Less receivable from management stockholders..................................... (150,000) (210,000)
Retained earnings................................................................ 8,154,945 4,114,687
------------- -------------
Total stockholders' equity................................................... 23,197,195 12,219,687
------------- -------------
Total liabilities and stockholders' equity................................. $ 31,117,885 $ 26,184,046
------------- -------------
------------- -------------
</TABLE>
See accompanying notes.
F-37
<PAGE>
ADCO TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
PERIOD MAY 14, 1993
(DATE OF ACQUISITION
OF
ADCO PRODUCTS, INC.)
YEAR ENDED DECEMBER 31, TO
---------------------------- DECEMBER 31,
1995 1994 1993
------------- ------------- --------------------
<S> <C> <C> <C>
Net sales.................................................... $ 47,411,421 $ 38,749,168 $ 20,325,449
Cost of products sold........................................ 33,317,969 27,056,887 14,447,812
------------- ------------- --------------------
Gross profit................................................. 14,093,452 11,692,281 5,877,637
Operating expenses:
Selling, general and administrative (NOTE 7)............... 5,720,330 4,845,815 2,749,201
Research and development................................... 1,350,589 1,265,046 631,431
------------- ------------- --------------------
Total operating expenses..................................... 7,070,919 6,110,861 3,380,632
------------- ------------- --------------------
Operating income............................................. 7,022,533 5,581,420 2,497,005
Interest expense............................................. 105,020 596,297 404,790
Dividends on preferred stock of subsidiary................... 280,000 280,000 140,000
Other expense (income) -- net................................ (104,495) 115,683 (123,632)
------------- ------------- --------------------
Income before taxes.......................................... 6,742,008 4,589,440 2,075,847
Income taxes (NOTE 4)........................................ 2,470,000 1,740,000 810,600
------------- ------------- --------------------
Net income................................................... $ 4,272,008 $ 2,849,440 $ 1,265,247
------------- ------------- --------------------
------------- ------------- --------------------
Net income per common and common equivalent share............ $ .84 $ .72 $ .33
------------- ------------- --------------------
------------- ------------- --------------------
Weighted average shares outstanding (NOTE 1)................. 5,065,847 3,937,825 3,819,603
</TABLE>
See accompanying notes.
F-38
<PAGE>
ADCO TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK OF
SUBSIDIARY AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
REDEEMABLE PREFERED STOCK OF SUBSIDIARY STOCKHOLDERS' EQUITY
-------------------------------------------------- -----------------------
ADDITIONAL ADDITIONAL
SERIES A SERIES B PAID-IN TOTAL PAID-IN
PREFERRED PREFERRED CAPITAL PREFERRED COMMON CAPITAL
STOCK STOCK PREFERRED STOCK STOCK COMMON
------------- ----------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at May 14, 1993 (date of
acquisition)................................. $ 35 -- $3,499,965 $3,500,000 $ 38,196 $7,901,804
Net income for the period ended December 31,
1993......................................... -- -- -- -- -- --
Collection of receivable...................... -- -- -- -- -- --
Dividends on preferred stock.................. -- $ 70,000 -- 70,000 -- --
--- ----------- ----------- --------- ----------- ----------
Balance at December 31, 1993.................. 35 70,000 3,499,965 3,570,000 38,196 7,901,804
Net income for the year ended December 31,
1994......................................... -- -- -- -- -- --
Issuance of stock............................. -- -- -- -- 1,804 373,196
Dividends on preferred stock.................. -- 140,000 -- 140,000 -- --
--- ----------- ----------- --------- ----------- ----------
Balance at December 31, 1994.................. 35 210,000 3,499,965 3,710,000 40,000 8,275,000
Net income for the year ended December 31,
1995......................................... -- -- -- -- -- --
Collection of receivable...................... -- -- -- -- -- --
Issuance of stock............................. 11,500 6,865,750
Dividends on common stock..................... -- -- -- -- -- --
Dividends on preferred stock.................. -- 140,000 -- 140,000 -- --
--- ----------- ----------- --------- ----------- ----------
Balance at December 31, 1995.................. $ 35 $ 350,000 $3,499,965 $3,850,000 $ 51,500 $15,140,750
--- ----------- ----------- --------- ----------- ----------
--- ----------- ----------- --------- ----------- ----------
<CAPTION>
RECEIVABLE
FROM TOTAL
MANAGEMENT RETAINED STOCKHOLDERS'
STOCKHOLDERS EARNINGS EQUITY
------------ --------- ------------
<S> <C> <C> <C>
Balance at May 14, 1993 (date of
acquisition)................................. $ (249,000) $7,691,000
Net income for the period ended December 31,
1993......................................... -- $1,265,247 1,265,247
Collection of receivable...................... 39,000 39,000
Dividends on preferred stock.................. --
------------ --------- ------------
Balance at December 31, 1993.................. (210,000) 1,265,247 8,995,247
Net income for the year ended December 31,
1994......................................... -- 2,849,440 2,849,440
Issuance of stock............................. -- -- 375,000
Dividends on preferred stock.................. -- -- --
------------ --------- ------------
Balance at December 31, 1994.................. (210,000) 4,114,687 12,219,687
Net income for the year ended December 31,
1995......................................... -- 4,272,008 4,272,008
Collection of receivable...................... 60,000 -- 60,000
Issuance of stock............................. 6,877,250
Dividends on common stock..................... -- (231,750) (231,750)
Dividends on preferred stock.................. -- -- --
------------ --------- ------------
Balance at December 31, 1995.................. $ (150,000) $8,154,945 $23,197,195
------------ --------- ------------
------------ --------- ------------
</TABLE>
See accompanying notes.
F-39
<PAGE>
ADCO TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD
MAY 14, 1993
(DATE OF
ACQUISITION OF
ADCO PRODUCTS,
YEAR ENDED DECEMBER 31, INC.) TO
---------------------------- DECEMBER 31,
1995 1994 1993
------------- ------------- ---------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income........................................................ $ 4,272,008 $ 2,849,440 $ 1,265,247
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................... 1,169,526 1,143,350 552,472
Provision for dividends on preferred stock of subsidiary........ 280,000 280,000 140,000
Deferred income taxes........................................... (786) 202,480 34,200
Changes in current assets and liabilities:
Trade accounts receivable..................................... (81,574) (783,029) 556,764
Inventories................................................... (835,547) (1,204,017) 1,705,964
Other current assets.......................................... (50,333) 30,258 (109,120)
Other assets.................................................. (1,500) 3,600 (1,567)
Trade accounts payable........................................ (560,908) 585,605 (723,417)
Taxes payable................................................. 19,705 (173,677) 36,663
Accrued salaries, wages and other expenses.................... 168,600 265,246 193,936
Due to Nalco Chemical Company................................. -- -- (46,819)
------------- ------------- ---------------
Net cash provided by operating activities......................... 4,379,191 3,199,256 3,604,323
INVESTING ACTIVITIES
Purchases of property, plant and equipment........................ (1,475,946) (1,131,458) (2,417,081)
Purchase of patents............................................... -- -- (472,500)
Other............................................................. -- -- (39,170)
------------- ------------- ---------------
Net cash used in investing activities............................. (1,475,946) (1,131,458) (2,928,751)
FINANCING ACTIVITIES
Proceeds from notes payable....................................... -- -- 1,500,000
Payments of debt.................................................. (6,008,076) (2,463,120) (1,958,804)
Issuance of capital stock......................................... 6,877,250 375,000 39,000
Decrease in receivable from management stockholders............... 60,000 -- --
Cash dividends paid on preferred stock of subsidiary.............. (140,000) (140,000) (70,000)
Cash dividends paid on common stock............................... (231,750)
------------- ------------- ---------------
Net cash provided by (used in) financing activities............... 557,424 (2,228,120) (489,804)
------------- ------------- ---------------
Increase (decrease) in cash and short-term investments............ 3,460,669 (160,322) 185,768
Cash at beginning of period....................................... 336,981 497,303 311,535
------------- ------------- ---------------
Cash and short-term investments at end of period.................. $ 3,797,650 $ 336,981 $ 497,303
------------- ------------- ---------------
------------- ------------- ---------------
</TABLE>
See accompanying notes.
F-40
<PAGE>
ADCO TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND DESCRIPTION OF BUSINESS
Adco Technologies Inc. ("ADCO") was incorporated May 7, 1993. Adco Products,
Inc. was a wholly owned subsidiary of Nalco Chemical Company ("Nalco") through
May 13, 1993. Effective May 14, 1993, Nalco sold all of the outstanding common
stock of Adco Products, Inc. to ADCO for $16,000,000 in cash and $3,500,000 in
preferred stock of Adco Products, Inc. (the "Acquisition"). Concurrently, Adco
Products, Inc. borrowed $8,930,000 under a bank term note and revolving line of
credit to fund the purchase. The purchase price was allocated to assets and
liabilities based upon their respective fair market values. There was no
activity of ADCO for the period from May 7, 1993 to May 13, 1993. Following is
the summarized balance sheet at date of acquisition:
<TABLE>
<S> <C>
Assets
Accounts receivable.................................................. $4,364,000
Inventories.......................................................... 4,735,000
Equipment and other assets........................................... 6,330,000
Intangibles.......................................................... 8,132,000
----------
$23,561,000
----------
----------
Liabilities
Accounts payable and other liabilities............................... $3,440,000
Acquisition debt..................................................... 8,930,000
Redeemable preferred stock of subsidiary............................. 3,500,000
Stockholders' equity................................................. 7,691,000
----------
$23,561,000
----------
----------
</TABLE>
In February 1995 ADCO registered 2,300,000 shares of common stock on Form
S-1. ADCO sold 1,150,000 shares in an initial public offering, with an
additional 1,150,000 shares sold by existing shareholders, the net proceeds to
ADCO of approximately $7,000,000 were used to payoff all outstanding long-term
debt. If this transaction had occurred as of May 14, 1993, the net earnings per
share for the year ended December 31, 1994 and the period May 14, 1993 to
December 31, 1993, would have been $.63 and $.30 per share, respectively.
ADCO produces adhesives and sealants primarily for the roofing, automotive
original equipment manufacturing, windshield replacement, window manufacturing,
and concrete pipe and vault markets and is considered to operate in one business
segment.
ADCO had sales to two customers during the year ended December 31, 1995 that
exceeded 10% of total net sales. Net sales to the first customer, with which
ADCO has a long-standing relationship, amounted to 22%, 20%, and 14% for the
years ended December 31, 1995 and 1994, and the period May 14, 1993 to December
31, 1993, respectively. The second customer had net sales at 11% and 9% for the
years ended December 31, 1995 and 1994, respectively. ADCO generally does not
require collateral from its customers. Credit losses, which have been minimal,
have been within management's expectations.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of ADCO and its
wholly-owned subsidiary, Adco Products, Inc. Significant intercompany accounts
have been eliminated in consolidation.
F-41
<PAGE>
ADCO TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
CASH AND SHORT-TERM INVESTMENTS
Cash and short-term investments consist primarily of highly liquid money
market funds and government securities invested with quality financial
institutions. These investments are carried at cost, which approximates fair
value, due to the short period of time to maturity.
INVENTORY
Inventories are stated at the lower of cost or market. Cost is determined
using the last in, first out (LIFO) method.
Current costs, based on the first-in, first out (FIFO) method would have
resulted in reported amounts approximately the same at December 31, 1995 and
1994.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost. Depreciation is computed
principally using the straight-line method over the estimated useful lives of
the assets.
INTANGIBLE ASSETS
Intangible assets are amortized by the straight-line method over periods
ranging from 5 to 40 years and consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Goodwill.......................................................... $ 8,052,582 $ 8,052,582
Deferred organization costs....................................... 242,284 242,284
Deferred patent costs............................................. 472,500 472,500
------------ ------------
8,767,366 8,767,366
Less accumulated amortization..................................... (732,372) (450,523)
------------ ------------
$ 8,034,994 $ 8,316,843
------------ ------------
------------ ------------
</TABLE>
Amortization expense was $281,852, $287,982 and $162,541 for the years ended
December 31, 1995 and 1994 and the period May 14, 1993 to December 31, 1993,
respectively.
Goodwill generally is amortized on a straight-line basis over 40 years,
organizational costs over 5 years and patent costs over 15 years. The carrying
value of goodwill will be reviewed if the facts and circumstances suggest that
it may be impaired. If this review indicates that goodwill will not be
recoverable, as determined based on the undiscounted cash flows of the entity
acquired over the remaining amortization period, ADCO's carrying value of the
goodwill will be reduced by the estimated shortfall of cash flows.
STOCK OPTIONS
ADCO has elected to follow Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employers" (APB 25) and related interpretations
in accounting for its employee stock options. Under APB 25, compensation expense
is recognized when the exercise price of employee stock options is less than the
market price of the underlying stock on the date of the grant. See Note 6,
"Stockholders' Equity" for information regarding ADCO's stock options plans.
F-42
<PAGE>
ADCO TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. NOTES PAYABLE
A summary of the ADCO notes payable as of December 31, 1994 is as follows:
<TABLE>
<S> <C>
7.20% note to First Fidelity, NA, payable in varying monthly amounts of $33,331
to $51,997 excluding interest through April, 2000, with remaining balance plus
accrued interest to be paid in full May 2000................................... $3,320,042
Prime plus 1/2% (9.00% and 7.25% at December 31, 1994 and 1993, respectively)
note to First Fidelity, NA, payable in varying monthly amounts of $26,169 to
$45,503 excluding interest through April 2000 with remaining balance plus
accrued interest to be paid in full May 2000................................... 1,422,817
7.22% note to First Fidelity, NA, payable in varying monthly amounts of $13,044
to $19,672 excluding interest through April 2000 with remaining balance plus
accrued interest to be paid in full May 2000................................... 1,265,217
----------
Total notes payable............................................................. 6,008,076
Less current portion............................................................ (1,106,462)
----------
$4,901,614
----------
----------
</TABLE>
ADCO repaid all of the notes payable outstanding at December 31, 1994 with
proceeds from the issuance of common stock during 1995.
At December 31, 1995, ADCO had an unused $3,000,000 discretionary line of
credit for general corporate purposes.
For the years ended December 31, 1995 and 1994, and the period May 14, 1993
to December 31, 1993, ADCO made interest payments of approximately $105,020,
$601,000 and $405,000, respectively.
3. EMPLOYEE BENEFIT PLANS
ADCO has a noncontributory, defined-benefit pension plan covering union
employees. Benefits are based on length of service and a negotiated benefit
rate.
ADCO's policy is to fund the plan between the minimum and maximum amounts
deductible for tax purposes under the Internal Revenue Code. ADCO made
contributions of $34,596 to the plan for the year ended December 31, 1995 and no
contributions for the other periods presented.
Plan assets are invested in mutual funds and money market accounts.
F-43
<PAGE>
ADCO TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. EMPLOYEE BENEFIT PLANS (CONTINUED)
The following table sets forth the funded status and amounts recognized in
the balance sheet:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1995 1994
----------- -----------
<S> <C> <C>
Actuarial present value of benefit obligations
Vested...................................................................... $ 423,600 $ 302,249
Non-vested.................................................................. 9,755 35,863
----------- -----------
Accumulated benefit obligation................................................ $ 433,355 $ 338,112
----------- -----------
----------- -----------
Projected benefit obligation.................................................. $ (433,355) $ (338,112)
Plan assets at fair value..................................................... 313,581 313,625
----------- -----------
Projected benefit obligation in excess of plan assets......................... (119,774) (24,487)
Unrecognized net asset at transition.......................................... (7,775) (8,552)
Unrecognized prior service cost............................................... 172,837 28,657
Additional minimum liability.................................................. -- (158,596)
Unrecognized net loss......................................................... 57,248 138,491
----------- -----------
Net pension asset (liability)................................................. $ 102,536 $ (24,487)
----------- -----------
----------- -----------
</TABLE>
Net pension expense was comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Service cost........................................................ $ 34,145 $ 29,358 $ 13,517
Interest cost on projected benefit obligation....................... 36,640 27,517 13,669
Actual return on plan assets........................................ (28,016) (31,711) (14,170)
Net amortizations and deferrals..................................... 2,004 6,409 2,276
---------- ---------- ----------
Net pension expense................................................. $ 44,773 $ 31,573 $ 15,292
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The following assumptions were used in calculating the plan's funded status
and the net pension expense:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Weighted average discount rates................................................. 8.50% 7.50% 8.50%
Rates of return on plan assets.................................................. 8.50 10.00 10.00
</TABLE>
During January 1993, Adco Products, Inc. terminated the pension plan
covering its salaried employees. This termination, which was approved and
completed in 1994, resulted in a gain to ADCO of approximately $100,000 in 1994.
ADCO also sponsors a retirement savings plan which includes a
defined-contribution 401(k) plan and a discretionary profit sharing plan, which
covers substantially all nonunion employees. ADCO's contribution to the 401(k)
plan is based on each participant's pretax contribution. For the years ended
December 31, 1995 and 1994 and the period May 14, 1993 to December 31, 1993,
ADCO contributed approximately $39,000, $35,900 and $19,800 to the 401(k) plan,
respectively. The profit sharing amount is determined annually by the Board of
Directors and was $250,000, $165,000 and $62,000, for the years ended December
31, 1995 and 1994 and the period May 14, 1993 to December 31, 1993,
respectively.
4. INCOME TAXES
ADCO accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), ACCOUNTING FOR INCOME TAXES. Deferred
income taxes reflect the net tax effects of
F-44
<PAGE>
ADCO TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. INCOME TAXES (CONTINUED)
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of ADCO's deferred tax assets (liabilities) are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1995 1994
----------- -----------
<S> <C> <C>
Warranty and other expenses................................................... $ 176,865 $ 160,400
Tax over book depreciation.................................................... (945,266) (854,900)
Reserve for doubtful accounts................................................. 47,712 51,100
Employee benefits............................................................. 51,533 (25,900)
Other......................................................................... (18,040) (18,682)
----------- -----------
$ (687,196) $ (687,982)
----------- -----------
----------- -----------
</TABLE>
Components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------------
1995 1994 1993
------------ ------------ ----------
<S> <C> <C> <C>
Current income taxes............................................ $ 2,470,786 $ 1,537,520 $ 776,400
Deferred income taxes (credit).................................. (786) 202,480 34,200
------------ ------------ ----------
$ 2,470,000 $ 1,740,000 $ 810,600
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
A reconciliation of the total federal income tax provision and the amount
computed by applying the statutory federal income tax rate to earnings before
income taxes for the periods ended are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------------
1995 1994 1993
------------ ------------ ----------
<S> <C> <C> <C>
Taxes at U. S. statutory rates.................................. $ 2,291,400 $ 1,560,400 $ 705,800
Impact of nondeductible intangible amortization................. 68,400 68,400 57,200
Impact of nondeductible preferred stock dividend................ 95,200 95,200 47,600
Other........................................................... 15,000 16,000 --
------------ ------------ ----------
$ 2,470,000 $ 1,740,000 $ 810,600
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
The difference between ADCO's effective income tax rate and the federal
statutory rate is primarily attributable to the effect of the amortization of
intangible assets (see NOTE 1) and the preferred stock dividend of subsidiary.
Income taxes paid by ADCO approximated $2,520,000, $1,639,000 and $803,000
for the years ended December 31, 1995 and 1994 and the period May 14, 1993 to
December 31, 1993, respectively.
5. REDEEMABLE PREFERRED STOCK OF SUBSIDIARY
The articles of incorporation of Adco Products, Inc. authorize 4,856 shares
of Series A Cumulative Redeemable Preferred Stock, non-voting, par value $.01
per share ("Series A") and 1,356 shares of Series B
F-45
<PAGE>
ADCO TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. REDEEMABLE PREFERRED STOCK OF SUBSIDIARY (CONTINUED)
Redeemable Preferred Stock, non-voting, par value $.01 per share ("Series B").
Nalco owned 3,500 shares of Series A and 350 shares of Series B at December 31,
1995, and 3,500 shares of Series A and 210 shares of Series B at December 31,
1994. The designated terms and conditions of the preferred stock are as follows:
<TABLE>
<CAPTION>
SERIES A SERIES B
--------- -----------
<S> <C> <C>
Shares outstanding at December 31, 1995............................................ 3,500 350
Dividend rate per annum............................................................ $ 80 *
Redemption price................................................................... $ 1,000 $ 1,000
Liquidation preference............................................................. $ 1,000 $ 1,000
</TABLE>
*Dividends are not payable on Series B
The mandatory obligation to redeem both Series A and Series B begins
November 15, 2000 and ends May 15, 2003, with a specified fraction of the
outstanding shares redeemed each November and May.
A summary of the Series A and Series B Preferred stock and additional paid
in capital for Adco Products, Inc. is as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Series A Preferred stock.................................................... $ 35 $ 35
Series B Preferred stock.................................................... 350,000 210,000
Additional paid-in capital -- preferred..................................... 3,499,965 3,499,965
</TABLE>
The Series A dividend is paid one-half in cash and one-half in shares of
Series B, bi-annually on May 15 and November 15. In each November and May of
1995 and 1994 and November 1993, 70 shares of Series B were issued as part of
the dividend to the Series A holders. These Series B shares were recorded at
their liquidation value of $1,000 per share.
6. STOCKHOLDERS' EQUITY
The articles of incorporation of ADCO authorize 100,000 shares of preferred
stock with a par value of $.01 per share. No preferred shares are outstanding as
of December 31, 1995 and 1994.
Effective May 14, 1993, ADCO adopted the Adco Technologies Inc. 1993 Stock
Option Plan, pursuant to which ADCO has granted options to certain officers of
ADCO to purchase an aggregate of 144,326 shares of common stock of ADCO. Under
the plan these options become exercisable on October 29, 2008 or at a sooner
date if certain performance and cash return targets are met. At December 31,
1994, 25,414 of the options were exercisable. An additional 48,112 shares became
exercisable in 1995 bringing the total options exercisable at December 31, 1995
to 73,526. Associated with the shares issued in 1995 additional compensation
expense of $257,500 was recorded. In February 1995, ADCO amended this option
plan. In connection with the plan amendment the remaining 70,800 shares become
exercisable over the next 3 to 5 years. Prior to the amendment in February 1995,
ADCO had the option to repurchase shares purchased upon exercise of the options
upon termination of employment for reasons other than for death, disability, or
retirement at a price calculated based on the book value of ADCO. The amendment
removed ADCO's option to repurchase the shares.
The Adco Technologies Inc. 1994 Non-Employee Director Stock Option Plan
("Director Plan") was adopted by ADCO in December 1994, and provides for the
grant of options covering up to 100,000 shares of common stock to non-employee
directors. Upon completion of the initial public offering and subsequently on
each date he or she is elected or re-elected, each non-employee director shall
receive options to purchase 4,000 shares of common stock. The exercise price per
share shall be the fair market value of the common
F-46
<PAGE>
ADCO TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. STOCKHOLDERS' EQUITY (CONTINUED)
stock as determined in accordance with the Director Plan. The options are
exercisable immediately and for ten years from the date of grant. At December
31, 1995, 24,000 options were outstanding as a result of the initial public
offering in February 1995 at a price of $7.00 per share.
The Adco Technologies Inc. 1994 Stock Option Plan was adopted by ADCO in
December 1994, which provides for the grant of options covering up to 150,000
shares of common stock to certain members of management, employees and outside
consultants. This plan provides for the issuance of both incentive stock options
and non-qualified stock options. During 1995 and 1994, 50,000 and 45,000 options
were issued at an exercise price of $7.62 and $7.00 per share, respectively. At
December 31, 1995, a total of 95,000 options were issued and exercisable.
7. RELATED PARTY TRANSACTIONS
ADCO has a consulting agreement with Bradford Ventures Limited ("BVL"), a
related party to certain shareholders, including ADCO's two largest shareholders
and its chairman, whereby, BVL provides financial and advisory services to ADCO
for a 10 year period, commencing May 14, 1993, at an initial annual fee of
$135,000, which increases annually by 7.5%. This consulting fee is included in
selling, general and administrative expenses and approximated $151,500, $140,800
and $78,750 for the years ended December 31, 1995 and 1994 and the period May
14, 1993 to December 31, 1993, respectively.
In May 1993, in connection with the Acquisition, ADCO's executive officers
entered into separate agreements to purchase shares of the common stock of ADCO.
The purchase price for the common stock was paid for by the delivery of cash and
promissory notes of the respective purchasers in favor of ADCO ranging in
amounts from $50,000 to $60,000. Each note is payable in full in May 1998,
bearing interest at a rate of five percent per annum. The purchaser's
obligations under their respective notes are secured by pledges of the common
stock purchased with the notes. In September 1995, one officer repaid the
balance of a promissory note in the amount of $60,000.
8. LITIGATION AND REGULATION
There are judicial and administrative claims pending or contemplated against
ADCO. Management believes that the resolution of these matters should not have a
material effect upon ADCO's financial condition, results of operations and cash
flows.
The U.S. Environmental Protection Agency (EPA) has notified ADCO that it is
a potentially responsible party at, and requested that ADCO provide information
with respect to, two hazardous waste disposal sites. Regarding the first site,
ADCO has responded that it is not responsible for any materials at the site and
that ADCO believes that the previous owners of the property upon which ADCO's
facility is located may be responsible for the materials in question located at
this site. Clean-up of this site is underway, ADCO has not made and has not been
requested to make any expenditures toward the clean up of this site, and has not
been contacted further by the EPA. At the second site, ADCO believes it is the
source of a de minimis quantity of waste materials.
The Michigan Department of Natural Resources has identified the property on
which ADCO's plant is located as a site of environmental contamination.
Management has recorded a reserve of $148,478 at December 31, 1995, included in
other accrued expenses, as an estimate of the amount of loss that is reasonably
possible to be incurred for this site. While management of ADCO does not believe
that ADCO's exposure in these matters will have a material adverse effect on the
business and financial condition of ADCO, there can be no assurance that ADCO
will not incur additional significant liabilities in connection with these
matters or that such liabilities will not have a material adverse effect on
ADCO's business and financial condition.
F-47
<PAGE>
ADCO TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. LITIGATION AND REGULATION (CONTINUED)
Regarding each of the above mentioned environmental matters, ADCO has
notified Nalco that Nalco may be responsible for indemnifying ADCO for
expenditures made for the above matters. Pursuant to the terms of an agreement
entered into in connection with ADCO's acquisition of Adco Products, Inc., ADCO
is indemnified to a limited extent against certain environmental liabilities by
Nalco. In certain instances, the indemnification is limited by a $100,000
deductible and a limitation on the amount of indemnification's ranging from
$341,600 to $3.5 million depending upon the type of claim made, with an
aggregate limitation of $3.5 million for all such claims made.
9. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the
years ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
MAR. 31 JUN. 31 SEPT. 30 DEC. 31
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
1995
Sales............................................... $ 11,387,715 $ 12,709,679 $ 12,833,654 $ 10,480,373
Gross profit........................................ 3,378,311 3,990,230 3,934,356 2,790,555
Net income.......................................... 883,494 1,346,961 1,336,998 704,555
Net income per common share......................... .19 .26 .26 .14
1994
Sales............................................... $ 7,690,773 $ 9,814,333 $ 11,414,955 $ 9,829,107
Gross profit........................................ 2,071,925 3,017,791 3,805,104 2,797,461
Net income.......................................... 180,909 769,707 1,265,288 633,536
Net income per common share......................... .05 .20 .32 .16
</TABLE>
F-48
<PAGE>
ADCO TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30,
----------------------------
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments.................................................. $ 3,558,264 $ 798,410
Trade accounts receivable, less allowances ($146,000 and $155,000 at June 30,
1996 and June 30, 1995, respectively)........................................... 7,601,085 6,514,550
Inventories:
Finished goods................................................................. 2,563,322 2,968,789
Raw materials and packaging.................................................... 3,218,307 3,190,622
------------- -------------
5,781,629 6,159,411
Deferred income taxes............................................................ 353,435 307,888
Other current assets............................................................. 203,650 264,735
------------- -------------
Total current assets......................................................... 17,498,063 14,044,994
Property, plant and equipment, net................................................. 9,075,418 8,549,881
Intangibles........................................................................ 7,894,360 8,175,628
Other assets....................................................................... 13,350 13,350
------------- -------------
Total assets................................................................. $ 34,481,191 $ 30,783,853
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable........................................................... $ 2,054,387 $ 2,575,522
Accrued compensation and other expenses.......................................... 1,922,476 1,928,355
Federal income and state taxes................................................... 383,260 325,036
------------- -------------
Total current liabilities.................................................... 4,360,123 4,828,913
Deferred income taxes.............................................................. 1,031,275 924,798
Redeemable preferred stock of subsidiary........................................... 3,920,000 3,780,000
Stockholders' equity:
Preferred stock, par value $.01 per share --
Authorized 100,000; no shares issued and outstanding........................... -- --
Common stock, par value $.01 per share --
Authorized 9,000,000; issued and outstanding 5,150,000 shares at June 30, 1996
and June 30, 1995............................................................. 51,500 51,500
Additional paid-in-capital -- common............................................. 15,140,750 15,140,750
Less receivable from management stockholders..................................... (50,000) (210,000)
Retained earnings................................................................ 10,027,543 6,267,892
------------- -------------
Total stockholders' equity................................................... 25,169,793 21,250,142
------------- -------------
Total liabilities and stockholders' equity................................. $ 34,481,191 $ 30,783,853
------------- -------------
------------- -------------
</TABLE>
See accompanying notes.
F-49
<PAGE>
ADCO TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------
1996 1995
------------- -------------
<S> <C> <C>
Net sales.......................................................................... $ 24,953,992 $ 24,097,393
Cost of products sold.............................................................. 18,200,020 16,728,853
------------- -------------
Gross profit..................................................................... 6,753,972 7,368,540
Operating expenses:
Selling, general and administrative.............................................. 2,780,472 2,928,840
Research and development......................................................... 733,163 678,978
------------- -------------
Total operating expenses........................................................... 3,513,635 3,607,818
------------- -------------
Operating income................................................................... 3,240,337 3,760,722
Interest expense................................................................... 0 105,020
Dividends on preferred stock of subsidiary......................................... 140,000 140,000
Other expense (income) - net....................................................... (184,261) (16,753)
------------- -------------
Income before taxes................................................................ 3,284,598 3,532,455
Income taxes....................................................................... 1,206,000 1,302,000
------------- -------------
Net income......................................................................... $ 2,078,598 $ 2,230,455
------------- -------------
------------- -------------
Net income per common and common equivalent share.................................. $ 0.40 $ 0.45
------------- -------------
------------- -------------
Weighted average shares outstanding................................................ 5,259,313 4,939,191
</TABLE>
See accompanying notes.
F-50
<PAGE>
ADCO TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------
1996 1995
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income.......................................................................... $ 2,078,598 $ 2,230,455
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization..................................................... 653,440 597,817
Deferred income taxes............................................................. (9,356) (81,760)
Changes in current assets and liabilities:
Trade accounts receivable....................................................... (2,928,958) (1,923,997)
Inventories..................................................................... (713,417) (1,926,746)
Other current assets............................................................ 112,677 (175,844)
Other assets.................................................................... -- (14,100)
Trade accounts payable.......................................................... 1,113,858 1,074,084
Taxes payable................................................................... 252,278 411,128
Accrued salaries, wages and other expenses...................................... (70,132) 107,366
------------- -------------
Net cash provided by operating activities........................................... 488,988 298,403
INVESTING ACTIVITIES
Purchases of property, plant and equipment.......................................... (692,374) (698,898)
------------- -------------
Net cash used in investing activities............................................... (692,374) (698,898)
FINANCING ACTIVITIES
Repayment of management loan........................................................ 100,000 --
Payments of debt.................................................................... -- (6,008,076)
Issuance of preferred stock......................................................... 70,000 70,000
Issuance of capital stock........................................................... -- 6,877,250
Cash dividend paid on common stock.................................................. (206,000) (77,250)
------------- -------------
Net cash (used in) provided by financing activities................................. (36,000) 861,924
------------- -------------
(Decrease) increase in cash and cash equivalents.................................... (239,386) 461,429
Cash and cash equivalents at beginning of period.................................... 3,797,650 336,981
------------- -------------
Cash and cash equivalents at end of period.......................................... $ 3,558,264 $ 798,410
------------- -------------
------------- -------------
</TABLE>
See accompanying notes.
F-51
<PAGE>
ADCO TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
(UNAUDITED)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six month period
ended June 30, 1996 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996. For further information, refer to
the consolidated financial statements and footnotes thereto of Adco
Technologies, Inc. ("ADCO") for the year ended December 31, 1995.
ADCO has adopted Statement of Financial Accounting Standards No. 121 ("SFAS
121"), ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS effective January 1,
1996. Based on current circumstances this adoption has no effect on the
Company's income statement.
2. INVENTORIES
Inventories are stated at the lower cost or market. Cost is determined using
the last in, first out (LIFO) method. Current costs, based on the first in,
first out (FIFO) method would have resulted in reported amounts approximately
$109,000 higher at June 30, 1996.
3. INCOME TAXES
ADCO accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), ACCOUNTING FOR INCOME TAXES. Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes.
4. LITIGATION AND REGULATION
There are judicial and administrative claims pending or contemplated against
ADCO. Management believes that the resolution of these matters should not have a
material effect upon ADCO's financial condition, results of operations and cash
flows.
The Environmental Protection Agency ("EPA") has notified ADCO that it is a
Potential Responsible Party ("PRP") at, and requested that ADCO provide
information with respect to, two Superfund sites. Regarding the first site, ADCO
has informed the EPA that it believes that it is not responsible for any
materials at the site and ADCO believes that the previous owners of the property
upon which ADCO's facility is located may be responsible for the materials in
question located at this site. ADCO has not made and has not been requested to
make any expenditures toward the clean-up of this site, and has not been
contacted further by the EPA. At the second site, ADCO has been notified by the
EPA that it is the source of a de minimis quantity of waste materials. ADCO
spent approximately $6,000 in clean-up costs at this site and ADCO does not
expect that its clean-up costs will exceed $10,000.
The Michigan Department of Natural Resources ("MDNR") has identified the
property on which ADCO's plant is located as a site of environmental
contamination. ADCO has recorded a reserve of $148,000 at June 30, 1996, as an
estimate of the amount of loss that is reasonably possible to be incurred for
this site. While management of ADCO does not believe that ADCO's exposure in
these matters will have a material adverse effect on the business and financial
condition of ADCO, there can be no assurance that ADCO will not incur additional
significant liabilities in connection with these matters or that such
liabilities will not have a material adverse effect on ADCO's business and
financial condition.
Regarding each of the above-mentioned environmental matters, ADCO has
notified Nalco Chemical Company ("Nalco") that Nalco may be responsible for
indemnifying ADCO for expenditures made for the
F-52
<PAGE>
ADCO TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. LITIGATION AND REGULATION (CONTINUED)
above matters. Pursuant to the terms of an agreement entered into in connection
with ADCO's acquisition of Adco Products, Inc., ADCO is indemnified to a limited
extent against certain environmental liabilities by Nalco. In certain instances,
the indemnification is limited by a $100,000 deductible and a limitation on the
amount of indemnification's ranging from $341,600 to $3.5 million depending upon
the type of claim made, with an aggregate limitation of $3.5 million for all
such claims made.
5. SUBSEQUENT EVENTS
In July 1996, ADCO declared a quarterly dividend of $.02 per share, payable
on August 30, 1996, to holders of common stock of record on August 15, 1996. The
aggregate amount of the common stock dividend will be approximately $103,000.
On July 12, 1996, ADCO, Astor Corporation, a Delaware corporation (the
"Buyer"), and AAC Acquisition Corporation, a Delaware corporation and wholly
owned subsidiary of the Buyer (the "Acquisition Company"), entered into an
Agreement and Plan of Merger (the "Merger Agreement") providing for the
Acquisition Company to merge with and into ADCO (the "Merger") with the
Acquisition Company continuing as the surviving corporation. In the Merger, each
outstanding share of common stock ("Common Stock") of ADCO will be converted
into the right to receive $10.25 in cash (the "Merger Consideration") and each
option to purchase shares of Common Stock shall be converted into the right to
receive a net amount in cash equal to the Merger Consideration allocable to the
shares of Common Stock then subject to the option (the "Option Shares") less the
aggregate exercise price for the purchase of the Option Shares.
Simultaneously with the execution and delivery of the Merger Agreement,
Bradford Venture Partners, LP, Overseas Equity Investor Partners, LP, Bradford
Mills, Robert Simon, Barbara Henagan, James McCowan, Phillip Beery, David Fuchs,
Charles Sax and Brian Briddell (each a "Stockholder" and collectively the
"Stockholders"), each of whom is a stockholder of ADCO and certain of whom are
directors and executive officers of ADCO, holding an aggregate of 2,559,308
shares of Common Stock (equal to 49.75% of the outstanding voting Common Stock
as of July 12, 1996) entered into agreements, dated as of July 12, 1996 (the
"Voting Agreements"), with the Buyer, which provide, among other things, that
each of the Stockholders will vote or will cause to be voted, the shares of
Common Stock owned by the Stockholder (i) in favor of the adoption of the Merger
Agreement and the approval of the Merger, (ii) against the approval of any
proposal relating to a competing merger or business combination involving an
acquisition of all or a substantial portion of the capital stock, the assets of
ADCO or the assets or stock of any subsidiary of ADCO by any person or entity
other than the Buyer or Acquisition Company or an affiliate of the Buyer or
Acquisition Company, and (iii) against any transaction which is inconsistent
with the obligation of ADCO to consummate the Merger in accordance with the
Merger Agreement. The Voting Agreements also provide that such Stockholder will
not, except as contemplated by the terms of the Voting Agreements, sell or
otherwise voluntarily dispose of any of the shares of Common Stock owned by such
Stockholder or take any voluntary action which would have the effect of removing
such Stockholder's power to vote his shares or which would be inconsistent with
the Voting Agreements.
F-53
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Adco Products, Inc.
We have audited the accompanying statements of income, stockholders' equity,
and cash flows of Adco Products, Inc. for the period from January 1, 1993 to May
13, 1993 (date of sale). These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Adco
Products, Inc. for the period from January 1, 1993 to May 13, 1993 (date of
sale), in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Detroit, Michigan
March 18, 1994
F-54
<PAGE>
ADCO PRODUCTS, INC.
STATEMENT OF INCOME
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1993
TO MAY 13, 1993
(DATE OF SALE)
---------------
<S> <C>
Net sales........................................................................................ $ 11,020,070
Cost of products sold............................................................................ 8,063,587
---------------
Gross profit..................................................................................... 2,956,483
Operating expenses:
Selling, general and administrative.............................................................. 1,698,123
Research and development......................................................................... 387,485
---------------
Total operating expenses......................................................................... 2,085,608
---------------
Operating income................................................................................. 870,875
Other expense -- net............................................................................. 36,935
---------------
Income before taxes.............................................................................. 833,940
Income taxes (NOTE 3)............................................................................ 201,470
---------------
Net income....................................................................................... $ 632,470
---------------
---------------
Net income per share............................................................................. $ 5.44
---------------
---------------
Weighed average shares outstanding............................................................... 116,189
</TABLE>
See accompanying notes.
F-55
<PAGE>
ADCO PRODUCTS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
---------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Balance at January 1, 1993............................... $ 116,189 $ 21,696,952 $ 1,801,269 $ 23,614,410
Net income for period from January 1, 1993 to May 13,
1993 (date of sale)..................................... -- -- 632,470 632,470
Cash dividends -- $6.89 per share........................ -- -- (800,000) (800,000)
---------- ------------- ------------ -------------
Balance at May 13, 1993.................................. $ 116,189 $ 21,696,952 $ 1,633,739 $ 23,446,880
---------- ------------- ------------ -------------
---------- ------------- ------------ -------------
</TABLE>
See accompanying notes.
F-56
<PAGE>
ADCO PRODUCTS, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1993
TO MAY 13, 1993
(DATE OF SALE)
---------------
<S> <C>
OPERATING ACTIVITIES
Net income....................................................................................... $ 632,470
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization................................................................ 401,985
Loss on sale of property, plant and equipment................................................ 92,696
Deferred income taxes........................................................................ (116,546)
Changes in current assets and liabilities:
Advances to Nalco Chemical Company......................................................... 77,458
Trade accounts receivable.................................................................. (1,489,288)
Inventories................................................................................ (646,606)
Other current assets....................................................................... 46,914
Trade accounts payable..................................................................... (75,679)
Income taxes payable....................................................................... (315,688)
Accrued salaries, wages, and other expenses................................................ (277,732)
Due to Nalco Chemical Company.............................................................. 1,733
---------------
Net cash used in operating activities............................................................ (1,668,283)
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net.................................................. (323,393)
---------------
Net cash used in investing activities............................................................ (323,393)
FINANCING ACTIVITIES
Cash dividends paid.............................................................................. (800,000)
---------------
Net cash used in financing activities............................................................ (800,000)
---------------
Decrease in cash................................................................................. (2,791,676)
Cash at beginning of period...................................................................... 3,081,541
---------------
Cash at end of period............................................................................ $ 289,865
---------------
---------------
</TABLE>
See accompanying notes.
F-57
<PAGE>
ADCO PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
PERIOD FROM JANUARY 1, 1993 TO MAY 13, 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND DESCRIPTION OF BUSINESS
Adco Products, Inc. ("API") was a wholly owned subsidiary of Nalco Chemical
Company ("Nalco") through May 13, 1993. Effective May 14, 1993 Nalco sold all of
the outstanding common stock of API to Adco Technologies Inc. for $16,000,000 in
cash and $3,500,000 of preferred stock. Concurrently, API borrowed $8,930,000
under a bank term note and revolving line of credit to fund the purchase. The
purchase price was allocated to assets and liabilities based upon their
respective fair market values. These financial statements reflect activity of
API through date of sale and do not reflect the effect of any purchase price
adjustments. Following is the summarized balance sheet at date of acquisition:
<TABLE>
<S> <C>
Assets
Accounts receivable.................................................. $4,364,000
Inventories.......................................................... 4,735,000
Equipment and other assets........................................... 6,330,000
Intangibles.......................................................... 8,132,000
----------
$23,561,000
----------
----------
Liabilities and stockholders' equity
Accounts payable and other liabilities............................... $3,440,000
Acquisition debt..................................................... 8,930,000
Redeemable preferred stock of subsidiary............................. 3,500,000
Stockholders' equity................................................. 7,691,000
----------
$23,561,000
----------
----------
</TABLE>
API produces adhesives and sealants primarily for the roofing, automotive
original equipment manufacturing, windshield replacement, window manufacturing,
and concrete pipe and vault markets and is considered to operate in one business
segment.
Net sales to one customer, with which API has a long-standing relationship
amounted to 10% for the period from January 1, 1993 to May 13, 1993. API
generally does not require collateral from its customers. Credit losses, which
have been minimal, have been within management's expectations.
INVENTORY
Inventories are stated at the lower of cost or market. Cost is determined
using the last in, first out (LIFO) method.
Current costs, based on the first-in, first out (FIFO) method would have
resulted in reported amounts approximately $746,000 higher at May 13, 1993.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is computed
principally using the straight-line method over the estimated useful lives of
the assets.
GOODWILL
Goodwill is amortized by the straight-line method over 40 years.
Amortization expense was $140,500 for the period January 1, 1993 to May 13,
1993.
2. EMPLOYEE BENEFIT PLANS
API has a noncontributory, defined-benefit pension plan covering union
employees. Benefits are based on length of service and a negotiated benefit
rate.
F-58
<PAGE>
ADCO PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
PERIOD FROM JANUARY 1, 1993 TO MAY 13, 1993
2. EMPLOYEE BENEFIT PLANS (CONTINUED)
API's policy is to fund the plans between the minimum and maximum amounts
deductible for tax purposes under the Internal Revenue Code. API made
contributions to the plans of approximately $78,000 for the period January 1,
1993 to May 13, 1993.
Plan assets are invested in mutual funds and money market accounts.
Net pension expense was comprised of the following:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1993
TO
MAY 13, 1993
-----------------
<S> <C>
Service cost......................................................................... $ 8,110
Interest cost on projected benefit obligation........................................ 8,201
Actual return on plan assets......................................................... (8,061)
Net amortizations and deferrals...................................................... 1,365
-------
Net pension expense.................................................................. $ 9,615
-------
-------
</TABLE>
During January 1993, API terminated the pension plan covering its salaried
employees. This termination is not expected to have a significant impact on
API's financial position or results of operations.
API also sponsors a retirement savings plan which includes a
defined-contribution 401(k) plan and, beginning January 1, 1993, a discretionary
profit sharing plan which cover substantially all nonunion employees. API's
contribution to the 401(k) plan is based on each participant's pretax
contribution. During the 1993 period, API contributed $10,600, to the plan. The
profit sharing amount is determined annually by the Board of Directors and
approximated $38,000 for the period January 1, 1993 to May 13, 1993.
3. INCOME TAXES
Effective January 1, 1993, API changed its method of accounting for income
taxes from the deferred method to the liability method required by FASB
Statement No. 109, "Accounting for Income Taxes".
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
API's deferred tax assets (liabilities) at May 13, 1993 are as follows:
<TABLE>
<S> <C>
Warranty and other expenses.............................................. $ 120,700
Tax over book depreciation............................................... (522,185)
Reserve for doubtful accounts............................................ 20,964
Employee benefits........................................................ 43,737
Other.................................................................... 19,330
---------
$(317,454)
---------
---------
</TABLE>
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1993
TO MAY 13, 1993
-----------------
<S> <C>
Federal:
Current............................................................................ $ 427,072
Deferred........................................................................... (116,546)
Correction of prior years over accrual............................................... (109,056)
-----------------
$ 201,470
-----------------
-----------------
</TABLE>
F-59
<PAGE>
ADCO PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
PERIOD FROM JANUARY 1, 1993 TO MAY 13, 1993
3. INCOME TAXES (CONTINUED)
A reconciliation of the total federal income tax provision and the amount
computed by applying the statutory federal income tax rate to earnings before
income taxes is as follows:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1993
TO
MAY 13, 1993
-----------------
<S> <C>
Tax at U. S. statutory rates......................................................... $ 283,500
Impact of nondeductible goodwill amortization........................................ 47,754
Correction of prior years over accrual............................................... (109,056)
Other................................................................................ (20,728)
-----------------
$ 201,470
-----------------
-----------------
</TABLE>
During the 1993 period, API made income tax payments of approximately
$444,000.
4. RELATED PARTY TRANSACTIONS
Advances to Nalco are excess funds deposited with Nalco. These funds bear
interest and are repayable to API upon demand.
The following amounts were accrued or paid to Nalco for the period ended:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1993
TO
MAY 13, 1993
-----------------
<S> <C>
Insurance............................................................................ $ 127,063
Service fee.......................................................................... 52,900
Legal................................................................................ 3,617
Purchase of inventory................................................................ 267
Salary and fringes................................................................... 65,020
--------
$ 248,867
--------
--------
</TABLE>
5. LITIGATION AND REGULATION
There are judicial and administrative claims pending or contemplated against
API, including those of an environmental nature. Management believes that the
resolution of these matters should not have a material effect upon API's
financial condition, results of operations or cash flows.
The U.S. Environmental Protection Agency has notified API that it is a
potentially responsible party at, and requested that API provided information
with respect to, two hazardous waste disposal sites. API believes that the
previous owners of the property upon which API's facility is located may be
responsible for the materials in question located at one of the sites. At the
second site, API believes it is the source of a de minimis quantity of waste
materials. The Michigan Department of Natural Resources has identified the
property on which API's plant is located as a site of environmental
contamination. An estimate of the amount of loss that is reasonably possible to
be incurred for these sites cannot be determined at this time. While management
of API does not believe that API's exposure in these matters will have a
material adverse effect on the business and financial condition of API, there
can be no assurance that API will not incur significant liabilities in
connection with these matters or that such liabilities will not have a material
adverse effect on API's business and financial condition.
F-60
<PAGE>
[INSIDE BACK COVER]
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
- ----------------------------------------------
----------------------------------------------
- ----------------------------------------------
----------------------------------------------
ALL TENDERED OLD NOTES, EXECUTED LETTERS OF TRANSMITTAL AND OTHER RELATED
DOCUMENTS SHOULD BE DIRECTED TO THE EXCHANGE AGENT. QUESTIONS AND REQUESTS FOR
ASSISTANCE AND REQUESTS FOR ADDITIONAL COPIES OF THE PROSPECTUS, THE LETTER OF
TRANSMITTAL AND OTHER RELATED DOCUMENTS SHOULD BE ADDRESSED TO THE EXCHANGE
AGENT AS FOLLOWS:
BY HAND, REGISTERED OR CERTIFIED MAIL
OR OVERNIGHT CARRIER:
STATE STREET BANK AND TRUST COMPANY
TWO INTERNATIONAL PLACE, 4TH FLOOR
BOSTON, MASSACHUSETTS 02110
BY FACSIMILE:
(617) 664-5365
ATTENTION: JACKIE THOMPSON
-- CORPORATE TRUST DEPARTMENT
CONFIRM BY TELEPHONE: (617) 664-5344
(ORIGINALS OF ALL DOCUMENTS SUBMITTED BY FACSMILIE SHOULD BE SENT PROMPTLY
BY HAND, OVERNIGHT COURIER, OR REGISTERED OR CERTIFIED MAIL)
No person dealer, salesperson or other person is authorized in connection
with any offer made hereby to give any information or to make any
representations not contained in this Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the securities offered
hereby nor does it constitute an offer to sell or a solicitation of an offer to
buy any of the securities offered hereby to any person in any jurisdiction in
which it is unlawful to make such an offer or solicitation to such person.
Neither the delivery of this Prospectus nor any sale made hereunder shall under
any circumstances create any implication that the information contained herein
is correct as of any time subsequent to the date hereof.
Until , 1996 (90 days from the date of this prospectus), all
dealers effecting transactions in the New Notes, whether or not participating in
this Exchange Offer, may be required to deliver a Prospectus.
[LOGO]
ASTOR CORPORATION
OFFER FOR ALL OUTSTANDING
10 1/2% SENIOR
SUBORDINATED NOTES
DUE 2006
IN EXCHANGE FOR
10 1/2% SERIES B SENIOR
SUBORDINATED NOTES DUE 2006
-----------------
PROSPECTUS
-----------------
OCTOBER , 1996
- ----------------------------------------------
----------------------------------------------
- ----------------------------------------------
----------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law (the "DGCL") makes
provision for the indemnification of officers and directors in terms
sufficiently broad to indemnify officers and directors of the Company under
certain circumstances from liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933. The Company's Charter and
Bylaws provide, in effect, that, to the fullest extent and under the
circumstances permitted by Section 145 of the DGCL, the Company will indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is a
director or officer of the Company or is or was serving at the request of the
Company as a director or officer of another corporation or enterprise. The
Company may, in its discretion, similarly indemnify its employees and agents.
The Charter relieves its directors from monetary damages to the Company or its
stockholders for breach of such director's fiduciary duty as directors to the
fullest extent permitted by the DGCL. Under Section 102(b)(7) of the DGCL, a
corporation may relieve its directors from personal liability to such
corporation or its stockholders for monetary damages for any breach of their
fiduciary duty as directors except (i) for a breach of the duty of loyalty, (ii)
for failure to act in good faith, (iii) for intentional misconduct or knowing
violations of law, (iv) for willful or negligent violation of certain provisions
in the DGCL imposing certain requirements with respect to stock repurchases,
redemption and dividends, or (v) for any transactions from which the director
derived an improper personal benefit. Depending upon the character of the
proceeding, under Delaware law, the Company may indemnify against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with any action, suit or
proceeding if the person indemnified acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interest of the
Company, and, with respect to any criminal action or proceeding, had no cause to
believe his or her conduct was unlawful. To the extent that a director or
officer of the Company has been successful in the defense of any action, suit or
proceeding referred to above, the Company will be obligated to indemnify him or
her against expenses (including attorneys' fees) actually and reasonably
incurred in connection therewith.
ITEM 21. EXHIBITS.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S>
1.1 Purchase Agreement, dated October 2, 1996, among Astor Corporation, Astor
Holdings II, Inc., Donaldson, Lufkin & Jenrette Securities Corporation
and Chase Securities Inc................................................
3.1 Certificate of Incorporation of Astor Corporation.........................
3.2 Bylaws of Astor Corporation...............................................
3.3 Certificate of Incorporation of Astor Holdings II, Inc....................
3.4 Bylaws of Astor Holdings II, Inc..........................................
4.1 Indenture, dated October 8, 1996, among Astor Corporation, Astor Holdings
II, Inc. and State Street Bank and Trust Company, as trustee............
4.2 Registration Rights Agreement, dated October 9, 1996, among Astor
Corporation, Astor Holdings II, Inc., Dondalson, Lufkin & Jenrette
Securities Corporation and Chase Securities Inc.
4.3 Form of Global Note certificate (included in Exhibit 4.1).................
*4.4 Form of Letter of Transmittal regarding the Offer for all Outstanding
Privately Placed 10 1/2 Senior Subordinated Notes Due 2006 in Exchange
for 10 1/2 Series B Senior Subordinated Notes Due 2006..................
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S>
*5.1 Opinion of Gibson, Dunn & Crutcher LLP as to the legality of the Notes....
*8.1 Opinion of Gibson, Dunn & Crutcher LLP as to certain federal income tax
consequences of the Offer...............................................
10.1 Groundwater Processing Remediation Agreement, dated April 22, 1994,
between Petrowax PA, Inc. and Quaker State Corporation..................
*10.2 Asset Purchase and Sale Agreement, dated as of March 30, 1990, between
Petrowax PA, Inc. and Quaker State Corporation, as amended..............
10.3 Slack Wax and Petrolatum Sales Agreement, dated April 22, 1994, between
Petrowax PA, Inc. and Quaker State Corporation..........................
10.4 Amendment, Agreement and Joint Release, dated April 22, 1994, between
Petrowax PA, Inc. and Quaker State Corporation..........................
*10.5 Rheochem joint venture documents, dated as of June 8, 1994, between ABI
Corporation and Concorde Industries, Inc................................
10.6 Agreement, dated as of October 1, 1996, between Lube & Wax Ventures,
L.L.C. and Astor Corporation............................................
10.7 1995 Stock Incentive Plan of Astor Holdings, Inc..........................
10.8 Astor Corporation 1997 Management Bonus Program...........................
10.9 Astor Corporation 1997 Incentive Bonus Program............................
10.10 Agreement among Astor Corporation and Oil, Chemical and Atomic Workers
International Union and Local 8-481, dated February 1, 1996.............
10.11 Agreement among Astor Corporation and Oil, Chemical and Atomic Workers
International Union and Local 8-607, dated February 1, 1996.............
10.12 Agreement among Astor Corporation and Oil, Chemical and Atomic Workers
International Union and Local 8-607, dated February 14, 1996............
10.13 Employment Agreement -- Boyd D. Wainscott.................................
10.14 Employment Agreement -- C. Richard Spalton................................
*10.15 Employment Agreement -- Jose C. Houssa
*10.16 Employment Agreement -- John F. Gottshall
*10.17 Employment Agreement -- David E. Hawkins
*10.18 Credit Agreement, dated as of October 8, 1996, among Astor Corporation,
certain lenders and The Chase Manhattan Bank, as agent..................
*12 Computation of ratio of earnings to fixed charges.........................
21 List of Subsidiaries of Astor Corporation.................................
23.1 Independent Auditors' Consent from Ernst & Young LLP relating to Astor
Holdings II, Inc........................................................
23.2 Independent Auditors' Consent from Ernst & Young LLP relating to Adco
Technologies, Inc.......................................................
23.3 Independent Auditor's Consent from KPMG relating to Associated British
Industries Limited......................................................
*23.4 Consent of Gibson, Dunn & Crutcher LLP (to be included in their opinion
filed as Exhibit 5)
24 Power of Attorney (included on pages II-4 through II-7....................
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S>
25 Form T-1, Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of State Street Bank and Trust Company, as
trustee.................................................................
</TABLE>
- ------------------------
* To be filed by amendment.
(b) Financial Statement Schedules.
The following financial statement schedules are filed with Part II of this
Registration Statement:
<TABLE>
<CAPTION>
SCHEDULE NUMBER DESCRIPTION OF SCHEDULE
- -------------------- --------------------------------------------------------------
<S> <C>
II Valuation and Qualifying Accounts
</TABLE>
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
applicable instructions or are inapplicable and therefore have been omitted.
ITEM 22. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable, in the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Raleigh, State of North
Carolina, on October 25, 1996.
ASTOR CORPORATION
By: /s/ BOYD D. WAINSCOTT
-----------------------------------
Boyd D. Wainscott
CHIEF EXECUTIVE OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints John F. Gottshall, David E. Hawkins and W.
Montague Yort his true and lawful attorneys-in-fact and agents, each with full
power and substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, and to file the same, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitution or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ ------------------------------------------------ -------------------
<C> <S> <C>
/s/ BOYD D. WAINSCOTT
--------------------------------- Chairman of the Board of Directors and Chief October 25, 1996
Boyd D. Wainscott Executive Officer (Principal Executive Officer)
/s/ C. RICHARD SPALTON
--------------------------------- President and Director October 25, 1996
C. Richard Spalton
/s/ JOHN F. GOTTSHALL
--------------------------------- Chief Financial Officer (Principal Financial and October 25, 1996
John F. Gottshall Accounting Officer)
/s/ ALAN J. ANDREINI
--------------------------------- Director October 25, 1996
Alan J. Andreini
/s/ RICHARD R. CROWELL
--------------------------------- Director October 25, 1996
Richard R. Crowell
/s/ MARK C. HARDY
--------------------------------- Director October 25, 1996
Mark C. Hardy
/s/ KURT B. LARSEN
--------------------------------- Director October 25, 1996
Kurt B. Larsen
/s/ JUSTIN MACCARONE
--------------------------------- Director October 25, 1996
Justin Maccarone
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ ------------------------------------------------ -------------------
<C> <S> <C>
/s/ GERALD L. PARSKY
--------------------------------- Director October 25, 1996
Gerald L. Parsky
/s/ RICHARD K. ROEDER
--------------------------------- Director October 25, 1996
Richard K. Roeder
/s/ W. MONTAGUE YORT
--------------------------------- Director October 25, 1996
W. Montague Yort
</TABLE>
II-5
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Co-registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Raleigh,
State of North Carolina, on October 25, 1996.
ASTOR HOLDINGS II, INC.
By: /s/ BOYD D. WAINSCOTT
-----------------------------------
Boyd D. Wainscott
CHIEF EXECUTIVE OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints John F. Gottshall, David E. Hawkins and W.
Montague Yort his true and lawful attorneys-in-fact and agents, each with full
power and substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, and to file the same, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitution or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ ------------------------------------------------ -------------------
<C> <S> <C>
/s/ BOYD D. WAINSCOTT
--------------------------------- Chairman of the Board of Directors and Chief October 25, 1996
Boyd D. Wainscott Executive Officer (Principal Executive Officer)
/s/ C. RICHARD SPALTON
--------------------------------- President and Director October 25, 1996
C. Richard Spalton
/s/ JOHN F. GOTTSHALL
--------------------------------- Chief Financial Officer (Principal Financial and October 25, 1996
John F. Gottshall Accounting Officer)
/s/ ALAN J. ANDREINI
--------------------------------- Director October 25, 1996
Alan J. Andreini
/s/ RICHARD R. CROWELL
--------------------------------- Director October 25, 1996
Richard R. Crowell
/s/ MARK C. HARDY
--------------------------------- Director October 25, 1996
Mark C. Hardy
/s/ KURT B. LARSEN
--------------------------------- Director October 25, 1996
Kurt B. Larsen
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ ------------------------------------------------ -------------------
<C> <S> <C>
/s/ JUSTIN MACCARONE
--------------------------------- Director October 25, 1996
Justin Maccarone
/s/ GERALD L. PARSKY
--------------------------------- Director October 25, 1996
Gerald L. Parsky
/s/ RICHARD K. ROEDER
--------------------------------- Director October 25, 1996
Richard K. Roeder
/s/ W. MONTAGUE YORT
--------------------------------- Director October 25, 1996
W. Montague Yort
</TABLE>
II-7
<PAGE>
SCHEDULE II
VALUATION & QUALIFYING ACCOUNTS
ASTOR HOLDINGS II, INC.
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
------------------------
BALANCE AT CHARGED TO
BEGINNING OF CHARGED TO OTHER BALANCE AT
DESCRIPTION PERIOD EXPENSES ACCTS. DEDUCTIONS END OF PERIOD
- ------------------------------------------------- --------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Year ended March 31, 1996:
Deducted from asset accounts:
Allowance for doubtful accounts................ $ 208 $ 245 $ 495(1) $ 222(2) $ 726
----- ----------- ----------- ----------- -----
Total........................................ $ 208 $ 245 $ 495 $ 222 $ 726
----- ----------- ----------- ----------- -----
----- ----------- ----------- ----------- -----
Year ended March 31, 1995:
Deducted from asset accounts:
Allowance for doubtful accounts................ $ -- $ 208 $ -- $ -- $ 208
----- ----------- ----------- ----------- -----
Total........................................ $ -- $ 208 $ -- $ -- $ 208
----- ----------- ----------- ----------- -----
----- ----------- ----------- ----------- -----
Year ended March 31, 1994:
Deducted from asset accounts:
Allowance for doubtful accounts................ $ -- $ -- $ -- $ -- $ --
----- ----------- ----------- ----------- -----
Total........................................ $ -- $ -- $ -- $ -- $ --
----- ----------- ----------- ----------- -----
----- ----------- ----------- ----------- -----
</TABLE>
- ------------------------
(1) Relates to allowance recorded as part of accounting for the purchase of
Associated British Industries Limited.
(2) Uncollectible accounts written off, net of recoveries.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ -------------------------------------------------------------------------- ---------
<C> <S> <C>
1.1 Purchase Agreement, dated October 2, 1996, among Astor Corporation, Astor
Holdings II, Inc., Donaldson, Lufkin & Jenrette Securities Corporation
and Chase Securities Inc.
3.1 Certificate of Incorporation of Astor Corporation
3.2 Bylaws of Astor Corporation
3.3 Certificate of Incorporation of Astor Holdings II, Inc.
3.4 Bylaws of Astor Holdings II, Inc.
4.1 Indenture, dated October 8, 1996, among Astor Corporation, Astor Holdings
II, Inc. and State Street Bank and Trust Company, as trustee
4.2 Registration Rights Agreement, dated October 9, 1996, among Astor
Corporation, Astor Holdings II, Inc., Dondalson, Lufkin & Jenrette
Securities Corporation and Chase Securities Inc.
4.3 Form of Global Note certificate (included in Exhibit 4.1)
*4.4 Form of Letter of Transmittal regarding the Offer for all Outstanding
Privately Placed 10 1/2 Senior Subordinated Notes Due 2006 in Exchange
for 10 1/2 Series B Senior Subordinated Notes Due 2006
*5.1 Opinion of Gibson, Dunn & Crutcher LLP as to the legality of the Notes
*8.1 Opinion of Gibson, Dunn & Crutcher LLP as to certain federal income tax
consequences of the Offer
10.1 Groundwater Processing Remediation Agreement, dated April 22, 1994,
between Petrowax PA, Inc. and Quaker State Corporation
*10.2 Asset Purchase and Sale Agreement, dated as of March 30, 1990, between
Petrowax PA, Inc. and Quaker State Corporation, as amended
10.3 Slack Wax and Petrolatum Sales Agreement, dated April 22, 1994, between
Petrowax PA, Inc. and Quaker State Corporation
10.4 Amendment, Agreement and Joint Release, dated April 22, 1994, between
Petrowax PA, Inc. and Quaker State Corporation
*10.5 Rheochem joint venture documents, dated as of June 8, 1994, between ABI
Corporation and Concorde Industries, Inc.
10.6 Agreement, dated as of October 1, 1996, between Lube & Wax Ventures,
L.L.C. and Astor Corporation
10.7 1995 Stock Incentive Plan of Astor Holdings, Inc.
10.8 Astor Corporation 1997 Management Bonus Program
10.9 Astor Corporation 1997 Incentive Bonus Program
10.10 Agreement among Astor Corporation and Oil, Chemical and Atomic Workers
International Union and Local 8-481, dated February 1, 1996
10.11 Agreement among Astor Corporation and Oil, Chemical and Atomic Workers
International Union and Local 8-607, dated February 1, 1996
10.12 Agreement among Astor Corporation and Oil, Chemical and Atomic Workers
International Union and Local 8-607, dated February 14, 1996
10.13 Employment Agreement -- Boyd D. Wainscott
10.14 Employment Agreement -- C. Richard Spalton
*10.15 Employment Agreement -- Jose C. Houssa
*10.16 Employment Agreement -- John F. Gottshall
*10.17 Employment Agreement -- David E. Hawkins
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ -------------------------------------------------------------------------- ---------
<C> <S> <C>
*10.18 Credit Agreement, dated as of October 8, 1996, among Astor Corporation,
certain lenders and The Chase Manhattan Bank, as agent
*12 Computation of ratio of earnings to fixed charges
21 List of Subsidiaries of Astor Corporation
23.1 Independent Auditors' Consent from Ernst & Young LLP relating to Astor
Holdings II, Inc.
23.2 Independent Auditors' Consent from Ernst & Young LLP relating to Adco
Technologies, Inc.
23.3 Independent Auditor's Consent from KPMG relating to Associated British
Industries Limited
*23.4 Consent of Gibson, Dunn & Crutcher LLP (to be included in their opinion
filed as Exhibit 5)
24 Power of Attorney (included on pages II-4 through II-7
25 Form T-1, Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of State Street Bank and Trust Company, as trustee
</TABLE>
- ------------------------
* To be filed by amendment.
<PAGE>
$110,000,000
ASTOR CORPORATION
10 1/2% Senior Subordinated Notes due 2006
PURCHASE AGREEMENT
<PAGE>
October 2, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Astor Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell to the several initial purchasers named above (the "Initial
Purchasers") $110,000,000 aggregate principal amount of its 10 1/2% Senior
Subordinated Notes due 2006 (the "Notes"). The Notes are to be issued pursuant
to the provisions of an Indenture to be dated as of October 8, 1996 (the
"Indenture") between the Company and State Street Bank and Trust Company, as
Trustee (the "Trustee").
The Notes will be offered and sold to the Initial Purchasers without
being registered under the United States Securities Act of 1933, as amended (the
"Securities Act"), in reliance on an exemption therefrom. The Initial
Purchasers have advised the Company that they will make an offering of the Notes
purchased by them hereunder in accordance with Section 4 hereof on the terms set
forth in the Preliminary Offering Memorandum and the Final Offering Memorandum
(each as defined below) as soon as practicable after the date hereof as in their
judgment is advisable.
It is understood that: (i) Adco Technologies, Inc. ("ADCO"), the
Company and AAC Acquisition Corp., a wholly-owned subsidiary of the Company
("Acquisition Company"), have entered into an Agreement and Plan of Merger (the
"Merger Agreement") dated as of July 12, 1996 pursuant to which Acquisition
Company will be merged with and into ADCO (the "Merger") and ADCO will become a
wholly-owned subsidiary of the Company, (ii) concurrent with the closing
hereunder, (A) ADCO Products, Inc., a subsidiary of ADCO, will be merged with
and into ADCO and ADCO will be merged with and into the Company, (B) the Company
has entered into, and will borrow under, the Senior Bank Facility (as defined
herein) to finance a portion of the
1
<PAGE>
merger consideration and to repay certain existing indebtedness of subsidiaries
of the Company.
In connection with the sale of the Notes, the Company has prepared a
preliminary Offering Memorandum dated September 20, 1996 (the "Preliminary
Offering Memorandum") and will prepare a final Offering Memorandum (the "Final
Offering Memorandum" and, with the Preliminary Offering Memorandum, each an
"Offering Memorandum") setting forth or including a description of the terms of
the Notes, the Guarantee (as defined below), the ADCO Acquisition (as defined in
the Final Offering Memorandum), the terms of the offering, a description of the
Company and any material developments relating to the Company occurring after
the date of the most recent financial statements included therein.
The Company's payment obligations under the Notes will be guaranteed
(the "Guarantee") by Astor Holdings II, Inc. (the "Guarantor").
The Astor Parties (as defined below) and the Initial Purchasers will
enter into a Registration Rights Agreement (the "Registration Rights
Agreement") concurrently with the issuance of the Notes. Pursuant to the
Registration Rights Agreement, under the circumstances and the terms set forth
therein, the Astor Parties will agree to file with the Securities and Exchange
Commission (the "Commission"): (i) a registration statement on form S-1 or S-4
(the "Exchange Offer Registration Statement") relating to an offer (the
"Exchange Offer") to the holders of Notes to exchange their Notes for an issue
of notes (the "New Notes") registered under the Securities Act and otherwise
identical in all material respects to the Notes or, alternatively, (ii) in the
event that applicable interpretations of the Commission do not permit the
Company to effect the Exchange Offer or do not permit any holder of the Notes to
participate in the Exchange Offer, a shelf registration statement (the "Shelf
Registration Statement") to cover resales of Transfer Restricted Securities by
such holders who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement.
This Agreement, the Indenture, the Notes, the Guarantee and the
Registration Rights Agreement are hereinafter referred to collectively as the
"Operative Documents". The Company and Astor Holdings II, Inc. are hereinafter
referred to collectively as the "Astor Parties".
1. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations and warranties contained in this Purchase Agreement (this
"Agreement"), and subject to its terms and conditions, the Company agrees to
issue and sell, and each Initial Purchaser agrees, severally and not jointly, to
purchase from the Company the principal amount of Notes set forth opposite the
name of such Initial Purchaser in Schedule I hereto, at 99.5% of the principal
amount thereof (the "Purchase Price").
2
<PAGE>
2. DELIVERY AND PAYMENT. Delivery of and payment for the Notes
shall be made at 10:00 A.M., New York City time, on October 8, 1996 (the
"Closing Date") in immediately available funds and at such place as the Initial
Purchasers shall designate. Certificates for the Notes shall be registered in
such names and issued in such denominations as the Initial Purchasers shall
request in writing not later than two business days prior to the Closing Date.
Such certificates shall be made available to the Initial Purchasers for
inspection not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date. Certificates evidencing the Notes shall be
delivered to the Initial Purchasers on the Closing Date with any transfer taxes
thereon duly paid by the Company, against payment of the Purchase Price therefor
in same day funds to the order of the Company or as the Company may direct. The
Closing Date and the location of delivery of and the form of payment for the
Notes may be varied by agreement between the Initial Purchasers and the Company.
3. AGREEMENTS OF THE ASTOR PARTIES. Each of the Astor Parties
hereby agrees with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by
them, to confirm such advice in writing of the happening of any event during the
period referred to in paragraph (d) below which makes any statement of a
material fact made in the Final Offering Memorandum untrue or which requires the
making of any additions to or changes in such Offering Memorandum in order to
make such statement not misleading.
(b) To furnish to the Initial Purchasers during the period referred
to in paragraph (d) below as many copies of the Preliminary Offering Memorandum,
the Final Offering Memorandum and any supplements and amendments thereto as they
may reasonably request.
(c) Not to make any amendment or supplement to either Offering
Memorandum of which the Initial Purchasers shall not previously have been
advised or to which they shall reasonably object and to prepare, promptly upon
their reasonable request, any amendment or supplement to either Offering
Memorandum which may be necessary or advisable in connection with the offering
of the Notes by the Initial Purchasers.
(d) If, during the period after the first date of the offering of the
Notes and prior to the completion of the sale thereof (the "Offering Period"),
any event shall occur as a result of which, in the opinion of counsel for the
Initial Purchasers, it becomes necessary to amend or supplement the Final
Offering Memorandum in order to make the statements therein, in the light of the
circumstances when such Offering Memorandum is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement such Offering
Memorandum to comply with any law, forthwith to prepare an appropriate amendment
or supplement to such Offering Memorandum so that the statements in such
3
<PAGE>
Memorandum, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with law, and to furnish to the Initial Purchasers and to
such dealers as the Initial Purchasers shall specify such number of copies
thereof as the Initial Purchasers or such dealers may reasonably request.
(e) Prior to any offering of the Notes, to cooperate with the Initial
Purchasers and their counsel in connection with the registration or
qualification of the Notes for offer and sale by the Initial Purchasers and by
dealers under the state securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may request, to continue such qualification in effect so long
as required for distribution of the Notes and to file such consents to service
of process (except general consents to service of process) or other documents as
may be necessary in order to effect such registration or qualification.
(f) So long as any Notes are outstanding, to deliver without charge
to the holders thereof, promptly upon their becoming available, copies of (i)
all reports or other publicly available information of the Guarantor, the
Company or its subsidiaries that the Guarantor, the Company or its subsidiaries
shall mail or otherwise make available to their security holders, (ii) all
reports, financial statements and proxy information statements filed by the
Guarantor, the Company or its subsidiaries with the Commission or any national
securities exchange and (iii) such other publicly available information
concerning the Guarantor, the Company or its subsidiaries, including without
limitation, press releases, as the holders thereof may reasonably request.
(g) To use the proceeds from the sale of the Notes in the manner
specified in the Offering Memorandum under the caption "Use of Proceeds".
(h) To pay all costs, expenses, fees and taxes incident to (i) the
preparation, printing, filing and distribution of each Offering Memorandum,
Exchange Offer, Registration Statement and any Shelf Registration Statement
(including financial statements and all amendments and supplements prior to or
during the period specified in paragraph (d), but not including fees and
disbursements of counsel to the Initial Purchasers), (ii) the registration or
qualification of the Notes and the New Notes for offer and sale under the
securities or Blue Sky laws of the several states (including the reasonable fees
and disbursements of counsel for the Initial Purchasers relating to such
registration or qualification and memoranda relating thereto), (iii) furnishing
such copies of the Offering Memorandum and all amendments and supplements
thereto as may be requested for use in connection with the offering or sale of
the Notes by the Initial Purchasers or by dealers to whom Notes may be sold,
(iv) any fees charged by rating agencies for the rating of the Notes and the New
Notes, (v) the fees and expenses, if any, incurred in connection with the
designation of the Notes for trading in the PORTAL market and the deposit of the
global Notes with Depository Trust Company, (vi) any stamp or transfer taxes
payable in connection with the sale of the Notes to the Initial
4
<PAGE>
Purchasers, (vii) the issuance, transfer and delivery by the Company of the
Notes and the New Notes (including, without limitation, the fees of the
Company's transfer agent and the registrar, the cost of its personnel and other
internal costs, the costs of printing and engraving the certificates
representing the Notes and any stock and securities transfer taxes payable
thereon), (viii) the reasonable fees and expenses of the Trustee and the fees
and disbursements of counsel for the Trustee, (ix) the costs and expenses of the
Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Notes, including without
limitation, expenses associated with the production of road show slides and
graphics, travel and lodging expenses of officers of the Company (provided that
the costs of car services and charter aircraft during the "road show" will be
paid equally by the Company and the Initial Purchasers and the cost of
conference rooms and other meeting places used on the "road show" to make
investor presentations will be paid by the Initial Purchasers) and (x) the
performance by each Astor Party and its subsidiaries of their obligations under
this Agreement; PROVIDED that, except as otherwise provided in this Section 3(h)
and Section 6, the Initial Purchasers shall pay their own costs and expenses,
including the fees and disbursements of their counsel.
(i) To use its reasonable best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it prior
to the Closing Date and to satisfy all conditions precedent to the delivery of
the Notes.
(j) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company or warrants to purchase
debt securities of the Company substantially similar to the Notes (other than
(i) the Notes and (ii) commercial paper issued in the ordinary course of
business) without the prior written consent of the Initial Purchasers.
(k) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate, and not to permit its affiliates (as defined in Regulation 501(b) of
Regulation D under the Securities Act, "Affiliates") to sell, offer for sale or
solicit offers to buy or otherwise negotiate, directly or through any agent, in
respect of any security (as defined in the Securities Act) the offering of which
security will be integrated with the sale of the Notes in a manner which would
require the registration of the Notes under the Securities Act and to take all
action that is appropriate to assure that its offerings of other securities will
not be integrated for purposes of the Securities Act with the offerings
contemplated hereby.
(l) Except pursuant to the Exchange Offer or a Shelf Registration
Statement, not to solicit any offer to buy or sell the Notes by means of any
form of general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act ("Regulation D")) in any manner involving
a public offering within the
5
<PAGE>
meaning of Section 4 (2) of the Securities Act, including: (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or radio and
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(m) Not to engage, or permit any person acting on behalf of either
Astor Party to engage, in any directed selling efforts within the meaning of
Regulation S under the Securities Act ("Regulation S") with respect to the
Notes, and to comply, and cause each such person so acting to comply, with the
offering restrictions requirement of Regulation S.
(n) So long as any of the Notes remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, during any period in which it is not subject to Section 13 or
15(d) of the Exchange Act, to make available to any holder of Notes in
connection with any sale thereof and any prospective purchaser of Notes from
such holder, in each case upon request, the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Securities Act.
(o) Not to, and not to permit any of its affiliates (as defined in
Rule 144(a)(1)) to, (i) purchase any of the Notes unless such Notes are held in
the form of a Certificated Note (as defined in the Final Offering Memorandum)
and (ii) resell any of the Notes, except as permitted by the Indenture.
4. OFFERING OF NOTES; RESTRICTIONS ON TRANSFER.
Each Initial Purchaser, as to itself, represents and warrants that:
(a) it is a qualified institutional buyer as defined in Rule 144A
under the Securities Act (a "QIB");
(b) it will not solicit offers for, or offer to sell, Notes by any
form of general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act;
(c) it will solicit offers for Notes only from, and will offer such
Notes only to, persons that it reasonably believes to be (i) in the case of
offers inside the United States, (A) QIBs or (B) other institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) that, prior to their purchase of the Notes, deliver to the Initial
Purchasers a letter containing the representations and agreements set forth in
Annex A to the Final Offering Memorandum and (ii) in the case of offers outside
the United States, to persons other than U.S. persons ("foreign purchasers,"
which term shall include dealers or other professional fiduciaries in the United
States
6
<PAGE>
acting on a discretionary basis for foreign beneficial owners (other than an
estate or trust)) in reliance upon Regulation S under the Securities Act who, in
each case, in purchasing such Notes are deemed to have represented and agreed as
provided in the Offering Memorandum under the caption "Notice to Investors";
(d) it understands that no action has been or will be taken in any
jurisdiction by the Astor Parties that would permit a public offering of the
Notes, or possession or distribution of either Offering Memorandum or any other
offering or publicity material relating to the Notes, in any country or
jurisdiction where action for that purpose is required;
(e) it will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Notes or has in its
possession or distributes either Offering Memorandum or any such other material,
in all cases at its own expense;
(f) it understands that the Notes have not been registered under the
Securities Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except in accordance with Rule 144A
or Regulation S under the Securities Act or pursuant to another exemption from
the registration requirements of the Securities Act;
(g) it has not offered the Notes and will not offer and sell the
Notes (i) as part of the distribution at any time and (ii) otherwise until 40
days after the later of the date hereof and the Closing Date, except in
accordance with Rule 903 of Regulation S or as otherwise permitted in paragraph
(a) above; and neither it, nor its Affiliates nor any person acting on its
behalf has engaged or will engage in any directed selling efforts (within the
meaning of Regulation S) with respect to the Notes; and it, its Affiliates and
any such other persons have complied and will comply with the offering
restrictions requirement of Regulation S;
(h) it has (i) not offered or sold and will not offer or sell any
Notes to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 ("Regulations"); (ii) complied and will
comply with all applicable provisions of the Financial Services Act 1986 and the
Regulations with respect to anything done by it in relation to the Notes in,
from or otherwise involving the U.K.; and (iii) only issued or passed on and
will only issue or pass on to any person in the U.K. any document received by it
in connection with the issue of the Notes if that person is of a kind described
in Article 11(3) of the Financial Services
7
<PAGE>
Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to
whom such document may otherwise lawfully be issued or passed on;
(i) it understands that the Notes have not been and will not be
registered under the Securities and Exchange Law of Japan, and represents that
it has not offered or sold, and agrees that it will not offer or sell, any
Notes, directly or indirectly in Japan or to or from any resident of Japan
except (i) pursuant to an exemption from the registration requirements of the
Securities and Exchange Law of Japan and (ii) in compliance with any other
applicable requirements of Japanese law; and
(j) it agrees that, at or prior to confirmation of sales of the
Notes, it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Notes from it
during the restricted period a confirmation or notice to substantially the
following effect:
The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered
and sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the
offering and the closing date, except in either case in accordance
with Regulation S (or Rule 144A if available) under the Securities
Act. Terms used above have the meanings given to them by Regulation
S.
Terms used in this Section 4 have the meanings given to them by Regulation S.
5. REPRESENTATIONS AND WARRANTIES OF THE ASTOR PARTIES. The Astor
Parties jointly and severally represent and warrant to the Initial Purchasers
that:
(a) The Final Offering Memorandum (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was, on the
date of its issuance, and is, at the date hereof, accurate in all material
respects and did not and does not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and the Final Offering Memorandum (as amended or
supplemented as necessary) will be, as of the Closing Date, accurate in all
material respects and will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances, existing at the Closing Date, not
misleading; PROVIDED that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information relating to the Initial Purchasers furnished to the Company in
writing by such Initial Purchasers expressly for use therein.
8
<PAGE>
(b) The Preliminary Offering Memorandum was, on the date of its
issuance, accurate in all material respects and did not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; PROVIDED that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with the information relating to the Initial Purchasers
furnished to the Company in writing by such Initial Purchasers expressly for use
therein.
(c) Each Astor Party and each of its subsidiaries has been duly
organized, is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation, has all requisite corporate power and
authority to carry on its business as it is currently being conducted and as
described in each Offering Memorandum and to own, lease and operate its
properties, and is duly qualified and in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a material adverse
effect on the business, operations or financial condition of the Astor Parties
and their subsidiaries, taken as a whole.
(d) Each Astor Party has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement and the
other Operative Documents and, in the case of the Company, to issue, sell and
deliver the Notes to the Initial Purchasers as provided herein and, in the case
of the Guarantor, to guarantee the Notes.
(e) Except for (i) the shares of voting preferred stock of ABI
Acquisition 1 plc ("ABI 1") which are owned by the Guarantor and (ii) one share
of common stock in each of the ABI 1 and ABI Acquisition 2 plc ("ABI 2") owned
by Richard K. Roeder, all of the outstanding shares of capital stock of, or
other ownership interests in, each of the Company's subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable, and are
owned by the Company, directly or indirectly, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature except the
lien of the UBS Credit Facility (as defined in the Final Offering Memorandum)
immediately prior to its termination on the Closing Date and the lien of the
Senior Secured Credit Agreement (the "Senior Bank Facility") to be dated as of
October 8, 1996 among the Company, the lenders party thereto and The Chase
Manhattan Bank, as agent for the lenders, upon execution and delivery thereof.
(f) The execution, delivery and performance of each Operative
Document and compliance by each Astor Party which is a party thereto with all
the provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not require any consent, approval,
authorization or other order of
9
<PAGE>
any court, regulatory body, administrative agency or other governmental body
(except (i) such as have been obtained, (ii) such as may be required under the
securities or Blue Sky laws of various states and (iii) such as may be required
under federal securities laws in connection with the Exchange Offer or the Shelf
Registration Statement) and will not conflict with or constitute a breach of any
of the terms or provisions of, or a default under, the charter or by-laws of any
Astor Party or any of its subsidiaries or any agreement, indenture or other
instrument to which an Astor Party or any of its subsidiaries is a party or by
which an Astor Party or any of its subsidiaries or their respective property is
bound, or violate or conflict with any laws, administrative regulations or
rulings or court decrees applicable to an Astor Party, any of its subsidiaries
or their respective property.
(g) This Agreement has been duly authorized, executed and delivered
by each Astor Party and (assuming the due execution and delivery thereof by the
Initial Purchasers) is the valid and legally binding agreement of such Astor
Party, enforceable against such Astor Party in accordance with its terms, except
that the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and the application of
equitable principles of general applicability.
(h) The Indenture has been duly authorized by each Astor Party and,
when duly executed and delivered by each Astor Party (assuming the due execution
and delivery thereof by the Trustee), will be the valid and legally binding
obligation of such Astor Party, enforceable against such Astor Party in
accordance with its terms, except that the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and the application of equitable principles of general applicability.
When executed and delivered, the Indenture will conform in all material respects
to the description thereof in each Offering Memorandum.
(i) The Notes and the Guarantees to be endorsed thereon have been
duly authorized by the Company and the Guarantor, respectively. When the Notes
are duly executed and authenticated in accordance with the terms of the
Indenture, the Guarantees endorsed on the Notes have been duly executed by the
Guarantor and the Notes have been delivered against payment therefor in
accordance with the terms hereof, the Notes and the Guarantees endorsed thereon
will be entitled to the benefits of the Indenture and will be the valid and
legally binding obligations of the Company and the Guarantor, respectively,
enforceable against the Company and the Guarantor, respectively, in accordance
with their respective terms, except that the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and the application of equitable principles of general applicability.
When issued, authenticated and delivered, the Notes will conform in all material
respects to the description thereof in each Offering Memorandum.
(j) The New Notes and the Guarantees to be endorsed thereon have been
duly authorized by the Company and the Guarantor, respectively. When the New
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Notes are duly executed and delivered and authenticated in accordance with the
terms of the Indenture, the Guarantees endorsed on the New Notes have been duly
executed and delivered by the Guarantor and the New Notes have been exchanged
for the Notes in the manner contemplated by the Registration Rights Agreement
and the Indenture, the New Notes and the Guarantees endorsed thereon will be
entitled to the benefits of the Indenture and will be valid and legally binding
obligations of the Company and the Guarantor, respectively, enforceable against
the Company and the Guarantor, respectively, in accordance with their respective
terms, except that the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and the
application of equitable principles of general applicability.
(l) The Senior Bank Facility has been duly authorized by the Company,
and, when executed and delivered by the Company, will be a legally valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except that the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
the application of equitable principles of general applicability.
(m) The Merger Agreement has been duly authorized, executed and
delivered by the Company and is a legally valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
that the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and the application of
equitable principles of general applicability.
(n) The Registration Rights Agreement has been duly and validly
authorized by each Astor Party and, when duly executed and delivered by each
Astor Party, will be the legally valid and binding agreement of such Astor
Party, enforceable against each Astor Party in accordance with its terms, except
that the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and the application of
equitable principles of general applicability. When executed and delivered, the
Registration Rights Agreement will conform in all material respects to the
description thereof in each Offering Memorandum.
(o) Since the respective dates as of which information is given in
each Offering Memorandum, except as otherwise stated therein, (i) there has been
no material adverse change, or any development that is reasonably likely to
result in a material adverse change, in the business, condition (financial or
otherwise), earnings, business, operations or prospects of the Astor Parties and
their subsidiaries, taken as a whole, whether or not arising in the ordinary
course of business, (ii) there have been no transactions entered into by such
Astor Party or any of its subsidiaries, other than those in the ordinary course
of business, that are material with respect to such Astor Party and its
subsidiaries, (iii) there has not been any material change in the capital stock,
short-term debt or long-term debt of
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the Astor Parties and their subsidiaries, taken as a whole, except in each case
as described in each Offering Memorandum and (iv) there has been no dividend or
distribution of any kind declared, paid or made by either Astor Party on any
class of its capital stock.
(p) Neither Astor Party nor any of its subsidiaries is in violation
of its charter or by-laws or in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any other agreement, indenture or instrument
material to the conduct of the business of such Astor Party and its
subsidiaries, taken as a whole, to which either Astor Party, or any of its
subsidiaries is a party or by which either Astor Party or any of its
subsidiaries or their respective property is bound.
(q) Except as set forth in each Offering Memorandum, there is (i) no
action, suit or proceeding before or by any court, arbitrator or governmental
agency, body or official, domestic or foreign, now pending, threatened or
contemplated to which either Astor Party or any of its subsidiaries is or may be
a party or to which the business or property of either Astor Party or any of its
subsidiaries is or may be subject, (ii) no statute, rule, regulation or order
that has been enacted, adopted or issued by any governmental agency or that has
been proposed by any governmental body and (iii) no injunction, restraining
order or order of any nature by a federal or state court of competent
jurisdiction has been or may be issued that, in the case of clause (i), (ii) and
(iii) above, is required to be disclosed in the Final Offering Memorandum in
order to make the statements therein not misleading and that is not so
disclosed, might adversely affect either Astor Party and its subsidiaries or the
property of either Astor Party or any of its subsidiaries or would interfere
with or adversely affect the issuance or marketability of the Notes or in any
manner draw into question the validity of any Operative Document. No contract,
agreement, instrument or document of a character required to be described in the
Final Offering Memorandum in order to make the statements therein not misleading
is not so described.
(r) Except as disclosed in each Offering Memorandum, neither Astor
Party nor any of its subsidiaries has violated any foreign, federal, state or
local law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws") nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any applicable
federal or state wages and hours laws nor any provisions of the Employee
Retirement Income Security Act or the rules and regulations promulgated
thereunder, which in each case could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), earnings, business,
operations or prospects of the Astor Parties and their subsidiaries, taken as a
whole.
(s) Each Astor Party and each of its subsidiaries (i) has all
permits, licenses, franchises and authorizations of governmental or regulatory
authorities
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<PAGE>
("permits"), including, without limitation, under any applicable Environmental
Laws, material to the ownership, leasing and operation of its properties and the
conduct of its business and (ii) has fulfilled and performed all of its material
obligations with respect to such permits and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or termination thereof
or results in any other material impairment of the rights of the holder of any
such permit. Except as described in each Offering Memorandum, such permits
contain no restrictions that are materially burdensome to either Astor Party or
any of its subsidiaries.
(t) The costs and liabilities associated with the effect of
Environmental Laws on the business, operations and properties of the Company and
its subsidiaries (including without limitation any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) would
not, singly or in the aggregate, have a material adverse effect on the condition
(financial or otherwise), earnings, business, operations or prospects of the
Company and its subsidiaries, taken as a whole.
(u) Except as otherwise set forth in each Offering Memorandum or such
as are not material to the business, prospects, financial condition or results
of operations of the Astor Parties and their subsidiaries, taken as a whole,
each Astor Party and each of its subsidiaries has good and marketable title,
free and clear of all liens, claims, encumbrances and restrictions (except liens
for taxes not yet due and payable, the lien of the UBS Credit Facility prior to
its termination on the Closing Date and thereafter the Senior Bank Facility) to
all property and assets described in each Offering Memorandum as being owned by
it. All leases to which the Company or any of its subsidiaries is a party are
valid and binding and no default has occurred or is continuing thereunder which
might result in any material adverse change in the condition (financial or
otherwise), earnings, business, operations or prospects of the Astor Parties and
their subsidiaries, taken as a whole, and the Astor Parties and their
subsidiaries enjoy peaceful and undisturbed possession under all such leases to
which any of them is a party as lessee with such exceptions as do not materially
interfere with the use made by such Astor Party or such subsidiary.
(v) There is (i) no significant unfair labor practice complaint
pending against either Astor Party or any of its subsidiaries or, to the best
knowledge of each Astor Party, threatened against any of them, before the
National Labor Relations Board or any state or local labor relations board, and
no significant grievance or more significant arbitration proceeding arising out
of or under any collective bargaining agreement is so pending against either
Astor Party or any of its subsidiaries or, to the best knowledge of each Astor
Party, threatened against any of them, and (ii) no significant strike, labor
dispute, slowdown or stoppage pending against either Astor Party or any of its
subsidiaries or, to the best knowledge of either Astor Party, threatened against
it or any of
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<PAGE>
its subsidiaries except for such actions specified in clause (i) or (ii) above,
which, singly or in the aggregate, could not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), earnings,
business, operations or prospects of each Astor Party and its subsidiaries,
taken as a whole.
(w) Each Astor Party and its subsidiaries owns or possesses, or can
acquire, or reasonably believes it can acquire, on reasonable terms, rights
adequate to the present operations of the businesses now operated by it under
the patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names presently employed by it in connection with the businesses now
operated by it, except to the extent that the failure to own, possess or acquire
such rights would not, singly or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), earnings, business, operations
or prospects of either Astor Party and its subsidiaries, taken as a whole, and,
neither Astor Party nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to any
of the foregoing.
(x) Neither Astor Party nor any of its subsidiaries has taken,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
any security of any Astor Party or any of its subsidiaries to facilitate the
sale or resale of the Notes.
(y) Neither Astor Party nor any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act") or (ii) a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(z) Each Astor Party and each of its subsidiaries maintains
reasonably adequate insurance.
(aa) The financial statements, together with related schedules and
notes forming part of each Offering Memorandum (and any amendment or supplement
thereto), present fairly the financial position, results of operations and
changes in financial position of the Guarantor and its subsidiaries on the basis
stated in each Offering Memorandum at the respective dates or for the respective
periods to which they apply; such statements and related schedules and notes
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set forth
in each Offering Memorandum (and any amendment or supplement thereto) is, in all
material
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<PAGE>
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the relevant entity.
(bb) Each Astor Party and each of its subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurance that
(1) transactions are executed in accordance with management's general or
specific authorizations; (2) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (3) access to assets
is permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(cc) The present fair salable value of the assets of each Astor Party
and its subsidiaries exceeds the amount that will be required to be paid on or
in respect of the existing debts and other liabilities (including contingent
liabilities) of such Astor Party and its subsidiaries as they become absolute
and matured. The assets of each Astor Party and its subsidiaries do not
constitute unreasonably small capital to carry out their businesses as conducted
or proposed to be conducted. Neither any Astor Party nor any of its
subsidiaries intends to, nor does such Astor Party believe that it or its
subsidiaries will, incur debts beyond its or their ability to pay such debts as
they mature. Upon consummation of the Transactions (as defined in the Final
Offering Memorandum) (including the issuance of the Notes), the present fair
salable value of the assets of the Company and its subsidiaries will exceed the
amount that will be required to be paid on or in respect of its existing debts
and other liabilities (including contingent liabilities) as they become absolute
and matured. The assets of the Company and its subsidiaries, upon the issuance
of the Notes, will not constitute unreasonably small capital to carry out its
businesses as now conducted, including the capital needs of the Company and its
subsidiaries, taking into account the projected capital requirements and capital
availability of the Company and its subsidiaries. No Astor Party (i) is
entering into the Transactions with the intent to hinder, delay, or defraud any
entity to which it is or will become indebted or (ii) will receive less than
reasonably equivalent value in exchange for entering into the Transactions.
(dd) There are no holders of securities of either Astor Party or its
subsidiaries who, by reason of the execution by any of the Astor Parties of this
Agreement or the consummation of the transactions contemplated hereby, have the
right to request or demand that such Astor Party or any of its subsidiaries
registers under the Securities Act securities held by them.
(ee) Except as disclosed in each Offering Memorandum, other than this
Agreement, there are no contracts, agreements or understandings between any
Astor Party or any of its subsidiaries and any person that would give rise to a
valid claim against such
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<PAGE>
Astor Party, its subsidiaries or the Initial Purchasers for a brokerage
commission, finder's fee or like payment in connection with the issuance,
purchase or sale of the Notes.
(ff) None of either Astor Party, any of its subsidiaries or any agent
thereof acting on the behalf of any of them has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale of the
Notes to violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part
220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of
the Board of Governors of the Federal Reserve System.
(gg) Each of Ernst & Young LLP, with respect to each Astor Party, and
KPMG Peat Marwick LLP, with respect to ABI, is an "independent public
accountant", as defined in the Securities Act.
(hh) Except as would not result, singly or in the aggregate, in a
material adverse effect on the condition (financial or otherwise), earnings,
business, operations or prospects of the Astor Parties and their subsidiaries,
taken as a whole, all tax returns required to be filed by each Astor Party and
its subsidiaries in all jurisdictions have been so filed and all taxes,
including withholding taxes, penalties and interest, assessments, fees and other
charges, due or claimed to be due from such entities or that are due and payable
have been paid, other than those being contested in good faith and for which
adequate reserves have been provided or those currently payable without penalty
or interest. Neither Astor Party knows of any material proposed additional tax
assessments against it or any of its subsidiaries.
(ii) There exist no conditions that would constitute a default (or an
event which with notice or the lapse of time, or both, would constitute a
default) under any of the Operative Documents or the Senior Bank Facility.
(jj) Each Astor Party and its subsidiaries have complied with all of
the provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida
statutes, and all regulations promulgated thereunder relating to issuers doing
business with the Government of Cuba or with any person or any affiliate located
in Cuba.
(kk) None of any Astor Party nor any Affiliate of any Astor Party has
directly, or through any agent, (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) the offering of which security is or will be integrated with the
sale of the Notes in a manner that would require the registration of the Notes
under the Securities Act or (ii) solicited any offer to buy or sell the Notes
by any form of general solicitation or general advertising (as those terms are
used in Regulation D) in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
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(ll) None of any Astor Party, its Affiliates or any person acting on
its or their behalf has engaged in any directed selling efforts (as that term is
defined in Regulation S) with respect to the Notes.
(mm) It is not necessary in connection with the offer, sale and
delivery of the Notes in the manner contemplated by this Agreement to register
the Notes under the Securities Act or to qualify the Indenture under the Trust
Indenture Act of 1939. The Notes satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
(nn) Neither Astor Party has taken and neither Astor Party will take,
directly or indirectly, any action prohibited by Rule 10b-6 of the Securities
Exchange Act of 1934, as amended.
(oo) Except as disclosed in each Offering Memorandum, there are no
business relationships or related party transactions which would be required to
be disclosed by Item 404 of Regulation S-K of the Securities and Exchange
Commission in a registration statement of each Astor Party becoming effective on
the date hereof.
6. INDEMNIFICATION. (a) Each Astor Party jointly and severally
agrees to indemnify and hold harmless each of the Initial Purchasers and each
person, if any, who controls each Initial Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and the
respective officers, directors, partners, employees, representatives and agents
of the Initial Purchasers (each an "Indemnified Person") from and against any
and all losses, claims, damages, liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in either
Offering Memorandum (as amended or supplemented if an Astor Party shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or omission (i) based
upon information relating to the Initial Purchasers furnished in writing to the
Company by any Initial Purchaser expressly for use therein or (ii) contained in
or omitted from the Preliminary Offering Memorandum and (x) such untrue
statement or omission was corrected in the Final Offering Memorandum, (y) a copy
of the Final Offering Memorandum (as then amended or supplemented) was required
by law to have been delivered by the Initial Purchaser seeking indemnification
and (z) a copy of the Final Offering Memorandum (as then amended or
supplemented) was not delivered by or on behalf of the Initial Purchaser to the
person asserting the claim or action. The Company shall notify the Initial
Purchasers promptly of the institution, threat or assertion of any claim,
proceeding (including governmental or regulatory investigation) or litigation in
connection with the matters addressed by this Agreement which involve any Astor
Party or an Indemnified Person.
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(b) If any action is brought against any Indemnified Person, based
upon either Offering Memorandum or any amendment or supplement thereto and with
respect to which indemnity may be sought against any Astor Party, such
Indemnified Person shall promptly notify such Astor Party in writing and such
Astor Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Person and payment of all
fees and expenses. Any Indemnified Person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Person unless (i) the employment of such counsel shall have been
specifically authorized in writing by such Astor Party, (ii) such Astor Party
shall have failed to assume the defense and employ counsel or (iii) the named
parties to any such action (including any impleaded parties) include both such
Indemnified Person and such Astor Party and such Indemnified Person shall have
been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to
such Astor Party (in which case such Astor Party shall not have the right to
assume the defense of such action on behalf of such Indemnified Person, it being
understood, however, that such Astor Party shall not, in connection with any one
such action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all such Indemnified Persons, which firm
shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, and that all such fees and expenses shall be reimbursed as they are
incurred).
(c) No Astor Party shall be liable for any settlement of any such
action effected without its written consent, but, if settled with the written
consent of such Astor Party, such Astor Party agrees to indemnify and hold
harmless any Indemnified Person from and against any loss or liability by reason
of such settlement. Notwithstanding the immediately preceding sentence, if in
any case where the fees and expenses of counsel are at the expense of the
indemnifying party and an Indemnified Person shall have requested the
indemnifying party to reimburse the Indemnified Person for such fees and
expenses of counsel as incurred, such indemnifying party agrees that it shall be
liable for any settlement of any action effected without its written consent if
(i) such settlement is entered into more than ten business days after the
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall have failed to reimburse the Indemnified Person in
accordance with such request for reimbursement prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.
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(d) Each Initial Purchaser agrees to indemnify and hold harmless the
Company, the Guarantor, each person controlling the Company or the Guarantor
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act and their respective officers, directors, partners, employees,
representatives and agents (the "Astor Indemnified Persons"), to the same extent
as the foregoing indemnity from the Astor Parties to such Initial Purchaser but
only with reference to information relating to such Initial Purchaser furnished
in writing by such Initial Purchaser to the Company, expressly for use in
either Offering Memorandum. If any action shall be brought against any Astor
Indemnified Person based on either Offering Memorandum and in respect of which
indemnity may be sought against any Initial Purchaser, such Initial Purchaser
shall have the rights and duties given to the Astor Parties (except that if the
Astor Parties shall have assumed the defense thereof, such Initial Purchaser
shall not be required to do so, but may employ separate counsel therein and
participate in the defense thereof but the fees and expenses of such counsel
shall be at such Initial Purchaser's expense), and the Astor Indemnified Persons
shall have the rights and duties given to the Initial Purchasers by Section 6(b)
hereof.
(e) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and the indemnified party on the other hand from the offering of the Notes or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying parties and the indemnified party in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Astor Parties, on the one
hand, and the Initial Purchasers, on the other hand, shall be deemed to be in
the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Astor Parties bear to the total underwriting
discounts and commissions received by the Initial Purchasers, in each case as
set forth on the cover page of the Final Offering Memorandum. The relative
fault of the Astor Parties, on the one hand, and the Initial Purchasers, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Astor Parties or an Initial
Purchaser and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Astor Parties and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 6(e) were
determined by pro rata
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allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, no Initial Purchaser shall be
required to contribute any amount in excess of the amount by which the total
underwriting discount applicable to the Notes purchased by such Initial
Purchaser exceeds the amount of any damages which such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this subsection are several and in proportion to the respective
amount of Notes purchased by each Initial Purchaser hereunder and not joint.
(f) Each of the Astor Parties hereby designates National Registered
Agents, Inc. as its authorized agent upon whom process may be served in any
action, suit or proceeding that may be instituted in any state or federal court
in the State of New York by an Indemnified Person asserting a claim for
indemnification or contribution under or pursuant to this Section. Each Astor
Party accepts the jurisdiction of such court in such action and waives, to the
fullest extent permitted by applicable law, any defense based upon lack of
personal jurisdiction or venue. A copy of any such process shall be sent or
given to such Astor Party at the address for notices specified in Section 9
hereof.
The indemnity and contribution agreements contained in this Section
are in addition to any liability which the indemnifying persons may otherwise
have to the indemnified persons referred to above.
7. CONDITIONS OF SEVERAL OBLIGATIONS OF THE INITIAL PURCHASERS. The
several obligations of the Initial Purchasers under this Agreement are subject
to the satisfaction of each of the following conditions:
(a) All the representations and warranties of each Astor Party
contained in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date and no
certificate, opinion, written statement or letter furnished pursuant to this
Section 7 to the Initial Purchasers or to their counsel shall contain any
misstatement or omission . The Astor Parties shall have performed or complied
with all of the agreements herein contained and required to be performed or
complied with by them at or prior to the Closing Date.
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(b) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have been any downgrading, nor shall
any notice have been given of any intended or potential downgrading, or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any securities of the Company or any of
its subsidiaries by any "nationally recognized statistical rating organization",
as such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
(c) (i) Since the date of the latest balance sheet included in the
Preliminary Offering Memorandum, there shall not have been any material adverse
change, or any development involving a prospective material adverse change, in
the condition (financial or otherwise), earnings, business, operations or
prospects of the Astor Parties and their subsidiaries, taken as a whole,(ii)
since the date of the latest balance sheet included in the Preliminary Offering
Memorandum there shall not have been any material change, or any development
involving a prospective material adverse change, in the capital stock or in the
long-term debt of either Astor Party and its subsidiaries from that set forth in
the Preliminary Offering Memorandum and no dividend or distribution of any kind
shall have been declared, paid or made by either Astor Party on any class of its
capital stock,(iii) neither any Astor Party nor any of its subsidiaries shall
have incurred any liabilities or obligations, direct or contingent, or entered
into any transactions, not in the ordinary course of business, that are
material, individually or in the aggregate, to the Astor Parties and their
subsidiaries, taken as a whole, other than those reflected in the Preliminary
Offering Memorandum and (iv) on the Closing Date the Initial Purchasers shall
have received a certificate dated the Closing Date, signed by the President and
the Chief Financial Officer of the Company, confirming the matters set forth in
paragraphs (a), (b) and (c) of this Section.
(d) No action shall have been taken and no statute, rule or
regulation or order shall have been enacted, adopted or issued by any
governmental agency that would as of the Closing Date prevent the issuance of
the Notes. No injunction, restraining order or order of any nature by a federal
or state court of competent jurisdiction shall have been issued as of the
Closing Date that would prevent or interfere with the issuance of the Notes. On
the Closing Date, no action, suit or proceeding shall be pending against or
affecting or, to the best knowledge of either Astor Party or any of its
subsidiaries, threatened against, either Astor Party or any of its subsidiaries
before any court or arbitrator or any governmental body, agency or official,
except as disclosed in the Final Offering Memorandum and except for such
actions, suits or proceedings that if adversely determined would not, either
individually or in the aggregate, have a material adverse effect on the issuance
or marketability of the Notes or would not, individually or in the aggregate,
have a material adverse effect on the condition (financial or otherwise),
earnings, business, operations or prospects of the Astor Parties and their
subsidiaries, taken as a whole, or would not in any manner draw into question
the validity of any Operative Document.
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<PAGE>
(e) The Initial Purchasers shall have received on the Closing Date an
opinion (satisfactory to the Initial Purchasers and counsel to the Initial
Purchasers), dated the Closing Date, of Gibson, Dunn & Crutcher, counsel for the
Company, substantially to the effect that:
(i) Each of the Astor Parties and ABI Corporation is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has the requisite corporate power and
corporate authority to own, lease and operate its properties and to conduct
its business as described in the Final Offering Memorandum. ABI 1 is a
corporation duly domesticated, validly existing and in good standing under
the laws of the State of Delaware and has the requisite corporate power and
corporate authority to own, lease and operate its properties and to conduct
its business as described in the Final Offering Memorandum. Each of the
Astor Parties, ABI Corporation and ABI 1 is duly qualified to do business
as a foreign corporation in good standing in all other jurisdictions
identified to such counsel by the Company in an officers' certificate as
being jurisdictions in which the nature of the property owned or leased by
such person or the nature of the business transacted by such person makes
such qualification necessary, except where the failure to be so qualified
would not have a material adverse effect on the business, operations or
financial condition of the Astor Parties and their subsidiaries, taken as a
whole (a "Material Adverse Effect").
(ii) Each Astor Party has the requisite corporate power and
corporate authority to execute, deliver and perform its obligations under
the Operative Documents.
(iii) Each of the Indenture and the Registration Rights Agreement
has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(iv) Each of the Indenture and the Registration Rights Agreement
has been duly authorized, executed and delivered by the Guarantor and is a
valid and legally binding agreement of the Guarantor, enforceable against
the Guarantor in accordance with its terms.
(v) This Agreement has been duly authorized, executed and
delivered by each Astor Party.
(vi) The Merger Agreement has been duly authorized, executed and
delivered by the Company.
22
<PAGE>
(vii) The Notes and the Guarantees endorsed thereon have been duly
authorized and executed by the Company and the Guarantor, respectively.
When the Notes are authenticated in accordance with the terms of the
Indenture and delivered against payment therefor in accordance with the
terms hereof, the Notes and the Guarantees endorsed thereon will be
entitled to the benefits of the Indenture and will be the valid and legally
binding obligations of the Company and the Guarantor, respectively,
enforceable against the Company and the Guarantor, respectively, in
accordance with their respective terms,.
(viii) The New Notes and the Guarantees to be endorsed thereon have
been duly authorized by the Company and the Guarantor, respectively. When
the New Notes are duly executed and delivered and authenticated in
accordance with the terms of the Indenture, the Guarantees endorsed on the
New Notes have been duly executed and delivered by the Guarantor and the
New Notes have been exchanged for the Notes in the manner contemplated by
the Registration Rights Agreement and the Indenture, the New Notes and the
Guarantees endorsed thereon will be entitled to the benefits of the
Indenture and will be valid and legally binding obligations of the Company
and the Guarantor, respectively, enforceable against the Company and the
Guarantor, respectively, in accordance with their respective terms.
(ix) The Indenture, the Registration Rights Agreement, the Notes
and the Guarantee conform in all material respects to the descriptions
thereof contained in the Final Offering Memorandum.
(x) The Initial Purchasers may rely on the opinion of such
counsel delivered to the lenders under the Senior Bank Facility as if such
opinion were addressed to them.
(xi) The statements (other than financial, statistical and
accounting data) under the captions "Executive Compensation - Management
Compensation and Employment Agreements", "- 1995 Stock Incentive Plan of
Parent", "- 1997 Incentive Bonus Program", "- 1997 Management Bonus
Program", "- Retirement Savings Plans", "- Indemnification of Directors and
Officers", "Acquisition of ADCO", "Certain Transactions", "Senior Bank
Facility," the summary of the key elements of the Reorganization Plan under
"Prior Reorganization", "Business - Legal Proceedings", "Description of
Notes", "Plan of Distribution", "ERISA Considerations" and "Notice to
Investors" in the Final Offering Memorandum, insofar as such statements
constitute a summary of legal matters, documents or proceedings referred to
therein, fairly present the information required with respect to such legal
matters, documents and proceedings in order to make the statements therein
not materially misleading.
23
<PAGE>
(xii) Assuming the accuracy of the representations and warranties
of the Company contained in paragraphs (kk) and (ll) of Section 5 hereof
and of the Initial Purchasers contained in Section 4 hereof and assuming
compliance with the representations and covenants of the Company contained
in Section 3 hereof and with the representations and covenants referred to
under the captions "Plan of Distribution" and "Notice to Investors" in the
Final Offering Memorandum, the issuance and sale of the Notes to the
Initial Purchasers and the initial offering, resale and delivery of the
Notes by the Initial Purchasers, in each case in the manner contemplated in
the Final Offering Memorandum and this Agreement, are exempt from the
registration requirements of the Securities Act of 1933, as amended,
provided that no opinion need be expressed as to any subsequent resales of
the Notes.
(xiii) (i) The shares of issued and outstanding capital stock of
ABI Corporation have been duly authorized and validly issued and are fully
paid and non-assessable and owned of record and, to the knowledge of such
counsel, beneficially by ABI 1, to the knowledge of such counsel, free and
clear of any lien, security interest, encumbrance or similar arrangement,
except the lien of the UBS Credit Facility immediately prior to its
termination on the Closing Date and the lien of the Senior Bank Facility
upon execution and delivery thereof. (ii) The shares of issued and
outstanding common stock of ABI 1 have been duly authorized and validly
issued and are fully paid and non-assessable and owned of record and, to
the knowledge of such counsel, beneficially by the Company (except for one
share owned by Richard K. Roeder), to the knowledge of such counsel, free
and clear of any lien, security interest, encumbrance or similar
arrangement, except the lien of the UBS Credit Facility immediately prior
to its termination on the Closing Date and the lien of the Senior Bank
Facility upon execution and delivery thereof. (iii) The shares of issued
and outstanding voting preferred stock of ABI 1 have been duly authorized
and validly issued and are fully paid and non-assessable and owned of
record and, to the knowledge of such counsel, beneficially by the
Guarantor, to the knowledge of such counsel, free and clear of any lien,
security interest, encumbrance or similar arrangement, except the lien of
the UBS Credit Facility immediately prior to its termination on the Closing
Date and the lien of the Senior Bank Facility upon execution and delivery
thereof.
(xiv) Neither Astor Party is an "investment company" or a company
"controlled" by an investment company within the meaning of the Investment
Company Act of 1940, as amended.
(xv) To the knowledge of such counsel, no authorization,
approval, consent or order of, or filing with, any court or governmental
body or agency of the United States or the States of New York or Delaware
is required for the issuance and sale of the Notes pursuant hereto, except
(i) such as have been
24
<PAGE>
obtained or completed and (ii) such authorizations, approvals, consents,
orders or filings as may be required under state securities or Blue Sky
laws or regulations.
(xvi) The execution and delivery of the Operative Documents, the
issuance, sale and delivery of the Notes and the performance by the Astor
Parties of their respective obligations under the Operative Documents will
not (i) result in a breach or violation of the Certificate of Incorporation
or Bylaws of the Company or the Guarantor, as applicable, (ii) to the
knowledge of such counsel, constitute a default under any statute, rule or
regulation which default would have a Material Adverse Effect or would have
an adverse effect on the Company's or the Guarantor's ability to duly and
timely perform their obligations under the Operative Documents, (iii)
constitute a default under any order, judgment or decree identified to such
counsel by the Company in an officers' certificate of any federal or state
government to which either Astor Party or ABI Corporation or ABI 1 is bound
or to which any of their properties is subject or (iv) constitute a default
under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument identified to such counsel by the Company in an
officers' certificate as being a material instrument to which either Astor
Party is a party or by which either Astor Party is bound or to which
any of their properties is subject.
(xvii) To the knowledge of such counsel without search of court or
agency records, there is no action, suit or proceeding before any court or
governmental agency, domestic or foreign, now pending or threatened to
which either Astor Party, ABI Corporation or ABI 1 is or may be a party or
to which the business or property of either Astor Party, ABI Corporation or
ABI 1 is subject, or any contract or other document that would be required
to be described in the Final Offering Memorandum if the Final Offering
Memorandum were a registration statement on Form S-1 under the Securities
Act that is not so described in the Final Offering Memorandum.
(xviii) To the knowledge of such counsel, no holder of any security
of either Astor Party has any right to require the Company or the
Guarantor, as applicable, to register such security under the Securities
Act other than rights pursuant to the Registration Rights Agreement and
that certain Stockholders Agreement dated as of June 27, 1995 among Astor
Holdings, Inc. and certain of its stockholders, optionholders and
warrantholders.
In addition, such counsel shall advise that, in the course of the preparation by
the Company of the Offering Memorandum, such counsel have participated in
conferences and discussions with officers and other representatives of the
Company and others at which the contents of the Final Offering Memorandum were
discussed. Although such counsel have not independently verified, are not
passing upon and do not assume
25
<PAGE>
responsibility for the accuracy, completeness or fairness of the statements and
information included in the Final Offering Memorandum, no facts have come to
such counsel's attention which cause such counsel to believe that the Final
Offering Memorandum (except for any financial statements and notes and schedules
thereto, pro forma financial information or other financial, statistical or
accounting data contained or incorporated by reference therein, as to all of
which such counsel make no comment), as of the date thereof and as of the
Closing Date, contained any untrue statement of a material fact or omitted to
state any material fact necessary to make the statements made therein, in light
of the circumstances under which they are made, not misleading.
(f) The Initial Purchasers shall have received on the Closing Date an
opinion (satisfactory to the Initial Purchasers and counsel of the Initial
Purchasers) dated the Closing Date, of Allen & Overy, special U.K. counsel to
the Company, substantially to the effect that:
(i) Each of ABI 1, ABI 2 and Astor Stag Limited ("Astor Stag" and,
collectively, the "U.K. Subsidiaries") is a company duly incorporated under
the laws of England and, in reliance on the searches of such counsel
specified in their opinion, not in liquidation. Each U.K. Subsidiary has
the power to carry out the objects set out in its memorandum (a copy of
which is attached to such opinion).
(ii) The share register of ABI 1, ABI 2 and Astor Stag show that: (A)
the Company, the Guarantor and Richard K. Roeder are the registered owners
of all the shares of ABI 1, (B) ABI 1 and Richard K. Roeder are the
registered owners of all the shares of ABI 2, and (C) ABI 2 is the
registered owner of all the shares of Astor Stag. The share registers do
not show beneficial ownership of those shares. There are not fixed or
floating charges shown over such shares on such counsel's search of ABI 1's
or ABI 2's mortgage register at the Companies Registry (other than a fixed
and floating charged dated 16th June in favor of Union Bank of
Switzerland), but that search would not necessarily show a fixed charge as
fixed charges over shares are not generally registerable in England and
Wales.
In rendering such opinion, such counsel may rely as to matters of fact (but not
as to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and the U.K. Subsidiaries and public
officials.
(g) The Initial Purchasers shall have received on the Closing Date a
copy of the opinion delivered to the Trustee pursuant to Section 14.4 of the
Indenture and an appropriate letter entitling the Initial Purchasers to rely on
such opinion.
(h) The Initial Purchasers shall have received on the Closing Date a
copy of the opinion, dated the Closing Date, of Morgan, Lewis & Bockius LLP,
counsel for ADCO, and delivered to the Company pursuant to the Merger Agreement
and an
26
<PAGE>
appropriate letter of such counsel entitling the Initial Purchasers to rely on
such portion of such opinion as the Initial Purchasers shall request.
(i) All proceedings taken in connection with the sale of the Notes as
herein contemplated shall be reasonably satisfactory in form and substance to
the Initial Purchasers and to Davis Polk & Wardwell, counsel for the Initial
Purchasers, and the Initial Purchasers shall have received on the Closing Date
an opinion, dated the Closing Date, of Davis Polk & Wardwell in form and
substance reasonably satisfactory to the Initial Purchasers.
(j) At the time this Agreement is executed and delivered by the Astor
Parties and on the Closing Date, the Initial Purchasers shall have received
letters, substantially in the form previously approved by the Initial
Purchasers, from Ernst & Young LLP and KPMG, independent public accountants,
with respect to the financial statements and certain financial information
contained in each Offering Memorandum.
(k) The Initial Purchasers shall have received on or before the
Closing Date a copy of a letter from each of Standard & Poor's Ratings Group and
Moody's Investors Services assigning to the Notes ratings of B- and B3,
respectively. Such ratings shall have been confirmed on the Closing Date by the
applicable rating agency and neither of such rating agencies shall have
announced that it has its rating of the Notes under surveillance or review.
(l) The Notes shall be eligible for trading in the PORTAL market.
(m) Counsel for the Initial Purchasers shall have been furnished with
such documents as they may reasonably require for the purpose of enabling them
to review or pass upon the matters referred to in this Section 7 in order to
evidence the accuracy, completeness or satisfaction in all material respects of
any of the representations, warranties or conditions herein contained.
(n) Each Operative Document shall have been executed and delivered by
each party thereto and a true and complete copy of each thereof shall have been
delivered to the Initial Purchasers.
(o) No Astor Party shall have failed at or prior to the Closing Date
to perform or comply with any of the agreements contained in any Operative
Document and required to be performed or complied with by such Astor Party at or
prior to the Closing Date.
(p) The Merger Agreement shall be in full force and effect on the
Closing Date, and the Merger shall have become effective as of the Closing Date.
No waiver, amendment or modification of any provision of the Merger Agreement
shall have
27
<PAGE>
occurred other than any waiver, amendment or modification which in the Initial
Purchasers' judgment does not make it impracticable to market the Notes on the
terms and in the manner contemplated in the Final Offering Memorandum.
(q) The Senior Bank Facility shall be in full force and effect on the
Closing Date, and prior to or contemporaneously with the Closing Date, each of
the actions contemplated or required to occur and each of the conditions
contemplated or required to be satisfied on or prior to the closing of the
Senior Bank Facility, shall have occurred or been satisfied and no waiver,
amendment or modification of any provision of the Senior Bank Facility shall
have occurred, other than any such action or condition or any such waiver,
amendment or modification which in the Initial Purchasers' judgment does not
make it impracticable to market the Notes on the terms and in the manner
contemplated in the Final Offering Memorandum; and the Company shall have
received the proceeds of the borrowings under the Senior Bank Facility prior to
or simultaneously with the closing hereunder in the manner described in the
Final Offering Memorandum.
All opinions, certificates, letters and other documents required by
this Section to be delivered by any Astor Party will be in compliance with the
provisions thereof only if they are reasonably satisfactory in form and
substance to the Initial Purchasers. The Company will furnish the Initial
Purchasers with such conformed copies of such opinions, certificates, letters
and other documents as it shall reasonably request.
8. TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date by the Initial Purchasers by notice to the Company if any of
the following has occurred:(i) any Astor Party shall have failed, refused or
been unable to perform in any material respect any agreement on its part then to
be performed under any Operative Document,(ii) since the respective dates as of
which information is given in either Offering Memorandum, any adverse change in
the condition (financial or otherwise), earnings, business, operations or
prospects of the Astor Parties or their subsidiaries, taken as a whole, whether
or not arising in the ordinary course of business, which would, in the Initial
Purchasers' judgment, make it impracticable to market the Notes on the terms and
in the manner contemplated in the Final Offering Memorandum,(iii) any outbreak
or escalation of hostilities or other national or international calamity or
crisis or change in economic conditions or in the financial markets of the
United States or elsewhere that, in the Initial Purchasers' judgment, is
material and adverse and would, in the Initial Purchasers' judgment, make it
impracticable to market the Notes on the terms and in the manner contemplated in
the Final Offering Memorandum,(iv) the suspension or material limitation of
trading in securities on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market System or limitation on prices for
securities on any such exchange or national market system,(v) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which in
the Initial Purchasers' opinion materially and adversely affects, or will
materially and adversely affect, the
28
<PAGE>
condition (financial or otherwise), earnings, business, operations or prospects
of the Astor Parties and their subsidiaries, taken as a whole,(vi) the
declaration of a banking moratorium by either federal or New York State
authorities or (vii) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
Initial Purchasers' opinion has a material adverse effect on the financial
markets in the United States.
Notwithstanding any termination of this Agreement, the Astor Parties
shall be liable for all expenses which it has agreed to pay pursuant to Section
3 hereof. If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 3 hereof.
9. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to any Astor Party, to 8251 Six
Forks Road, Raleigh, North Carolina 27615, Attention: David E. Hawkins, Chief
Administrative Officer, (b) if to the Initial Purchasers, to Donaldson, Lufkin &
Jenrette Securities Corporation, 277 Park Avenue, New York, New York 10172,
Attention: Patrick Fallon, High Yield Group, or in any case to such other
address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Astor Parties, and their respective
officers and directors and of the Initial Purchasers set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Notes, regardless of (i) any
investigation, or statement as to the results thereof, made by the Initial
Purchasers or on the Initial Purchasers behalf or by or on behalf of either
Astor Party or its subsidiaries, their respective officers or directors or any
controlling person of either Astor Party or its subsidiaries,(ii) acceptance of
and payment for the Notes hereunder or (iii) termination of this Agreement.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Astor Parties, the
Initial Purchasers, any directors and officers or controlling persons referred
to herein and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include a purchaser of any of the Notes from the Initial Purchasers merely
because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
29
<PAGE>
30
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Astor Parties and the Initial Purchasers.
Very truly yours,
ASTOR CORPORATION
By: /s/ David E. Hawkins
---------------------------
Name:
Title:
ASTOR HOLDINGS II, INC.
By: /s/ David E. Hawkins
---------------------------
Name:
Title:
Accepted and agreed to as of
the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
Acting severally on behalf of
themselves and the several
Initial Purchasers named in
Schedule I hereto.
By: /s/ Patrick J. Fallon
--------------------------------
Name:
Title:
CHASE SECURITIES INC.
Acting severally on behalf of
themselves and the several
Initial Purchasers named in
Schedule I hereto.
By: /s/ Christopher M. Linnemon
--------------------------------
Name:
Title:
31
<PAGE>
SCHEDULE I
Principal Amount of Notes
Initial Purchasers to be Purchased
------------------ -------------------------
Donaldson, Lufkin & Jenrette
Securities Corporation $ 68,200,000
Chase Securities Inc. 41,800,000
-----------
Total $110,000,000
<PAGE>
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE COURT ORDERED RESTATED
CERTIFICATE OF "PETROWAX PA INC.", CHANGING ITS NAME FROM "PETROWAX PA INC." TO
"PETROWAX PA, INC.", FILED IN THIS OFFICE ON THE SIXTEENTH DAY OF JUNE, A.D.
1995, AT 9 O'CLOCK A.M.
[SEAL]
/s/ Edward J. Freel
[SEAL] -----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
AUTHENTICATION:
2215409 8100 8127111
DATE:
960284228 09-30-96
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/16/1995
950134360 - 2215409
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PETROWAX PA INC.
The undersigned, for the purpose of amending and restating the
Certificate of Incorporation of Petrowax PA Inc., a Delaware corporation,
(the "Corporation"), do hereby certify that:
1. The date of filing the Corporation's original Certificate of
Incorporation with the Secretary of State of the State of Delaware was December
6, 1989. A Certificate of Amendment to the original Certificate of Amendment
was filed on April 26, 1990. A Restated Certificate of Amendment was filed on
June 3, 1991.
2. This Amended and Restated Certificate of Incorporation was duly
adopted in accordance with the provisions of Sections 242, 245 and 303 of the
General Corporation Law of the State of Delaware.
3. The provision for the making of this Amended and Restated Certificate
of Incorporation is contained in the Order entered by the Honorable Helen Balick
confirming the Second Amended Plan of Reorganization of Petrowax PA Inc. dated
May 19, 1995.
4. The Certificate of Incorporation of the Corporation is hereby amended
and restated in its entirety as follows:
ARTICLE I.
NAME OF CORPORATION
The name of this corporation is:
Petrowax PA, Inc.
ARTICLE II.
REGISTERED OFFICE
The address of the registered office of the corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle,
and the name of its registered agent at that address is The Corporation Trust
Company.
ARTICLE III.
PURPOSE
<PAGE>
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware ("DGCL").
ARTICLE IV.
AUTHORIZED CAPITAL STOCK
(a) AUTHORIZED CAPITAL STOCK. All shares of the Corporation issued on or
prior to May 19, 1995 have been cancelled pursuant to the Second Amended Plan of
Reorganization of Petrowax PA, Inc. dated April 24, 1995, as amended from time
to time. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is two hundred thousand (200,000),
consisting of (i) one hundred thousand (100,000) shares of common stock, par
value $0.001 per share (the "Common Stock"), and (ii) one hundred thousand
(100,000) shares of preferred stock, par value $0.001 per share (the "Preferred
Stock"), of which Preferred Stock, ten thousand (10,000) shares shall be
designated Series A Preferred Stock (the "Series A Preferred Stock"). The
Corporation shall not issue any shares of non-voting stock.
(b) DESIGNATIONS REGARDING COMMON STOCK. The statement of the
designations and the powers, preferences and rights and the qualifications,
limitations and restrictions of the Common Stock are as follows:
(1) VOTING RIGHTS OF COMMON STOCK. All shares of Common Stock shall
have identical terms and characteristics. For all matters on which a holder of
Common Stock is entitled to vote, each each holder of Common Stock shall be
entitled to one (1) vote for each share standing in each holder's name on the
books of the Corporation.
(2) DIVIDENDS ON COMMON STOCK. The holders of Common Stock shall be
entitled to receive, and shall share equally share for share, when permitted by
the Amended and Restated Certificate of Incorporation and as lawfully declared
by the Board of Directors, out of the funds of the Corporation legally available
therefor, dividends or distributions payable in cash, in property or in
securities of the Corporation.
(c) DESIGNATIONS REGARDING PREFERRED STOCK. The statement of the
designations and the powers, preferences and rights and the qualifications,
limitations and restrictions of the Preferred Stock are as follows:
(1) VOTING RIGHTS OF PREFERRED STOCK. For all matters on which a
holder of Preferred Stock is entitled to vote, each such holder of Preferred
Stock shall be entitled to one (1) vote for each share standing in such holder's
name on the books of the Corporation.
<PAGE>
(2) DIVIDENDS ON PREFERRED STOCK. The holders of Preferred Stock
shall be entitled to receive, and the holders of each series thereof shall share
equally share for share, when permitted by the Amended and Restated Certificate
of Incorporation and as lawfully declared by the Board of Directors, out of the
funds of the Corporation legally available therefor, dividends or distributions
payable in cash, in property or in securities of the Corporation.
(d) DESIGNATIONS REGARDING SERIES A PREFERRED STOCK. The statement of
the designations and the powers, preferences and rights and the qualifications,
limitations and restrictions of the Series A Preferred Stock are as follows:
(1) DESIGNATION, ISSUANCE AND STATED VALUE OF SERIES A PREFERRED
STOCK. The designation of the series of Preferred Stock shall be "Series A
Preferred Stock." The number of shares of Series A Preferred Stock issuable
hereunder shall be ten thousand (10,000). The shares of Series A Preferred
Stock shall be issued by the Corporation for their Stated Value (as hereinafter
defined), in such amounts, at such times and to such persons as shall be
specified by the Corporation's Board of Directors, from time to time. For the
purposes hereof, the "stated value" of each share of Series A Preferred Stock
(regardless of its par value) shall be $7,500 per share, which Stated Value
shall be proportionately increased, in the event of any stock consolidation, or
decreased, in the event of any stock split, of the outstanding shares of Series
A Preferred Stock. All monetary amounts hereunder shall be calculated and paid
in U.S. dollars.
(2) VOTING RIGHTS OF SERIES A PREFERRED STOCk. For all matters on
which holders of Common Stock are entitled to vote, each holder of Series A
Preferred Stock shall be entitled to one (1) vote for each share standing in
such holder's name on the books of the Corporation.
(3) RANK OF SERIES A PREFERRED STOCK. The Series A Preferred Stock
shall, with respect to dividends and rights on liquidation, winding up and
dissolution, rank senior (a) to all classes and series of Common Stock of the
Corporation and (b) to all other series and classes of Preferred Stock of the
Corporation now or hereafter authorized, issued or outstanding (all securities
referred to in clauses (a) and (b) of this subsection being hereafter
collectively referred to as the "Junior Securities"), other than the
Corporation's "Senior Securities" and "Parity Securities." For the purposes
hereof, "Senior Securities" shall mean such series and classes of the Preferred
Stock of the Corporation as shall be designated as senior to the Series A
Preferred Stock. For purposes hereof, "Parity Securities" shall mean such
series and clauses of the Preferred Stock of the Corporation as shall be
designated as ranking on a parity with the Series A Preferred Stock. The
Corporation shall not issue any series or class of stock ranking
<PAGE>
senior to or on a parity with the Series A Preferred Stock without the
affirmative vote or consent of a majority of the outstanding shares of the
Series A Preferred Stock. Once any share of Series A Preferred Stock is issued,
the Corporation may not purchase or otherwise acquire, or pay any dividends or
other distributions (other than in kind) on, any shares of Junior Securities
unless, at the time of such purchase or other acquisition, all dividends on the
Series A Preferred Stock have been paid in full or declared and set apart for
payment through the next succeeding dividend payment.
(4) DIVIDENDS ON SERIES A PREFERRED STOCK.
(i) AMOUNT. The Corporation shall pay, when, as and if declared
by the Board of Directors of the Corporation, out of funds legally available
therefor, cash dividends on Series A Preferred Stock at a rate per annum equal
to the fair market rate on the date of issuance, as determined by the Board of
Directors and set forth in the Certificate of Designations for such series.
Such dividends shall be payable quarterly in arrears on the last day of [MARCH.
JUNE, SEPTEMBER, AND DECEMBER], commencing [ ], 1995 (the "Dividend Payment
Dates") except that if any Dividend Payment Date is not a business day in the
State of Delaware, then such quarterly dividend shall be payable on the day
which is the next succeeding business day in such State and such next
succeeding business day shall be the Dividend Payment Date. Such dividends
shall be paid to the holders of record at the close of business on the date
specified by the Board of Directors of the Corporation at the time such dividend
in declared; PROVIDED, HOWEVER, that such record date shall not be more than
sixty (60) days prior to the respective Dividend Payment Date. Each of such
quarterly dividends shall be fully cumulative, to the extent not paid, and shall
accrue (whether or not earned or declared) on a daily basis commencing with the
date of issue of each such share.
(ii) PAYMENT OF ACCUMULATED DIVIDENDS. Accumulated dividends not
paid on prior Dividend Payment Dates may be declared by the Board of Directors
and paid to the holders of record of outstanding shares of Series A Preferred
Stock as their name shall appear on the stock register of the Corporation on a
record date to be established by the Board of Directors, which record date shall
not be more than sixty (60) nor less than thirty (30) days preceding the date of
payment, whether or not such date is a Dividend Payment Date.
<PAGE>
(iii) RESTRICTIONS ON PAYMENT OF DIVIDENDS. Notwithstanding
anything contained herein to the contrary, no dividend payments on shares of
Series A Preferred Stock shall be declared by the Board of Directors or paid or
set apart for payment by the Corporation: (i) unless, prior to or concurrently
with such declaration, payment or setting apart, all accrued and unpaid
dividends, if any, on shares of Senior Securities shall have been paid in full,
or declared and set apart for payment through the dividend payment period with
respect to such Senior Securities which next precedes or coincides with the
Dividend Payment Date; or (ii) at any time as such declaration, payment or
setting apart is prohibited by the terms and provisions of any Senior
Securities; or (iii) at any time as such declaration, payment or setting apart
is prohibited by the DGCL; or (iv) at any time as the terms and provisions of
any contract or other agreement of the Corporation or any of its subsidiaries
entered into or assumed providing financing (including acquisition financing) or
working capital to the Corporation or any of its subsidiaries (whether or not
entered into prior to, at or after the issuance of the Series A Preferred Stock)
prohibits such declaration, payment or setting apart for payment or provides
that such declaration, payment or setting apart for payment would constitute a
breach thereof or a default hereunder.
(iv) DEFAULT IN THE PAYMENT OF DIVIDENDS. If and whenever
dividends payable on shares of Series A Preferred Stock as provided in this
Section 3 hereof shall be in arrears and unpaid, then the number of directors
constituting the Board of Directors of the Corporation shall, without further
action, be increased by one (1) and the holders of Series A Preferred Stock
shall have the exclusive right, voting separately as a series, to elect one (1)
additional director of the Corporation to fill such newly created directorship
at each meeting of stockholders held for the purpose of electing directors.
(5) LIQUIDATION PREFERENCE OF SERIES A PREFERRED STOCK.
(i) LIQUIDATION PREFERENCE. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of shares of Series A Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders, whether such assets are capital or surplus
and whether or not any dividends are declared, an amount equal to the Stated
Value per share, plus an amount equal to all accrued but unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding up (the
"Liquidation Preference"), before any payment or asset distribution may be
made to the holders of the Junior Securities. If the assets of the
Corporation are not sufficient to pay in full the liquidation payments
payable to the holders of the outstanding shares of Series A Preferred Stock
and any Parity Securities, then the holders of all such shares shall share
ratably in such distributions of assets in accordance with the amount that
would be payable on such distribution if the
<PAGE>
amounts to which the holders of outstanding shares of Series A Preferred Stock
and the holders of such Parity Securities were paid in full. After payment of
the full amount of the Liquidation Preference to which each holder of the
outstanding Series A Preferred Stock is entitled, such holders will not be
entitled to any further participation in any distribution of assets by the
Corporation.
(ii) EVENTS NOT CONSTITUTING LIQUIDATION. For the purposes of
this Section 5, neither the voluntary sale, conveyance, exchange, transfer or
lease (for cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Corporation nor the
consolidation or merger of the Corporation with or into any other corporation
shall be deemed to be a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, provided that in each case effective provision is
made either in the certificate of incorporation of the resulting or surviving
corporation or otherwise for the protection of the rights of the holders of
Series A Preferred Stock.
(6) REDEMPTION OF SERIES A PREFERRED STOCK.
(i) REDEMPTION. Subject to the restrictions otherwise set forth in
this Section 6, the Corporation may, upon the resolution of the Board of
Directors, at any time or from time to time, in whole or in part, redeem the
shares of Series A Preferred Stock at the time outstanding, upon notice given
and on a date as specified in such notice. In the event that fewer than all of
the outstanding shares of Series A Preferred Stock are to be redeemed pursuant
to this Section 6, the number of shares to be redeemed shall be determined by
the Board of Directors at its sole option and shall be redeemed pro rata among
all holders of the Series A Preferred Stock.
(ii) NOTICE. Notice of redemption shall be mailed by the
Corporation by first class mail, postage prepaid, not less than thirty (30)
days nor more than sixty (60) days prior to the redemption date addressed to
the holders of record of the shares to be redeemed at their respective most
recent addresses as they shall appear on the books of the Corporation,
PROVIDED, HOWEVER, that the failure to give such notice or any defect therein
or in the mailing thereof shall not affect the validity of the redemption of
any shares so to be redeemed except as to the holder to whom the Corporation
has failed to give such notice or except as to the holder to whom such notice
was defective. Each such notice shall state: (i) the redemption date; (ii)
that shares of Series A Preferred Stock are to be redeemed and, if fewer than
all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed; (iii) the redemption price; (iv) the place or places
where certificates for such shares are to be surrendered for payment of the
redemption price; and (v) that dividends on the shares to be redeemed will
cease to accrue on such redemption date.
<PAGE>
(iii) PAYMENT UPON REDEMPTION. The price at which outstanding
shares of Series A Preferred Stock shall be redeemed pursuant to this Section 6
shall be the Stated Value per share, together with all accrued but unpaid
dividends on such shares on the date fixed for such redemption (the "Redemption
Price"). Subject to receipt of a share certificate or certificates
representing the Series A Preferred Stock to be redeemed, the Corporation
shall, on the applicable redemption date, redeem such Series A Preferred Stock
by paying to the registered holder the Redemption Price for each such share
being redeemed. If only a part of the shares represented by any certificate is
being redeemed or purchased, a new certificate for the balance shall be issued
at the expense of the Corporation. If, as a result of a redemption, a holder
would be left with a fraction of a share of Series A Preferred Stock, the
Corporation shall redeem the number of shares of such holder that it otherwise
would redeem rounded up or down, at the Corporation's sole discretion, to the
nearest whole number.
(iv) RESTRICTIONS ON REDEMPTIONS. No shares of Series A Preferred
Stock shall be redeemed in whole or part under Section 6 hereof: (i) at any
time that such redemption is prohibited by the DGCL; (ii) at any time that the
terms and provisions of any contract or other agreement of the Corporation or
any of its subsidiaries entered into or assumed providing financing (including
acquisition financing) or working capital to the Corporation or any of its
subsidiaries (whether or not entered into prior to, at or after the issuance of
the Series A Preferred Stock), specifically prohibits such redemption or
provides that such redemption would constitute a breach thereof or a default
thereunder; (iii) unless prior to or concurrently with such redemption, all
unpaid and accrued dividends on Series A Preferred Stock and on Senior
Securities and Parity Securities for dividend periods preceding or ending on the
redemption date have been paid in full or have been declared and set aside for
payment in full; or (iv) at any time that the Corporation shall be in default in
respect of any of its redemption obligations on or under Senior Securities or
such redemption is otherwise prohibited by the terms and provisions of any
Senior Securities.
(v) EFFECT OF REDEMPTION. From and after the redemption date,
dividends on the shares of Series A Preferred Stock so called for redemption
shall cease to accrue, and said shares shall no longer be deemed to be
outstanding and shall be retired and shall have the status of authorized but
unissued shares of Preferred Stock, unclassified as to series, and all rights of
the holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the Redemption Price as provided in this Section 6)
shall cease and terminate. In the event of redemption, if notice of redemption
shall have been mailed and if prior to the date of redemption specified in such
notice all said funds necessary for such redemption shall have been irrevocably
deposited in trust, for the account of the holders of the shares of the Series A
Preferred Stock to be
<PAGE>
redeemed, with a bank or trust company named in such notice, thereupon and
without awaiting the redemption date, all shares of the Series A Preferred Stock
with respect to which such notice shall have been so mailed and such deposit
shall have been so made, shall be deemed to be no longer outstanding and all
rights with respect to such shares of the Series A Preferred Stock shall
forthwith upon such deposit in trust cease and terminate (except the right of
the holders thereof on or after the redemption date to receive from such deposit
the amount payable upon the redemption). In case the holders of shares of the
Series A Preferred Stock that shall have been called for redemption shall not
within two (2) years (or any longer period if required by law) after the
redemption date claim any amount so deposited in trust for the redemption of
such shares, such bank or trust company shall, upon demand and if permitted by
applicable law, pay over to the Corporation any such unclaimed amount so
deposited with it and shall thereupon be relieved of all responsibility in
respect thereof, and thereafter the holders of such shares shall, subject to
applicable escheat laws, look only to the Corporation for payment of the
redemption price thereof. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so require and the
notice shall so state), the redemption price provided in Section 6 and any cash
to be delivered by the Corporation pursuant to Section 6 shall be delivered to
the registered holder of such certificates. In case fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the holder thereof.
(e) DESIGNATIONS REGARDING OTHER SERIES OF PREFERRED STOCK. Subject to
paragraph (c), the Board of Directors of the Corporation is hereby expressly
authorized by resolution or resolutions, to provide, out of the unissued shares
of Preferred Stock, for series of Preferred Stock. Before any share of any
such series is issued, the Board of Directors shall fix, and hereby is expressly
empowered to fix, by resolution or resolutions, the following provisions of the
shares thereof, provided that much provisions as fixed by the Board of Directors
do not violate paragraph (c):
(i) the designation of such series, the number of shares to
constitute such series and the stated value hereof if different from the par
value thereof;
(ii) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law and, if so, the terms of such
voting rights, which may be general or limited;
(iii) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative and, if so, from what dates, the conditions and
dates upon which such dividends
<PAGE>
shall be payable, the preference or relation which such dividends shall bear to
the dividends payable on any shares of stock of any other class or any other
services of this class;
(iv) whether the shares of such series shall be subject to redemption
at the election of the corporation or the holders of such series, and, if so,
the times, prices and other conditions of such redemption;
(v) the amount or amounts payable upon shares of such series upon,
and the rights of the holders of such series in, the voluntary or involuntary
liquidation, dissolution or winding up, or upon any involuntary liquidation,
dissolution or winding up, or upon any distribution of the assets, of the
Corporation;
(vi) whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or any other series of
Preferred Stock or any other securities and, if so, the price or prices or the
rate or rates of conversion or exchange and the method, if any, of adjusting the
same, and any other terms and conditions for conversion or exchange;
(vii) the limitations and restrictions, if any, to be affective while
any shares of such series are outstanding upon the payment of dividends or the
making of other distributions on, or upon the purchase, redemption or other
acquisition by the corporation of, the Common stock or shares of stock of any
other class or any other series of this class;
(viii) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of this class
or of any other class; and
(ix) any other powers, preferences and relative, participating,
optional and other special rights of such series, and any qualifications,
limitations and restrictions thereof.
The powers, preferences and relative, participating, optional and
other special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series of Preferred Stock at any time outstanding. All shares of any
one series of Preferred Stock shall be identical in all respects with all other
shares of such series, except that shares of any one series issued at different
times may differ as to the dates from which dividends thereon shall be
cumulative.
<PAGE>
ARTICLE V.
BOARD POWER REGARDING BY-LAWS
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal,
alter, amend and rescind the by-laws of the Corporation.
ARTICLE VI.
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless the by-
laws of the Corporation shall so provide.
ARTICLE VII.
LIMITATION OF DIRECTOR LIABILITY
To the fullest extent permitted by the DGCL as the same exists or may
hereafter be amended, a director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director. If the DGCL is amended after the date of the filing of this
Amended and Restated Certificate of Incorporation to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the DGCL, as so amended from time to time. No repeal
or modification of this Article VII by the stockholders shall adversely affect
any right or protection of a director of the Corporation existing by virtue of
this Article VII at the time of such repeal or modification.
ARTICLE VIII.
CORPORATE POWER
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned have executed this Amended and
Restated Certificate of Incorporation under seal and on behalf of Petrowax PA
Inc. and have attested such execution and do verify and affirm, under penalties
of perjury, that this Amended and Restated Certificate of Incorporation is the
act and
<PAGE>
deed of the Corporation and that the facts stated herein are true as of this
day of June, 1995.
Petrowax PA INC.
By: /s/ Kevin Gay
-------------------------------------
Name: Kevin Gay
Title: Vice President
Attest:
By: /s/ illegible
-------------------------------------
Name: illegible
Title: Secretary
<PAGE>
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "PETROWAX PA, INC.", CHANGING ITS NAME FROM "PETROWAX PA, INC." TO "ASTOR
CORPORATION", FILED IN THIS OFFICE ON THE SIXTH DAY OF FEBRUARY, A.D. 1996, AT 3
O'CLOCK P.M.
[SEAL]
/s/ Edward J. Freel
[SEAL] -----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
AUTHENTICATION:
2215409 8100 8127119
DATE:
960284228 09-30-96
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PETROWAX PA, INC.
(a Delaware Corporation)
Boyd D. Wainscott hereby certifies as follows:
FIRST: He is the Chairman and Chief Executive Officer of Petrowax
PA, Inc., a Delaware corporation (the "Corporation"),
SECOND: Article First of the Certificate of Incorporation of this
Corporation is hereby amended to read in its entirety as follows:
"The name of this corporation is:
"Astor Corporation"
THIRD: The foregoing amendment of Certificate of Incorporation of
this Corporation has been duly approved by the board of directors of the
Corporation by unanimous written consent in accordance with Sections 141(f) and
242(b) of the Delaware General Corporation Law.
FOURTH: The foregoing amendment of the Certificate of Incorporation
of this Corporation has been duly approved by the stockholders of the
Corporation by written consent in accordance with Sections 228(a) and 242(a) of
the Delaware General Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Boyd D. Wainscott, its Chairman and Chief Executive
Officer, on the 30th day of December, 1995.
/s/ Boyd D. Wainscott
----------------------------------------
Boyd D. Wainscott, Chairman
and Chief Executive Officer
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 03:00 PM 02/06/1996
960035620 - 2215409
<PAGE>
PETROWAX PA, INC.
(a Delaware corporation)
BYLAWS
ARTICLE I
Offices
SECTION 1.01 Registered Office. The registered office of Petrowax
PA, Inc. (hereinafter called the Corporation) in the State of Delaware shall be
at 1209 Orange Street, City of Wilmington, County of New Castle, and the name
of the registered agent in charge thereof shall be The Corporation Trust
Company.
SECTION 1.02 Other Offices. The Corporation may also have an office
or offices at such other place or places, either within or without the State of
Delaware, as the Board of Directors (hereinafter called the Board) may from time
to time determine or at the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
SECTION 2.01 Annual Meetings. Annual meetings of the stockholders
of the Corporation for the purpose of electing directors and for the
transaction of such other proper business as may come before such meetings may
be held at such time, date and place as the Board shall determine by
resolution.
SECTION 2.02 Special Meetings. A special meeting of the stockholders
for the transaction of any proper business may be called at any time by the
Board or by the President.
SECTION 2.03 Place of Meetings. All meetings of the stockholders
shall be held at such places, within or without the State of Delaware, as may
from time to time be designated by the person or persons calling the respective
meeting and specified in the respective notices or waivers of notice thereof.
SECTION 2.04 Notice of Meetings. Except as otherwise required by
law, notice of each meeting of the stockholders, whether annual or
special, shall be given not fewer than ten (10) nor more than sixty (60) days
before the date of the meeting to each stockholder of record entitled to vote at
such meeting by delivering a typewritten or printed notice thereof to
him personally, or by depositing such notice in the United States mail, in a
postage prepaid envelope, or by express overnight delivery or air courier,
directed to him at his post office address furnished by him to the Secretary of
the Corporation for such purpose or, if
<PAGE>
he shall not have furnished to the Secretary his address for such purpose,
then at his post office address last known to the Secretary, or by
transmitting a notice thereof to him at such address by telegraph, cable, or
wireless. Except as otherwise expressly required by law, no publication
of any notice of a meeting of the stockholders shall be required. Every
notice of a meeting of the stockholders shall state the place, date and hour
of the meeting, and, in the case of a special meeting, shall also state the
purpose or purposes for which the meeting is called. Notice of any meeting of
stockholders shall not be required to be given to any stockholder who shall
have waived such notice and such notice shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, except as a
stockholder who shall attend such meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Except as
otherwise expressly required by law, notice of any adjourned meeting
of the stockholders need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken.
SECTION 2.05 Quorum. Except in the case of any meeting for the
election of directors summarily ordered as provided by law, the holders of
record of a majority in voting interest of the shares of stock of the
Corporation entitled to be voted thereat, present in person or by proxy, shall
constitute a quorum for the transaction of business at any meeting of the
stockholders of the Corporation or any adjournment thereof. In the absence of a
quorum at any meeting or any adjournment thereof, a majority in voting interest
of the stockholders present in person or by proxy and entitled to vote thereat,
or, in the absence therefrom of all the stockholders, any officer entitled to
preside at, or to act as secretary of, such meeting may adjourn such meeting
from time to time. At any such adjourned meeting at which a quorum is present
any business may be transacted which might have been transacted at the meeting
as originally called.
SECTION 2.06 Voting.
(a) Each stockholder shall, at each meeting of the stockholders, be
entitled to vote in person or by proxy each share or fractional share of the
stock of the Corporation having voting rights on the matter in question and
which shall have been held by him and registered in his name on the books of the
Corporation:
i) on the date fixed pursuant to Section 6.05 of these Bylaws as the
record date for the determination of stockholders entitled to notice of and to
vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (a) at the
close of business on the day next preceding the day
2
<PAGE>
on which notice of the meeting shall be given or (b) if notice of the meeting
shall be waived at the close of business on the day next preceding the day on
which the meeting shall be held.
(b) Shares of its own stock belonging to the Corporation
or to another corporation, if a majority of the shares entitled to
vote in the election of directors in such other corporation is
held, directly or indirectly, by the Corporation, shall neither be
entitled to vote nor be counted for quorum purposes. Persons
holding stock of the Corporation in a fiduciary capacity shall be
entitled to vote such stock. Persons whose stock is pledged shall
be entitled to vote, unless in the transfer by the pledgor on the
books of the Corporation he shall have expressly empowered the
pledgee to vote thereon, in which case only the pledgee, or his
proxy, may represent such stock and vote thereon. Stock having
voting power standing of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint
tenants in common, tenants by entirety or otherwise, or with
respect to which two or more persons have the same fiduciary
relationship, shall be voted in accordance with the provisions of
the General Corporation Law of the State of Delaware.
(c) Any such voting rights may be exercised by the
stockholder entitled thereto in person or by his proxy appointed by
an instrument in writing, subscribed by such stockholder or by his
attorney thereunto authorized and delivered to the secretary of the
meeting; provided, however, that no proxy shall be voted or acted
upon after three years from its date unless said proxy shall
provide for a longer period. The attendance at any meeting of a
stockholder who may theretofore have given a proxy shall not have
the effect of revoking the same unless he shall in writing so
notify the secretary of the meeting prior to the voting of the
proxy. At any meeting of the stockholder all matters, except as
otherwise provided in the Certificate of Incorporation, in these
Bylaws or by law, shall be decided by the vote of a majority in
voting interest of the stockholders present in person or by proxy
and entitled to vote thereat and thereon, a quorum being present.
The vote at any meeting of the stockholders on any question need
not be by ballot, unless so directed by the chairman of the
meeting. On a vote by ballot each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and it
shall state the number of shares voted.
SECTION 2.07 List of Stockholders. The Secretary of the Corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a
3
<PAGE>
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 2.08 Judges. If at any meeting of the stockholders a vote
by written ballot shall be taken on any question, the chairman of such meeting
may appoint a judge or judges to act with respect to such vote. Each judge so
appointed shall first subscribe an oath faithfully to execute the duties of a
judge at, such meeting with strict impartiality and according to the best of
his ability. Such judges shall decide upon the qualification of the
voters and shall report the number of shares represented at the meeting and
entitled to vote on such question, shall conduct and accept the votes,
and, when the voting is completed, shall ascertain and report the number of
shares voted respectively for and against the question. Reports of judges shall
be in writing and subscribed and delivered by them to the Secretary of the
Corporation. The judges need not be stockholders of the Corporation, and any
officer of the Corporation may be a judge on any question other than a vote for
or against, a proposal in which he shall have a material interest.
SECTION 2.09 Action Without Meeting. Any action required to be taken
at any annual or special meeting of stockholders of the Corporation, or any
action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present, and
voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
Board of Directors
SECTION 3.01 General Powers. The property, business and affairs of
the Corporation shall be managed by the Board.
SECTION 3.02 Number and Term of Office. The number of directors
shall not be fewer than three (3) and not more than eleven (11), as determined
by the Board. The number of directors may be increased by action of the
Board or the stockholders.
4
<PAGE>
Directors need not be stockholders. Each of the directors of the Corporation
shall hold office until his successor shall have been duly elected and shall
qualify or until he shall resign or shall have been removed in the manner
hereinafter provided.
SECTION 3.03 Election of Directors. The directors shall be elected
annually by the stockholders of the Corporation and the persons receiving the
greatest number of votes, up to the number of directors to be elected, shall be
the directors.
Section 3.04 Resignations. Any director of the Corporation may
resign at any time by giving written notice to the Board or to the Secretary of
the Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, it shall take effect immediately upon
its receipt; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 3.05 Vacancies. Except as otherwise provided in the
Certificate of Incorporation, any vacancy in the Board, whether because of
death, resignation, disqualification, an increase in the number of directors, or
any other cause, may be filled by vote of the majority of the remaining
directors, although less than a quorum. Each director so chosen to fill a
vacancy shall hold office until his successor shall have been elected
and shall qualify or until he shall resign or shall have been removed in the
manner hereinafter provided.
SECTION 3.06 Place of Meeting, Etc. The Board may hold any of its
meetings at such place or places within or without the State of Delaware as the
Board may from time to time by resolution designate or as shall be
designated by the person or persons calling the meeting or in the notice or a
waiver of notice of any such meeting. Directors may participate in any regular
or special meeting of the Board by means of conference telephone or similar
communications equipment pursuant to which all persons participating
in the meeting of the Board can hear each other, and such participation shall
constitute presence in person at such meeting.
SECTION 3.07 First Meeting. The Board shall meet as soon as
practicable after each annual election of directors and notice of such first
meeting shall not be required.
SECTION 3.08 Regular Meetings. Regular meetings of the Board may be
held at such times as the Board shall from time to time by resolution determine.
If any day fixed for a regular meeting shall be a legal holiday at the place
where the meeting is to be held, then the meeting shall be held at the same hour
and place on the next succeeding business day not a legal holiday. Except as
provided by law, notice of regular meetings need not be
5
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given.
SECTION 3.09 Special Meetings. Special meetings of the board shall
be held whenever called by the President or a majority of the authorized
number of directors. Except as otherwise provided by law or by these
Bylaws, notice of the time and place of each such special meeting shall be
mailed to each director, by United States mail, express overnight delivery or
air courier, addressed to him at his residence or usual place of business, at
least five (5) days before the day on which the meeting is to be held, or shall
be sent to him at such place by telegraph or cable or be delivered personally
not fewer than forty-eight (48) hours before the time at which the meeting is to
be held. Except where otherwise required by law or by these Bylaws, notice of
the purpose of a special meeting need not be given. Notice of any meeting of
the Board shall not be required to be given to any director who is present at
such meeting, except a director who shall attend such meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
SECTION 3.10 Quorum and Manner of Acting. Except as otherwise
provided in these Bylaws or by law, the presence of a majority of the authorized
number of directors shall be required to constitute a quorum for the transaction
of business at any meeting of the Board, and all matters shall be decided at any
such meeting, a quorum being present, by the affirmative votes of a majority of
the directors present. In the absence of a quorum, a majority of directors
present at any meeting may adjourn the same from time to time until a quorum
shall be present. Notice of any adjourned meeting need not be given. The
directors shall act only as a Board, and the individual directors shall have no
power as such.
SECTION 3.11 Action by Consent. Any action required or permitted to
be taken at any meeting of the Board or of, any committee thereof may be
taken without a meeting if a written consent thereto is signed by all members of
the Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.
Section 3.12 Removal of Directors. Subject to the provisions of
the Certificate of Incorporation, any director may be removed at any time,
either with or without cause, by the affirmative vote of the stockholders
having a majority of the voting power of the Corporation given at a special
meeting of the stockholders called for the purpose.
SECTION 3.13 Compensation. The directors shall receive no
compensation for their services as directors unless otherwise allowed by
resolution of the Board. The Corporation shall reimburse each such
directed for all reasonable expenses incurred
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by him on account of his membership on the Board or Committees of the Board.
Neither the payment of such compensation nor the reimbursement of such
expenses shall be construed to preclude any director from serving the
Corporation or its subsidiaries in any other capacity and receiving compensation
therefor.
SECTION 3.14 Committees. The Board may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee
to consist of one or more of the directors of the Corporation. Any such
committee, to the extent provided in the resolution of the Board and except as
otherwise limited by law, shall have and may exercise all the powers and
authority of the Board in the management of the business and affairs of
the Corporation, and may authorize the seal of the Corporation to be affixed to
all papers which may require it. Any such committee shall keep written minutes
of its meetings and report the same to the Board at the next regular meeting of
the Board. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in the
place of any such absent or disqualified member.
ARTICLE IV
Officers
SECTION 4.01 Number. The officers of the Corporation shall be a
Chairman of the Board of Directors, a Chief Executive Officer, a President, a
Managing Director, a Chief Administrative Officer, a Chief Technical Officer,
one or more Vice Presidents (the number thereof and their respective titles to
be determined by the Board), a Secretary, a Chief Financial Officer and a
Treasurer.
SECTION 4.02 Election, Term of Office and Qualifications. The
officers of the Corporation, except such officers as may be, appointed in
accordance with Section 4.03, shall be elected annually by the Board at the
first meeting thereof held after the election thereof. Each officer shall
hold office until his successor shall have been duly chosen and shall qualify
or until his resignation or removal in the manner hereinafter provided.
SECTION 4.03 Assistants, Agents and Employees, Etc. In addition to
the officers specified in Section 4.01, the Board may appoint other assistants,
agents and employees as it may deem necessary or advisable, including one or
more Assistant Secretaries, and one or more Assistant Financial Officers, each
of whom shall hold office for such period, have such authority, and perform such
duties as the Board may from time to time determine. The Board may delegate to
any officer of the Corporation or any
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committee Of the Board the power to appoint, remove and prescribe the duties of
any such assistants, agents or employees.
SECTION 4.04 Removal. Any officer, assistant, agent, or employee of
the Corporation may be removed, with or without cause, at any time: (i) in the
case of an officer, assistant, agent or employee appointed by the Board, only by
resolution of the Board; and (ii) in the case of another officer,
assistant, agent or employee, by any officer of the Corporation or committee of
the Board upon whom or which such power of removal may be conferred by the
Board.
SECTION 4.05 Resignations. Any officer or assistant may resign at
any time by giving written notice of his resignation to the Board or the
Secretary of the Corporation. Any such resignation shall take effect at
the time specified therein, or, if the time be not specified, upon receipt
thereof by the Board or the Secretary, as the case may be; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 4.06 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or other cause, may be filled for the
unexpired portion of the term thereof in the manner prescribed in these Bylaws
for regular appointments or elections to such office.
SECTION 4.07 The Chairman of the Board. The Chairman of the Board
shall, if present, preside at all meetings of the Board and shall have such
powers and perform such duties as the Board may from time to time prescribe.
SECTION 4.08 The Chief Executive Officer. The Chief Executive
Officer shall be the chief executive officer of the Corporation and shall,
subject to the control of the Board, have general and active supervision and
management over the business of the Corporation and over its several officers,
assistants, agents and employees. The Chief Executive Officer shall have the
general powers and duties of management usually vested in the office of the
chief executive officer of a corporation, and shall have such powers and
perform such duties as the Board may from time to time prescribe.
SECTION 4.09 The President. In the absence or disability of the Chief
Executive Officer, the President of the Corporation shall perform the duties of
the Chief Executive Officer and when so acting, shall have all the powers of,
and be subject to all the restrictions upon, the Chief Executive Officer. The
President shall have such powers and perform such duties as the Board may from
time to time prescribe.
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SECTION 4.1O The Managing Director. In the absence or disability of
the President, the Managing Director of the Corporation shall perform the
duties of the President and when so acting, shall have all the powers of, and be
subject to all the restrictions upon, the President. The Managing Director
shall have such powers and perform such duties as the Board may from time to
time prescribe.
SECTION 4.11 The Chief Administrative Officer. The Chief
Administrative Officer shall have such powers and perform such duties as the
Board may from time to time prescribe.
SECTION 4.12 The Chief Technical Officer. The Chief Technical
Officer shall have such powers and perform such duties as the Board may from
time to time prescribe.
SECTION 4.13 The Vice Presidents. Each Vice President shall have
such powers and perform such duties as the Board may from time to time
prescribe. At the request of the Managing Director, or in case of the
Managing Director's absence or inability to act upon the request of the
Board, a Vice President shall perform the duties of the Managing Director and
when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the Managing Director.
SECTION 4.14 The Secretary. The Secretary shall, if present,
record the proceedings of all meetings of the Board, of the stockholders, and of
all committees of which a secretary shall not have been appointed in one or more
books provided for that purpose; he shall see that all notices are duly given in
accordance with these Bylaws and as required by law; he shall be custodian of
the seal of the Corporation and shall affix and attest the seal to all documents
to be executed on behalf of the Corporation under its seal; and, in general, he
shall perform all the duties incident to the office of Secretary and such other
duties as may from time to time be assigned to him by the Board.
SECTION 4.15 The Chief Financial Officer. The Chief Financial
Officer shall have the general care and custody of the funds and securities of
the Corporation, and shall deposit all such funds in the name of the Corporation
in such banks, trust companies or other depositories as shall be selected by the
Board. He shall receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever. He shall exercise general supervision
over expenditures and disbursements made by officers, agents and employees of
the Corporation and the preparation of such records and reports in connection
therewith as may be necessary or desirable. He shall, in general, perform all
other duties incident to the office of Chief Financial Officer and such other
duties as from time to time may be assigned to him by the Board.
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SECTION 4.16 The Treasurer. In the absence or disability of the
Chief Financial Officer, the Treasurer of the Corporation shall perform the
duties of the Chief Financial Officer and when an acting, shall have all the
powers of, and be subject, to all the restrictions upon, the Chief Financial
Officer. The Treasurer shall have such powers and perform such duties as the
Board may from time to time prescribe.
SECTION 4.17 Compensation. The compensation of the officers of
the Corporation shall be fixed from time to time by the Board. None of such
officers shall be prevented from receiving such compensation by reason of the
fact that he is also a director of the Corporation. Nothing contained herein
shall preclude any officer from serving the Corporation, or any subsidiary
corporation, in any other capacity and receiving such compensation by reason
of the fact that he is also a director of the Corporation. Nothing contained
herein shall preclude any officer from serving the Corporation, or any
subsidiary corporation, in any other capacity and receiving proper
compensation therefor.
ARTICLE V
Contracts, Checks, Drafts, Bank Accounts, Etc.
SECTION 5.01 Execution of Contracts. The Board, except as in these
Bylaws otherwise provided, may authorize any officer or officers, agent or
agents, to enter into any contract or execute any instrument in the name of and
on behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by these Bylaws,
no officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any amount.
SECTION 5.02 Checks, Drafts, Etc. All checks, drafts or other orders
for payment of money, notes or other evidence of indebtedness, issued in the
name of or payable to the Corporation, shall be signed or endorsed by such
person or persons and in such manner as, from time to time, shall be determined
by resolution of the Board. Each such officer, assistant, agent or attorney
shall give such bond, if any, as the Board may require.
SECTION 5.03 Deposits. All funds of the Corporation not orherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the
purpose of collection for the account of the Corporation, the President, any
Vice President, or the Chief Financial Officer
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(or any other officer or officers, assistant or assistants, agent or agents, or
attorney or attorneys of the Corporation who shall from time to time be
determined by the Board) may endorse, assign and deliver checks, drafts and
other orders for the payment of money which are payable to the order of the
Corporation.
SECTION 5.04 General and Special Bank Accounts. The Board may
from time to time authorize the opening and keeping of general and special
bank accounts with such banks, trust companies or ocher depositories as the
Board may select or as may be selected by any officer or officers, assistant
or assistants, agent or agents, or attorney or attorneys of the Corporation
to whom such power shall have been delegated by the Board. The Board may
make such special rules and regulations with respect to such bank accounts,
not inconsistent with the provisions of these Bylaws, as it may deem
expedient.
ARTICLE VI
Shares and Their Transfer
SECTION 6.01 Certificates for Stock. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him. The certificates
representing shares of such stock shall be numbered in the order in which
they shall be issued and shall be signed in the name of the Corporation by
the President or a Vice President, and by the Secretary or an Assistant
Secretary or by the Chief Financial Officer or an Assistant Financial
Officer. Any of or all of the signatures on the certificates may be a
facsimile. In case any officer, transfer agent or registrar who has signed,
or whose facsimile signature has been placed upon, any such certificate,
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, such certificate may nevertheless be issued by the
Corporation with the same effect as though the person who signed such
certificate, or whose facsimile signature shall have been placed thereupon,
were such officer, transfer agent or registrar at the date of issue. A
record shall be kept of the respective names of the persons, firms or
corporations owning the stock represented by such certificates, the number
and class of shares represented by such certificates, respectively, and the
respective dates thereof, and in case of cancellation, the respective dates
of cancellation. Every certificate surrendered to the Corporation for
exchange or transfer shall be cancelled, and no new certificate or
certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so cancelled, except in cases
provided for in Section 6.04.
SECTION 6.02 Transfers of Stock. Transfers of shares of
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stock of the Corporation shall be made only on the books of the Corporation,
by the registered holder thereof, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary, or with a
transfer clerk or a transfer agent appointed as provided in Section 6.03, and
upon surrender of the certificate or certificates for such shares properly
endorsed and the payment of all taxes thereon. The person in whose name
shares of stock stand on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation. Whenever any
transfer of shares shall be made for collateral security, and not absolutely,
such fact shall be so expressed in the entry of transfer if, when the
certificate or certificates shall be presented to the Corporation for
transfer, both the transferor and the transferee request the Corporation to
do so.
SECTION 6.03 Regulations. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these Bylaws,
concerning the issue, transfer and registration of certificates for shares of
the stock of the Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer clerks or one or more transfer agents
and one or more registrars, and may require all certificates for stock to bear
the signature or signatures of any of them.
SECTION 6.04 Lost, Stolen, Destroyed, and Mutilated Certificates.
In any case of loss, theft, destruction, or mutilation of any certificate of
stock, another may be issued in its place upon proof of such loss, theft,
destruction, or mutilation and upon the giving of a bond of indemnity to the
Corporation in such form and in such sum as the Board may direct; provided,
however, that a new certificate may be issued without requiring any bond
when, in the judgment of the Board, it is proper so to do.
SECTION 6.05 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights
in respect of any other change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board may fix, in advance, a record
date, which shall not be more than sixty (60) nor fewer than ten (10) days
before the date of such meeting, nor more than sixty (60) days prior to any
other action. If in any case involving the determination of stockholders for
any purpose other than notice of or voting at a meeting of stockholders or
expressing consent to corporate action without a meeting the Board shall not
fix such a record date, the record date for determining stockholders for such
purpose shall be the close of business on the
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day on which the Board shall adopt the resolution relating thereto. A
determination of stockholders entitled to notice of or to vote at a meeting
of stockholders shall apply to any adjournment of such meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.
ARTICLE VII
Indemnification
SECTION 7.01 Actions, Etc. Other Than by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful.
SECTION 7.02 Actions, Etc., by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
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misconduct in the performance of his duty to the Corporation unless and only
to the extent that the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
SECTION 7.03 Determination of Right of Indemnification. Any
indemnification under Section 7.01 or 7.02 (unless ordered by a court) shall
be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section 7.01 and 7.02. Such determination
shall be made (i) by the Board by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (ii) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders.
SECTION 7.04 Indemnification Against Expenses of Successful Party.
Notwithstanding the other provisions of this Article, to the extent that a
director, officer, employee or agent of the Corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding
referred to in Section 7.01 or 7.02, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
SECTION 7.05 Prepaid Expenses. Expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be
paid by the Corporation in advance of the final disposition of such action,
suit or proceeding-as authorized by the Board in the specific case upon
receipt of an undertaking by or on behalf of the director or officer to repay
such amount unless it shall ultimately be determined that he is entitled to
be indemnified by the Corporation as authorized in this Article. Such
expenses incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the Board deems appropriate.
SECTION 7.06 Other Rights and Remedies. The Indemnification
provided by this Article shall not be deemed exclusive of any other rights
to which those seeking indemnification may be entitled under any Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit
of the heirs, executors and
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administrators of such a person.
SECTION 7.07 Insurance. Upon resolution passed by the Board, the
Corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise against any liability asserted against him and incurred
by him in any such capacity, or arising out of his status as such, whether or
not the Corporation would have the power to indemnify him against such
liability under the provisions of this Article.
SECTION 7.O8 Constituent Corporations. For the purposes of this
Article, references to "the Corporation" include all constituent
corporations absorbed in a consolidation or merger as well as the resulting or
surviving corporation, so that any person who is or was a director, officer,
employee or agent of such a constituent corporation or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under the provisions of this Article
with respect to the resulting or surviving corporation as he would if he had
served the resulting or surviving corporation in the same capacity.
SECTION 7.09 Other Enterprises, Fines, and Serving at Corporation's
Request. For purposes of this Article, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan;
and references to "serving at the request of the Corporation" shall include
any service as a director, officer, employee or agent of the corporation
which imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to
in this Article.
ARTICLE VIII
Miscellaneous
SECTION 8.01 Seal. The Board shall provide a corporate seal, which
shall be in the form of a circle and shall bear the name of the Corporation and
words and figures showing that the Corporation was incorporated in the State of
Delaware and the year of incorporation.
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SECTION 8.02 Waiver of Notices. Whenever notice is required to be
given by these Bylaws or the Certificate of Corporation or by law, the person
entitled to said notice may waive such notice in writing, either before or
after the time stated therein, and such waiver shall be deemed equivalent to
notice.
SECTION 8.03 Amendments. These Bylaws, or any of them, may be
altered, amended or repealed, and new Bylaws may be made, (i) by the Board,
by vote of a majority of the number of directors then in office as directors,
acting at any meeting of the Board, or (ii) by the stockholders, at any
annual meeting of stockholders, without previous notice, or at any special
meeting of stockholders, provided that notice of such proposed amendment,
modification, repeal or adoption is given in the notice of special meeting.
Any Bylaws made or altered by the stockholders may be altered or repealed by
either the Board or the stockholders.
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Exhibit 3.3
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "MSC HOLDINGS II, INC.", CHANGING ITS NAME FROM "MSC HOLDINGS II, INC." TO
"ASTOR HOLDINGS II, INC.", FILED IN THIS OFFICE ON THE SIXTH DAY OF FEBRUARY,
A.D. 1996, AT 3 O'CLOCK P.M.
[SEAL] /s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
AUTHENTICATION:
8128146
DATE:
10-01-96
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
MSC HOLDINGS II, INC.
(a Delaware corporation)
Boyd D. Wainscott hereby certifies as follows:
FIRST: He is the Chairman and Chief Executive Officer of MSC Holdings
II, Inc., a Delaware corporation (the "Corporation").
SECOND: Article I of the Certificate of Incorporation of this
Corporation is hereby amended to read in its entirety as follows:
"The name of this corporation is:
"Astor Holdings II, Inc."
THIRD: The foregoing amendment of Certificate of Incorporation of
this Corporation has been duly approved by the board of directors of the
Corporation by unanimous written consent in accordance with Sections 141(f) and
242(b) of the Delaware General Corporation Law.
FOURTH: The foregoing amendment of the Certificate of Incorporation
of this Corporation has been duly approved by the stockholders of the
Corporation by written consent in accordance with Sections 228(a) and 242(a)
of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Boyd D. Wainscott; its Chairman and Chief Executive
Officer on the 30th day of December, 1995.
/s/ Boyd D. Wainscott
----------------------------------------
Boyd D. Wainscott, Chairman
and Chief Executive Officer
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 03:00 PM 02/06/1996
960035623 - 2500894
<PAGE>
STATE OF DELAWARE - DIVISION OF CORPORATIONS
FAXCER CERTIFICATION SHEET [SEAL]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
/ / / / / / / / / / / /
Priority 1 Priority 2 Priority 3 Priority 4 Priority 5 Priority 6
(Two Hr. Service) (Same Day) (24 Hour) (Most Approvals) (Reg. Approvals) (Reg. Work)
</TABLE>
REQUESTOR NAME National Corporate Research, Ltd. DATE SUBMITTED 10-1-96
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ADDRESS 9 East Loockerman Street
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Dover, DE 19901
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ATTN. Jeanne
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PHONE (302) 734-1450
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NAME of COMPANY / ENTITY Astor Holdings II, Inc.
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FILE NUMBER 2500894 FILER'S NUMBER 9070044
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<PAGE>
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "MSC HOLDINGS, INC.", CHANGING ITS NAME FROM "MSC HOLDINGS, INC." TO "MSC
HOLDINGS II, INC.", FILED IN THIS OFFICE ON THE EIGHTEENTH DAY OF MAY, A.D.
1995, AT 9 O'CLOCK A.M.
[SEAL] /s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
AUTHENTICATION:
8128147
DATE:
10-01-96
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 05/18/1995
950110983 - 2500894
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
MSC HOLDINGS, INC.
MSC Holdings, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation") does hereby certify:
FIRST: That, in accordance with the requirement of Section 241 of
the General Corporation Law of the State of Delaware, the Board of Directors
of the Corporation by Action by Unanimous Written Consent of all of the
directors, dated May 18, 1995, adopted a resolution proposing and declaring
advisable an amendment to the Certificate of Incorporation to the
Corporation. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that Article I of the Certificate of Incorporation of
this Corporation be amended to read as follows:
The name of this corporation is:
MSC Holdings II, Inc.
SECOND: That the Corporation had not received any payment for any of
its stock and no stock has been issued.
THIRD: That said amendment was duly adopted in accordance with the
provision of Section 241 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said MSC Holdings, Inc. has caused this
Certificate to be signed by Richard R. Crowell, Vice President and Secretary of
the Corporation, this 18th day of May, 1995.
/s/ Richard R. Crowell
------------------------------
Richard R. Crowell
<PAGE>
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
---------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "MSC HOLDINGS, INC.", FILED IN THIS OFFICE ON THE TWENTY-FIRST
DAY OF APRIL, A. D. 1995, AT 9 O'CLOCK A.M.
[SEAL]
[SEAL] /s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
AUTHENTICATION:
8128148
DATE:
10-01-96
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 04/21/1995
950088873 - 2500894
CERTIFICATE OF INCORPORATION
OF
MSC HOLDINGS, INC.
ARTICLE I
NAME OF CORPORATION
The name of this corporation is:
MSC Holdings, Inc.
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the corporation in the State
of Delaware is 1013 Centre Road, in the City of Wilmington 19805, County of New
Castle, and the name of its registered agent at that address is Corporation
Service Company.
ARTICLE III
PURPOSE
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE VI
AUTHORIZED CAPITAL STOCK
The corporation shall be authorized to issue one class of stock to be
designated Common Stock; the total number of shares which the corporation shall
have authority to issue is ten thousand (10,000), and each such share shall have
a par value of one cent ($0.01).
<PAGE>
ARTICLE V
INCORPORATOR
The name and mailing address of the incorporator of the corporation
is:
Leslie Mussett
c/o Gibson, Dunn & Crutcher
2029 Century Park East, Suite 4000
Los Angeles, California 90067
ARTICLE VI
BOARD POWER REGARDING BYLAWS
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind the bylaws of the corporation.
ARTICLE VII
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless the bylaws
of the corporation shall so provide.
ARTICLE VIII
LIMITATION OF DIRECTOR LIABILITY
To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or may hereafter be amended, a director of the
corporation shall not be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. If the Delaware
General Corporation Law is amended after the date of the filing of this
Certificate of Incorporation to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended from time to
time. No repeal or modification of this Article VIII by the stockholders shall
adversely affect any right or protection of a director of the corporation
existing by virtue of this Article VIII at the time of such repeal or
modification.
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<PAGE>
ARTICLE IX
CORPORATE POWER
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.
ARTICLE X
CREDITOR COMPROMISE OR ARRANGEMENT
Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation to do business both within and without the
State of Delaware, and in pursuance of the Delaware General Corporation Law,
does make and file this Certificate.
Dated: April 21, 1995
/s/ Leslie Mussett
----------------------------------------
Leslie Mussett, Incorporator
3
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
MSC HOLDINGS II, INC.
JUNE 28, 1995
<PAGE>
MSC HOLDINGS II, INC.
(a Delaware corporation)
BYLAWS
ARTICLE I
Offices
SECTION 1.01 Registered Office. The registered office of MSC
Holdings II, Inc. (hereinafter called the Corporation) in the State of Delaware
shall he at 1013 Centre Road, City of Wilmington, County of New Castle, and the
name of the registered agent in charge thereof shall be Corporation Service
Company.
SECTION 1.02 Other Offices. The Corporation may also have an office
or offices at such other place or places, either within or without the State of
Delaware, as the Board of Directors (hereinafter called the Board) may from time
to time determine or as the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
SECTION 2.01 Annual Meetings. Annual meetings of the stockholders
of the Corporation for the purpose of elective directors and for the transaction
of such other proper business as may come before such meetings may be held at
such time, date and place as the Board shall determine by resolution.
SECTION 2.02 Special Meetings. A special meeting of the
stockholders for the transaction of any proper business may he called at any
time by the Board or by the President.
SECTION 2.03 Place of Meetings. All meetings of the stockholders
shall be held at such places, within or without the State of Delaware, as may
from time to time be designated by the person or persons calling the respective
meeting and specified in the respective notices or waivers of notice thereof.
SECTION 2.04 Notice of Meetings. Except as otherwise required by
law, notice of each meeting of the stockholders, whether annual or special,
shall be given not less than ten (10) nor more than sixty (60) days before the
<PAGE>
date of the meeting to each stockholder of record entitled to vote at such
meeting by delivering a typewritten or printed notice thereof to him personally,
or by depositing such notice in the United States mail, in a postage prepaid
envelope, directed to him at his post office address furnished by him to the
Secretary of the Corporation for such purpose or, if ho shall not have furnished
to the Secretary his address for such purpose, then at his post office address
last known to the Secretary, or by transmitting a notice thereof to him at such
address by telegraph, cable, or wireless. Except as otherwise expressly
required by law, no publication of any notice of a meeting of the stockholders
shall be required. Every notice of a meeting of the stockholders shall state
the place, date and hour of the meeting, and, in the case of a special meeting,
shall also state the purpose or purposes for which the meeting is called.
Notice of any meeting of stockholders shall not be required to be given to any
stockholder who shall have waived such notice and such notice shall he deemed
waived by any stockholder who shall attend such meeting in person or by proxy,
except as a stockholder who shall attend such meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Except as otherwise
expressly required by law, notice of any adjourned meeting of the stockholders
need not be given if the time and place thereof are announced at the meeting at
which the adjournment is taken.
SECTION 2.05 Quorum. Except in the case of any meeting for the
election of directors summarily ordered as provided by law, the holders of
record of a majority in voting interest of the shares of stock of the
Corporation entitled to be voted thereat, present in person or by proxy, shall
constitute a quorum for the transaction of business at any meeting of the
stockholders of the Corporation or any adjournment thereof. In the absence of a
quorum at any meeting or any adjournment thereof, a majority in voting interest
of the stockholders present in person or by proxy and entitled to vote thereat
or, in the absence therefrom of all the stockholders, any officer entitled to
preside at, or to act as secretary of, such meeting may adjourn such meeting
from time to time. At any such adjourned meeting at which a quorum is present
any business may be transacted which might have been transacted at the meeting
as originally called.
SECTION 2.06 Voting.
(a) Each stockholder shall, at each meeting of
the stockholders, be entitled to vote in person or by proxy
each share or fractional share of the stock of the
Corporation having voting rights on the matter in question
2
<PAGE>
and which shall have been held by him and registered in his name on the books of
the Corporation:
(i) on the date fixed pursuant to Section 6.05 of these Bylaws
as the record date for the determination of stockholders entitled to
notice of and to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (a)
at the close of business on the day next preceding the day on which
notice of the meeting shall be given or (b) if notice of the meeting
shall he waived, at the close of business on the day next preceding
the day on which the meeting shall be held.
(b) Shares of its own stock belonging to the corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors in such other corporation is held, directly or
indirectly, by the Corporation, shall neither be entitled to vote nor be
counted for quorum purposes. Persons holding stock of the Corporation in a
fiduciary capacity shall be entitled to vote such stock. Persons whose stock
is pledged shall be entitled to vote, unless in the transfer by the pledgor
on the books of the Corporation he shall have expressly empowered the pledgee
to vote thereon, in which case only the pledgee, or his proxy, may represent
such stock and vote thereon. Stock having voting power standing of record in
the names of two or more persons, whether fiduciaries, members of a
partnership, joint tenants in common, tenants by entirety or otherwise, or
with respect to which two or more persons have the same fiduciary
relationship, shall he voted in accordance with the provisions of the General
Corporation Law of the State of Delaware.
(c) Any such voting rights may he exercised by the stockholder
entitled thereto in person or by his proxy appointed by an instrument in
writing, subscribed by such stockholder or by his attorney thereunto authorized
and delivered to the secretary of the meeting; provided, however, that no proxy
shall he voted or acted upon after three years from its date unless said proxy
shall provide for a longer period. The attendance at any meeting of a
stockholder who may theretofore have given a proxy shall not have the effect of
revoking the same unless he shall in writing so notify the secretary of the
meeting prior to the voting of the proxy. At any meeting of the stockholders
all matters, except as otherwise provided in the Certificate of Incorporation,
in these Bylaws or by law, shall be decided by the vote of a majority in voting
interest of the stockholders present in person or by proxy and entitled to
3
<PAGE>
vote thereat and thereon, a quorum being present. The vote at any meeting of
the stockholders on any question need not be by ballot, unless so directed by
the chairman of the meeting. On a vote by ballot each ballot shall be signed
by the stockholder voting, or by his proxy, if there be such proxy, and it
shall state the number of shares voted.
SECTION 2.07 List of Stockholders. The Secretary of the
Corporation shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall he open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place
within the city where the meeting is to he held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also he produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
SECTION 2.08 Judges. If at any meeting of the stockholders a vote
by written ballot shall be taken on any question, the chairman of such
meeting may appoint a judge or judges to act with respect to such vote. Each
judge so appointed shall first subscribe an oath faithfully to execute the
duties of a judge at such meeting with strict impartiality and according to
the best of his ability. Such judges shall decide upon the qualification of
the voters and shall report the number of shares represented at the meeting
and entitled to vote on such question, shall conduct and accept the votes,
and, when the voting is completed, shall ascertain and report the number of
shares voted respectively for and against the question. Reports of judges
shall be in writing and subscribed and delivered by them to the Secretary of
the Corporation. The judges need not be stockholders of the Corporation, and
any officer of the Corporation may be a judge on any question other than a
vote for or against a proposal in which he shall have a material interest.
SECTION 2.09 Action Without Meeting. Any action required to be
taken at any annual or special meeting of stockholders of the Corporation, or
any action that may be taken at any annual or special meeting of such
stockholders, may he taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall he signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
4
<PAGE>
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
Board of Directors
SECTION 3.01 General Powers. The property, business and affairs of
the Corporation shall be managed by the Board.
SECTION 3.02 Number and Term of Office. The number of directors
shall be eleven (11). Directors need not be stockholders. Each of the
directors of the Corporation shall hold office until his successor shall have
been duly elected and shall qualify or until he shall resign or shall have been
removed in the manner hereinafter provided.
SECTION 3.03 Election of Directors. Subject to the provisions of
the Certificate of Incorporation, the directors shall be elected annually by the
stockholders of the Corporation and the persons receiving the greatest number of
votes, up to the number of directors to be elected, shall be the directors.
SECTION 3.04 Resignations. Any director of the Corporation may
resign at any time by giving written notice to the Board or to the Secretary of
the Corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified, it shall take effect immediately upon
its receipts and unless otherwise specified therein, the acceptance of such
resignation shall not he necessary to make it effective.
SECTION 3.05 Vacancies. Except; as otherwise provided in the
Certificate of Incorporation, any vacancy in the Board, whether because of
death, resignation, disqualification, an increase in the number of directors,
or any either cause, may be filled by vote of the majority of the remaining
directors, although less than a quorum. Each director so chosen to fill a
vacancy shall hold office until his successor shall have been elected and
shall qualify or until he shall resign or shall have been removed in the
manner hereinafter provided.
SECTION 3.06 Place of Meeting, Etc. The Board may hold any of its
meetings at such place or places within or without the State of Delaware as
the Board may from time to time by resolution designate or as shall be
designated by the person or persons calling the meeting or in the notice
5
<PAGE>
or a waiver of notice of any such meeting. Directors may participate in any
regular or special meeting of the Board by means of conference telephone or
similar communications equipment pursuant to which all persons participating in
the meeting of the Board can hear each other, and such participation shall
constitute presence in person at such meeting.
SECTION 3.07 First Meeting. The Board shall meet as soon as
practicable after each annual election of directors and notice of such first
meeting shall not be required.
SECTION 3.08 Regular Meetings. Regular meetings of the Board may
be held at such times as the Board shall from time to time by resolution
determine. If any day fixed for a regular meeting shall be a legal holiday at
the place where the meeting is to be held, then the meeting shall be held at
the same hour and place on the next succeeding business day not a legal
holiday. Except as provided by law, notice of regular meetings need not be
given.
SECTION 3.09 Special Meetings. Special meetings of the Board shall
be held whenever called by the President or a majority of the authorized number
of directors. Except as otherwise provided by law or by these Bylaws, notice
of the time and place of each such special meeting shall be mailed to each
director, addressed to him at his residence or usual place of business, at least
five (5) days before the day on which the meeting is to be held, or shall be
sent to him or her at such place by telegraph or cable or be delivered
personally not less than forty-eight (48) hours before the time at which the
meeting is to be held. Except where otherwise required by law or by these
Bylaws, notice of the purpose of a special meeting need not be given. Notice of
any meeting of the Board shall not be required to be given to any director who
is present at such meeting, except a director who shall attend such meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
SECTION 3.10 Quorum and Manner of Acting. Except as otherwise
provided in these Bylaws or by law, the presence of a majority of the authorized
number of directors shall be required to constitute a quorum for the transaction
of business at any meeting of the Board, and all matters shall be decided at any
such meeting, a quorum being present, by the affirmative votes of a majority of
the directors present. In the absence of a quorum, a majority of directors
present at any meeting may adjourn the same from time to time until a quorum
shall be present. Notice of any adjourned meeting need not be given. The
directors
6
<PAGE>
shall act only as a Board, and the individual directors shall have no power as
such.
SECTION 3.11 Action by Consent. Any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.
SECTION 3.12 Removal of Directors. Subject to the provisions of the
Certificate of Incorporation, any director may be removed at any time, either
with or without cause, by the affirmative vote of the stockholders having a
majority of the voting power of the Corporation given at a special meeting of
the stockholders called for the purpose.
SECTION 3.13 Compensation. The directors shall receive only such
compensation for their services as directors as may be allowed by resolution of
the Board. The Board may also provide that the Corporation shall reimburse each
such director for any expense incurred by him because of his attendance at any
meetings of the Board or Committees of the Board. Neither the payment of such
compensation nor the reimbursement of such expenses shall be construed to
preclude any director from serving the Corporation or its subsidiaries in any
other capacity and receiving compensation therefor.
SECTION 3.14 Committees. The Board may, by resolution passed by a
majority of the Whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. Any such committee,
to the extent provided in the resolution of the Board and except as otherwise
limited by law, shall have and may exercise all the powers and authority of the
Board in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers that may
require it. Any such committee shall keep written minutes of its meetings and
report the same to the Board at the next regular meeting of the Board. In the
absence or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board to act at the meeting in the place of any such absent or disqualified
member.
7
<PAGE>
ARTICLE IV
Officers
SECTION 4.01 Number. The officers of the Corporation shall be a
President, one or more Vice Presidents (the number thereof and their respective
titles to be determined by the Board), a Secretary and a Chief Financial
Officer.
SECTION 4.02 Election, Term of Office and Qualifications. The
officers of the Corporation, except much officers as may be appointed in
accordance with Section 4.03, shall be elected annually by the Board at the
first meeting thereof held after the election thereof. Each officer shall hold
office until his successor shall have been duly chosen and shall qualify or
until his resignation or removal in the manner hereinafter provided.
SECTION 4.03 Assistants, Agents and Employees, Etc. In addition
to the officers specified in Section 4.01, the Board may appoint other
assistants, agents and employees as it may deem necessary or advisable,
including one or more Assistant Secretaries, and one or more Assistant
Treasurers, each of whom shall hold office for such period, have such
authority, and perform such duties as the Board may from time to time
determine. The Board may delegate to any officer of the Corporation or any
committee of the Board the power to appoint, remove and prescribe the duties
of any such assistants, agents or employees.
SECTION 4.04 Removal. Any officer, assistant, agent or employee of
the Corporation may be removed, with or without cause, at any time: (i) in the
case of an officer, assistant, agent or employee appointed by the Board, only by
resolution of the Board; and (ii) in the case of an officer, assistant, agent or
employee, by any officer of the Corporation or committee of the Board upon whom
or which such power of removal may be conferred by the Board.
SECTION 4.05 Resignations. Any officer or assistant may resign at
any time by giving written notice of his resignation to the Board or the
Secretary of the Corporation. Any such resignation shall take effect at the
time specified therein, or, if the time be not specified, upon receipt thereof
by the Board or the Secretary, as the case may be; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 4.06 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or other cause, may be filled for the
unexpired portion of the
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<PAGE>
term thereof in the manner prescribed in these Bylaws for regular appointments
or elections to such office.
SECTION 4.07 The President. The President of the Corporation shall
be the chief executive officer of the Corporation and shall have, subject to the
control of the Board, general and active supervision and management over the
business of the Corporation and over its several officers, assistants, agents
and employees.
SECTION 4.08 The Vice Presidents. Each Vice President shall have
such powers and perform such duties as the Board may from time to time
prescribe. At the request of the President, or in case of the President's
absence or inability to act upon the request of the Board, a Vice President
shall perform the duties of the President and when so acting, shall have all the
powers of, and he subject to all the restrictions upon, the President.
SECTION 4.09 The Secretary. The Secretary shall, if present, record
the proceedings of all meetings of the Board, of the stockholders, and of all
committees of which a secretary shall not have been appointed in one or more
books provided for that purpose; he shall see that all notices are duly given in
accordance with these Bylaws and as required by law; he shall be custodian of
the seal of the Corporation and shall affix and attest the seal to all documents
to be executed on behalf of the Corporation under its seal; and, in general, he
shall perform all the duties incident to the office of Secretary and such other
duties as may from time to time be assigned to him by the Board.
SECTION 4.10 The chief Financial Officer. The Chief Financial
Officer shall have the general care and custody of the funds and securities of
the Corporation, and shall deposit all such funds in the name of the Corporation
in such banks, trust companies or other depositories as shall be selected by the
Board. He shall receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever. He shall exercise general supervision
over expenditures and disbursements made by officers, agents and employees of
the Corporation and the preparation of such records and reports in connection
therewith as may be necessary or desirable. He shall, in general, perform all
other duties incident to the office of Chief Financial Officer and such other
duties as from time to time may be assigned to him by the Board.
SECTION 4.11 Compensation. The compensation of the officers of the
Corporation shall be fixed from time to time by the Board. None of such
officers shall be prevented from receiving such compensation by reason of the
fact that he is also a director of the Corporation. Nothing contained herein
shall preclude any officer from serving the
9
<PAGE>
Corporation, or any subsidiary corporation, in any other capacity and receiving
such compensation by reason of the fact that he is also a director of the
Corporation. Nothing contained herein shall preclude any officer from serving
the Corporation, or any subsidiary corporation, in any other capacity and
receiving proper compensation therefor.
ARTICLE V
Contracts, Checks, Drafts, Bank Accounts, Etc.
SECTION 5.01 Execution of Contracts. The Board, except as in these
Bylaws otherwise provided, may authorize any officer or officers, agent or
agents, to enter into any contract or execute any instrument in the name of and
on behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by these Bylaws, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any amount.
SECTION 5.02 Checks, Draft, Etc. All checks, drafts or other orders
for payment of money, notes or other evidence of indebtedness, issued in the
name of or payable to the Corporation, shall be signed or endorsed by such
person or persons and in such manner as, from time to time, shall be determined
by resolution of the Board. Each such officer, assistant, agent or attorney
shall give such bond, if any, as the Board may require.
SECTION 5.03 Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. For the purpose of deposit and for the
purpose of collection for the account of the Corporation, the President, any
Vice President or the Chief Financial Officer (or any other officer or officers,
assistant or assistants, agent or agents, or attorney or attorneys of the
Corporation who shall from time to time be determined by the Board) may endorse,
assign and deliver checks, drafts and other orders for the payment of money
which are payable to the order of the Corporation.
SECTION 5.04 General and Special Bank Accounts. The Board may from
time to time authorize the opening and keeping of general and special bank
accounts with such banks, trust companies or other depositories as the Board may
select or as may be selected by any officer or officers,
10
<PAGE>
assistant or assistants, agent or agents, or attorney or attorneys of the
Corporation to whom such power shall have been delegated by the Board. The
Board may make such special rules and regulations with respect to such bank
accounts, not inconsistent with the provisions of these Bylaws, as it may deem
expedient.
ARTICLE VI
Shares and Their Transfer
SECTION 6.01 Certificates for Stock. Every owner of stock of the
Corporation shall be entitled to have a certificate or certificates, to be in
such form as the Board shall prescribe, certifying the number and class of
shares of the stock of the Corporation owned by him. The certificates
representing shares of such stock shall be numbered in the order in which they
shall be issued and shall be signed in the name of the Corporation by the
President or a Vice President, and by the Secretary or an Assistant Secretary or
by the Chief Financial Officer or an Assistant Treasurer. Any of or all of the
signatures on the certificates may be a facsimile. In case any officer,
transfer agent or registrar who has signed, or whose facsimile signature has
been placed upon, any such certificate, shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, such certificate
may nevertheless be issued by the Corporation with the same effect as though the
person who signed such certificate, or whose facsimile signature shall have been
placed thereupon, were such officer, transfer agent or registrar at the date of
issue. A record shall be kept of the respective names of the persons, firms or
corporations owning the stock represented by such certificates, the number and
class of shares represented by such certificates, respectively, and the
respective dates thereof, and in case of cancellation, the respective dates of
cancellation. Every certificate surrendered to the Corporation for exchange or
transfer shall be cancelled, and no new certificate or certificates shall be
issued in exchange for any existing certificate until such existing certificate
shall have been so cancelled, except in cases provided for in Section 6.04.
SECTION 6.02 Transfers of Stock. Transfers of shares of stock of
the Corporation shall be made only on the books of the Corporation by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary, or with a transfer clerk or
a transfer agent appointed as provided in Section 6.03, and upon surrender of
the certificate or certificates for such shares properly endorsed and the
payment of all taxes thereon. The person in whose name shares of stock stand on
the books of the Corporation shall
11
<PAGE>
be deemed the owner thereof for all purposes as regards the Corporation.
Whenever any transfer of shares shall be made for collateral security, and not
absolutely, such fact shall be so expressed in the entry of transfer if, when
the certificate or certificates shall be presented to the Corporation for
transfer, both the transferor and the transferee request the Corporation to do
so.
SECTION 6. 03 Regulations. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these Bylaws,
concerning the issue, transfer and registration of certificates for shares of
the stock of the Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer clerks or one or more transfer agents
and one or more registrars, and may require all certificates for stock to bear
the signature or signatures of any of them.
SECTION 6.04 Lost, Stolen, Destroyed, and Mutilated Certificates.
In any case of loss, theft, destruction, or mutilation of any certificate of
stock, another may be issued in its place upon proof of such loss, theft,
destruction, or mutilation and upon the giving of a bond of indemnity to the
Corporation in such form and in such sum as the Board may direct; provided,
however, that a new certificate may be issued without requiring any bond when,
in the judgment of the Board, it is proper so to do.
SECTION 6.05 Fixing Data for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
other change, conversion or exchange of stock or for the purpose of any other
lawful action, the Board may fix, in advance, a record data, which shall not be
more than 60 nor less than 10 days before the date of such meeting, not more
than 60 days prior to any other action. If in any case involving the
determination of stockholders for any purpose other than notice of or voting at
a meeting of stockholders or expressing consent to corporate action without a
meeting the Board shall not fix such a record date, the record date for
determining stockholders for such purpose shall be the close of business on the
day on which the Board shall adopt the resolution relating thereto. A
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of such meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting.
12
<PAGE>
ARTICLE VII
Indemnification
SECTION 7.01 Action, Etc. Other Than by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and, in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation,
and with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, that he
had reasonable cause to believe that his conduct was unlawful.
SECTION 7.02 Actions, Etc., by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Corporation, except that no indemnification
shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable for negligence or misconduct in
the performance of his duty to the Corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability
13
<PAGE>
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such either court shall deem proper.
SECTION 7.03 Determination of Right of Indemnification. Any
indemnification under Section 7.01 or 7.02 (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 7.01 and 7.02. Such determination shall be made
(i) by the Board by a majority vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or (ii) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders.
SECTION 7.04 Indemnification Against Expenses of Successful Party.
Notwithstanding the other provisions of this Article, to the extent that a
director, officer, employee or agent of the Corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding
referred to in Section 7.01 or 7.02, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
SECTION 7.05 Prepaid Expenses. Expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the Corporation as authorized in this Article. Such expenses incurred by
other employees and agents may be so paid upon such terms and conditions, if
any, as the Board deems appropriate.
SECTION 7.06 Other Rights and Remedies. The indemnification
provided by this Article shall not he deemed exclusive of any other rights to
which those seeking indemnification may be entitled under any Bylaws, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the
14
<PAGE>
benefit of the heirs, executors and administrators of such a person.
SECTION 7.07 Insurance. Upon resolution passed by the Board, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article.
SECTION 7.08 Constituent Corporations. For the purposes of this
Article, references to "the Corporation" include all constituent corporations
absorbed in a consolidation or merger as well as the resulting or surviving
corporation, so that any person who is or was a director, officer, employee or
agent of such a constituent corporation or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise shall
stand in the same position under the provisions of this Article with respect to
the resulting or surviving corporation as he would if he had served the
resulting or surviving corporation in the same capacity.
SECTION 7.09 Other Enterprises, Fines, and Serving at Corporation's
Request. For purposes of this Article, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Article.
15
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ARTICLE VIII
Miscellaneous
SECTION 8.01 Seal. The Board shall provide a corporate seal, which
shall be in the form of a circle and shall bear the name of the Corporation and
words and figures showing that the Corporation was incorporated in the State of
Delaware and the year of incorporation.
SECTION 8.02 Waiver of Notices. Whenever notice is required to he
given by these Bylaws or the Certificate of Incorporation or by law, the person
entitled to said notice may waive such notice in writing, either before or after
the time stated therein, and such waiver shall he deemed equivalent to notice.
SECTION 8.03 Amendments. These Bylaws, or any of them, may be
altered, amended or repealed, and new Bylaws may be made, (i) by the Board, by
vote of a majority of the number of directors then in office as directors,
acting at any meeting of the Board, or (ii) by the stockholders, at any annual
meeting of stockholders, without previous notice, or at any special meeting of
stockholders, provided that notice of such proposed amendment, modification,
repeal or adoption is given in the notice of special meeting. Any Bylaws made
or altered by the stockholders may be altered or repealed by either the Board or
the stockholders.
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CERTIFICATE OF ASSISTANT SECRETARY
The undersigned, being the duly elected Assistant Secretary of MSC
Holdings II, Inc., a Delaware corporation, hereby certifies that the Bylaws
to which this Certificate is attached were duly adopted by the Board of
Directors of said Corporation as of June 28, 1995.
/s/ Monty Yort
----------------------------------------
Monty Yort,
Assistant Secretary
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASTOR CORPORATION
ISSUER,
AND
ASTOR HOLDINGS II, INC.
AND
STATE STREET BANK AND TRUST COMPANY,
TRUSTEE
------------------
INDENTURE
Dated as of October 8, 1996
------------------
10 1/2% Senior Subordinated Notes due 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of October 8, 1996
Trust Indenture Indenture
Act Section Section
--------------- ---------
Section 310(a)(1) . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . 7.10
7.8
Section 311(a) . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . 7.11
Section 312(a) . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . 14.3
(c) . . . . . . . . . . . . . . . 14.3
Section 313(a) . . . . . . . . . . . . . . . 7.6
(b) . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . 7.6
(d) . . . . . . . . . . . . . . . 7.6
Section 314(a) . . . . . . . . . . . . . . . 4.7
(a)(4) . . . . . . . . . . . . . . . 1.1
4.6
(b) . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . 14.4
(c)(2) . . . . . . . . . . . . . . . 14.4
(c)(3) . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . 4.6
Section 315(a) . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . 7.5
(c) . . . . . . . . . . . . . . . 7.1
(d) . . . . . . . . . . . . . . . 7.1
(e) . . . . . . . . . . . . . . . 6.13
i
<PAGE>
Trust Indenture Indenture
Act Section Section
--------------- ---------
Section 316(a) . . . . . . . . . . . . . . . 1.1
(a)(1)(A) . . . . . . . . . . . . . . . 6.2
6.11
(a)(1)(B) . . . . . . . . . . . . . . . 6.12
(a)(2) . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . 6.8
(c) . . . . . . . . . . . . . . . 9.4
Section 317(a)(1) . . . . . . . . . . . . . . . 6.3
(a)(2) . . . . . . . . . . . . . . . 6.4
(b) . . . . . . . . . . . . . . . 2.4
Section 318(a) . . . . . . . . . . . . . . . 1.1
1.2
1.3
ii
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 INCORPORATION BY REFERENCE OF TIA. . . . . . . . . . . . . .26
SECTION 1.3 RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . .27
ARTICLE II
THE NOTES
SECTION 2.1 FORM AND DATING. . . . . . . . . . . . . . . . . . . . . . .27
SECTION 2.2 EXECUTION AND AUTHENTICATION . . . . . . . . . . . . . . . .28
SECTION 2.3 REGISTRAR AND PAYING AGENT . . . . . . . . . . . . . . . . .29
SECTION 2.4 PAYING AGENT TO HOLD ASSETS IN TRUST . . . . . . . . . . . .30
SECTION 2.5 NOTEHOLDER LISTS . . . . . . . . . . . . . . . . . . . . . .30
SECTION 2.6 TRANSFER AND EXCHANGE. . . . . . . . . . . . . . . . . . . .30
SECTION 2.7 REPLACEMENT NOTES. . . . . . . . . . . . . . . . . . . . . .36
SECTION 2.8 OUTSTANDING NOTES. . . . . . . . . . . . . . . . . . . . . .36
SECTION 2.9 TREASURY NOTES . . . . . . . . . . . . . . . . . . . . . . .37
SECTION 2.10 TEMPORARY NOTES. . . . . . . . . . . . . . . . . . . . . . .37
SECTION 2.11 CANCELLATION . . . . . . . . . . . . . . . . . . . . . . . .37
SECTION 2.12 DEFAULTED INTEREST . . . . . . . . . . . . . . . . . . . . .38
ARTICLE III
REDEMPTION
SECTION 3.1 RIGHT OF REDEMPTION. . . . . . . . . . . . . . . . . . . . .39
SECTION 3.2 NOTICES TO TRUSTEE . . . . . . . . . . . . . . . . . . . . .40
SECTION 3.3 SELECTION OF NOTES TO BE REDEEMED. . . . . . . . . . . . . .40
SECTION 3.4 NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . .40
SECTION 3.5 EFFECT OF NOTICE OF REDEMPTION . . . . . . . . . . . . . . .42
SECTION 3.6 DEPOSIT OF REDEMPTION PRICE. . . . . . . . . . . . . . . . .42
SECTION 3.7 NOTES REDEEMED IN PART . . . . . . . . . . . . . . . . . . .43
ARTICLE IV
COVENANTS
SECTION 4.1 PAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . .43
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY. . . . . . . . . . . . . . .43
SECTION 4.3 CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . . . .44
iii
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Page
----
SECTION 4.4 PAYMENT OF TAXES AND OTHER CLAIMS. . . . . . . . . . . . . .44
SECTION 4.5 MAINTENANCE OF PROPERTIES AND INSURANCE. . . . . . . . . . .45
SECTION 4.6 COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT. . . . . . . . . .45
SECTION 4.7 REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . .46
SECTION 4.8 STATUS AS INVESTMENT COMPANY . . . . . . . . . . . . . . . .47
SECTION 4.9 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED
STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . .47
SECTION 4.10 RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . . . . .49
SECTION 4.11 DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . .53
SECTION 4.12 ANTI-LAYERING. . . . . . . . . . . . . . . . . . . . . . . .54
SECTION 4.13 ASSET SALES AND SALES OF SUBSIDIARY STOCK. . . . . . . . . .55
SECTION 4.14 LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . .59
SECTION 4.15 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . .59
SECTION 4.16 LINE OF BUSINESS . . . . . . . . . . . . . . . . . . . . . .61
SECTION 4.17 FUTURE SUBSIDIARY GUARANTORS . . . . . . . . . . . . . . . .61
SECTION 4.18 WAIVER OF STAY, EXTENSION OR USURY LAWS. . . . . . . . . . .62
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 LIMITATION ON MERGER, CONSOLIDATION OR SALE OF ASSETS. . . .62
SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED. . . . . . . . . . . . . .63
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1 EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . .64
SECTION 6.2 ACCELERATION OF MATURITY DATE; RESCISSION AND ANNULMENT. . .67
SECTION 6.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . .69
SECTION 6.4 TRUSTEE MAY FILE PROOFS OF CLAIM.. . . . . . . . . . . . . .69
SECTION 6.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES . . .70
SECTION 6.6 PRIORITIES . . . . . . . . . . . . . . . . . . . . . . . . .71
SECTION 6.7 LIMITATION ON SUITS. . . . . . . . . . . . . . . . . . . . .71
SECTION 6.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM,
INTEREST AND LIQUIDATED DAMAGES. . . . . . . . . . . . . . .72
iv
<PAGE>
Page
----
SECTION 6.9 RIGHTS AND REMEDIES CUMULATIVE . . . . . . . . . . . . . . .72
SECTION 6.10 DELAY OR OMISSION NOT WAIVER . . . . . . . . . . . . . . . .73
SECTION 6.11 CONTROL BY HOLDERS . . . . . . . . . . . . . . . . . . . . .73
SECTION 6.12 WAIVER OF PAST DEFAULT . . . . . . . . . . . . . . . . . . .73
SECTION 6.13 UNDERTAKING FOR COSTS. . . . . . . . . . . . . . . . . . . .74
SECTION 6.14 RESTORATION OF RIGHTS AND REMEDIES . . . . . . . . . . . . .74
ARTICLE VII
TRUSTEE
SECTION 7.1 DUTIES OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . .75
SECTION 7.2 RIGHTS OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . .76
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . .77
SECTION 7.4 TRUSTEE'S DISCLAIMER . . . . . . . . . . . . . . . . . . . .77
SECTION 7.5 NOTICE OF DEFAULT. . . . . . . . . . . . . . . . . . . . . .77
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS. . . . . . . . . . . . . . . .78
SECTION 7.7 COMPENSATION AND INDEMNITY . . . . . . . . . . . . . . . . .78
SECTION 7.8 REPLACEMENT OF TRUSTEE . . . . . . . . . . . . . . . . . . .79
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.. . . . . . . . . . . . . .80
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION. . . . . . . . . . . . . . . .81
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. . . . . .81
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE . .81
SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE . . . . . . . . . . . . . . .81
SECTION 8.3 COVENANT DEFEASANCE. . . . . . . . . . . . . . . . . . . . .82
SECTION 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE . . . . . . . . .82
SECTION 8.5 DEPOSITED CASH AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS . . . . . . . . . .84
SECTION 8.6 REPAYMENT TO THE COMPANY . . . . . . . . . . . . . . . . . .85
SECTION 8.7 REINSTATEMENT. . . . . . . . . . . . . . . . . . . . . . . .85
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS . . . . .86
v
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Page
----
SECTION 9.2 AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH
CONSENT OF HOLDERS . . . . . . . . . . . . . . . . . . . . .87
SECTION 9.3 COMPLIANCE WITH TIA. . . . . . . . . . . . . . . . . . . . .88
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS. . . . . . . . . . . . . .88
SECTION 9.5 NOTATION ON OR EXCHANGE OF NOTES . . . . . . . . . . . . . .89
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC. . . . . . . . . . . . . . .90
SECTION 9.7 EFFECT ON SENIOR DEBT. . . . . . . . . . . . . . . . . . . .90
ARTICLE X
MEETINGS OF NOTEHOLDERS
SECTION 10.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED. . . . . . . . . .90
SECTION 10.2 MANNER OF CALLING MEETINGS . . . . . . . . . . . . . . . . .91
SECTION 10.3 CALL OF MEETINGS BY THE COMPANY OR HOLDERS . . . . . . . . .91
SECTION 10.4 WHO MAY ATTEND AND VOTE AT MEETINGS. . . . . . . . . . . . .92
SECTION 10.5. REGULATIONS MAY BE MADE BY TRUSTEE; CONDUCT OF THE
MEETING; VOTING RIGHTS; ADJOURNMENT. . . . . . . . . . . . .92
SECTION 10.6 VOTING AT THE MEETING AND RECORD TO BE KEPT. . . . . . . . .93
SECTION 10.7 EXERCISE OF RIGHTS OF TRUSTEE OR NOTEHOLDERS MAY NOT BE
HINDERED OR DELAYED BY CALL OF MEETING . . . . . . . . . . .93
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE
SECTION 11.1 REPURCHASE OF NOTES AT OPTION OF THE HOLDER UPON A CHANGE
OF CONTROL . . . . . . . . . . . . . . . . . . . . . . . . .94
ARTICLE XII
SUBORDINATION
SECTION 12.1 NOTES SUBORDINATED TO SENIOR DEBT. . . . . . . . . . . . . .97
SECTION 12.2 NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES . . . . . . . .97
SECTION 12.3 NOTES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR DEBT ON
DISSOLUTION, LIQUIDATION OR REORGANIZATION . . . . . . . . .99
SECTION 12.4 NOTEHOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR
DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
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SECTION 12.5 OBLIGATIONS OF THE COMPANY AND THE GUARANTORS
UNCONDITIONAL. . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 12.6 TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN
ABSENCE OF NOTICE. . . . . . . . . . . . . . . . . . . . . 102
SECTION 12.7 APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT . . . . 103
SECTION 12.8 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
THE COMPANY, THE GUARANTOR OR HOLDERS OF SENIOR DEBT . . . 103
SECTION 12.9 NOTEHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION
OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 104
SECTION 12.10 RIGHT OF TRUSTEE TO HOLD SENIOR DEBT . . . . . . . . . . . 105
SECTION 12.11 ARTICLE XII NOT TO PREVENT EVENTS OF DEFAULT . . . . . . . 105
SECTION 12.12 NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF SENIOR DEBT . . 105
ARTICLE XIII
NOTE GUARANTEE
SECTION 13.1 NOTE GUARANTEE . . . . . . . . . . . . . . . . . . . . . . 106
SECTION 13.2 EXECUTION AND DELIVERY OF NOTE GUARANTEE . . . . . . . . . 108
SECTION 13.3 FUTURE SUBSIDIARY GUARANTORS . . . . . . . . . . . . . . . 108
SECTION 13.4 CERTAIN BANKRUPTCY EVENTS. . . . . . . . . . . . . . . . . 108
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 TIA CONTROLS . . . . . . . . . . . . . . . . . . . . . . . 109
SECTION 14.2 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . 109
SECTION 14.3 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS . . . . . . . 110
SECTION 14.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT . . . . 110
SECTION 14.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. . . . . . . 110
SECTION 14.6 RULES BY TRUSTEE, PAYING AGENT, REGISTRAR. . . . . . . . . 111
SECTION 14.7 LEGAL HOLIDAYS . . . . . . . . . . . . . . . . . . . . . . 111
SECTION 14.8 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . 111
SECTION 14.9 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. . . . . . . 112
SECTION 14.10 NO RECOURSE AGAINST OTHERS . . . . . . . . . . . . . . . . 112
SECTION 14.11 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 14.12 DUPLICATE ORIGINALS. . . . . . . . . . . . . . . . . . . . 112
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SECTION 14.13 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 14.14 TABLE OF CONTENTS, HEADINGS, ETC.. . . . . . . . . . . . . 113
SECTION 14.15 QUALIFICATION OF INDENTURE . . . . . . . . . . . . . . . . 113
SECTION 14.16 REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . . 113
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
EXHIBIT A - FORM OF NOTE . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B - FORM OF NOTE GUARANTEE . . . . . . . . . . . . . . . . . . . . B-1
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INDENTURE, dated as of October 8, 1996, among Astor Corporation, a
Delaware corporation (the "Company"), Astor Holdings II, Inc. as a Guarantor and
State Street Bank and Trust Company, as Trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's
10 1/2% Senior Subordinated Notes due 2006 and the class of 10 1/2% Senior
Subordinated Notes due 2006 to be exchanged for such Notes:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS.
"ABI CORPORATION" means ABI Corporation, a Delaware corporation, and
its successors and assigns.
"ABI SHAREHOLDER INTERCOMPANY NOTES" means the amended and restated
notes dated October 1, 1996 of ABI Acquisition 2 plc, ABI Acquisition 1 plc and
Astor Holdings II to ABI Acquisition 1 plc, Astor Holdings II and the Parent,
respectively, in connection with the acquisition of Astor Stag Ltd. and each in
a principal amount equal to L3,736,295 PLUS the principal amount of all ABI
Shareholder Notes issued from time to time in payment of interest on the then
outstanding ABI Shareholder Notes pursuant to the terms thereof.
"ABI SHAREHOLDER NOTES" means the Series A L2,285,307 8% Subordinated
Notes due 2003 and the Series B L1,450,988 8% Subordinated Notes due 2003 issued
by the Parent to the former shareholders of Associated British Industries
Limited, plc.
"ACCELERATION NOTICE" shall have the meaning specified in Section 6.2.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting
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securities, by agreement or otherwise; PROVIDED that beneficial ownership of 10%
or more of the voting securities of a Person shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-Registrar.
"ASSET SALE" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback) (PROVIDED that the sale, lease, conveyance or other disposition of
all or substantially all of the assets of Astor Holdings II or of the Company
and its Restricted Subsidiaries taken as a whole will be governed by the
provisions under Article XI and/or the provisions under Article V and not by the
provisions of Section 4.13) and (ii) the issue or sale by Astor Holdings II of
Equity Interests of the Company or any Restricted Subsidiary or by the Company
or any Restricted Subsidiary of Equity Interests of any Restricted Subsidiary,
in the case of either of the foregoing clauses, whether in a single transaction
or a series of related transactions (a) that have a fair market value in excess
of $250,000 or (b) for net proceeds in excess of $250,000. Notwithstanding the
foregoing, the following will not be deemed to be Asset Sales: (i) a transfer of
assets by the Company to a Guarantor, by a Guarantor or a Subsidiary to the
Company or to another Guarantor or by a Restricted Subsidiary that is not a
Guarantor to another Restricted Subsidiary or the Company, (ii) the sale, lease,
conveyance or other disposition of inventory or cash management or hedging
investments by the Company or a Restricted Subsidiary of the Company in the
ordinary course of business, (iii) the sale, lease, conveyance or other
disposition of property or equipment that have become worn out, obsolete or
damaged or otherwise unusable for use in connection with the business of the
Company or any Restricted Subsidiary, as the case may be, (iv) an issuance of
Equity Interests by a Restricted Subsidiary to the Company or to any Guarantor,
(v) a sale or other disposition pursuant to and permitted by Article V, (vi) the
transfer by the Company to any Restricted Subsidiary, or by any Restricted
Subsidiary to the Company or any other Restricted Subsidiary, of non-exclusive
rights to use proprietary product formulations, (vii) the merger of a Restricted
Subsidiary into a Subsidiary Guarantor or into the Company (provided that the
Person surviving any such merger must be either a Subsidiary Guarantor or the
Company), (viii) the merger of a Restricted Subsidiary that is not a Subsidiary
Guarantor into another Restricted Subsidiary that is not a Subsidiary Guarantor,
and (ix) a Restricted Payment that is permitted by Section 4.10.
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"ASSET SALE OFFER" shall have the meaning specified in Section 4.13.
"ASSET SALE PURCHASE DATE" shall have the meaning specified in Section
4.13.
"ASTOR HOLDINGS II" means Astor Holdings II, Inc., a Delaware
corporation, and its successors and assigns.
"BANK TERM LOAN" means the term loan facility provided under the
Senior Bank Facility.
"BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar Federal,
state or foreign law for the relief of debtors.
"BOARD OF DIRECTORS" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
"BOARD RESOLUTION" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"BORROWING BASE" means, as of any date of determination (and expressed
in dollars or foreign currency as appropriate), the sum of (i) 85% of the
aggregate unpaid portions of accounts receivable of the Company and its
Restricted Subsidiaries arising in the ordinary course of business from the sale
of products or the provision of services (after allowance for doubtful accounts
and net of any credits, rebates, offsets and other adjustments) and (ii) 50% of
the value (determined at the lower of cost or market on a basis consistent with
the consolidated financial statements of the Company, after appropriate
write-downs for obsolescence, quality problems and the like) of inventories of
the Company and its Restricted Subsidiaries held in the ordinary course of
business; PROVIDED that the amount determined pursuant to clause (ii) above
shall not constitute 50% of the sum of the foregoing clauses.
"BUSINESS DAY" means a day that is not a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means rental obligations under a lease that
are required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by
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such obligations shall be the capitalized amount of such obligations as
determined in accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"CASH" means such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public and
private debts.
"CASH EQUIVALENT" means (i) securities issued or directly and fully
Guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits,
certificates of deposit and money market deposits issued by and commercial paper
issued by the parent corporation of, any domestic commercial bank of recognized
standing having capital and surplus in excess of $500 million and commercial
paper issued by others rated at least A-2 or the equivalent thereof by S&P or at
least P-2 or the equivalent thereof by Moody's and in each case maturing within
one year after the date of acquisition, (iii) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clause (i) or deposits of the type described in clause (ii) above entered into
with a bank meeting the qualifications described in clause (ii) above and (iv)
investments in money market funds substantially all of whose assets comprise
securities of the types described in clauses (i), (ii) and (iii) above.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i)
any sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation) in one or a series of related transactions, of all or
substantially all of the assets of (A) the Company and its Restricted
Subsidiaries taken as a whole or (B) Astor Holdings II, the Company and its
Restricted Subsidiaries taken as a whole or (C) the Parent, Astor Holdings II,
the Company and its Restricted Subsidiaries taken as a whole to any "person" (as
defined in Section 13(d)(3) of the Exchange Act) or "group" (as defined in
4
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Sections 13(d)(3) and 14(d)(2) of the Exchange Act) unless the "beneficial
owners" (as defined in Rule 13d-3 under the Exchange Act) of the Voting Stock
of the Parent, Astor Holdings II or the Company immediately prior to such
transaction own, directly or indirectly, more than 50% of the total Voting
Stock of such person immediately after such transaction, (ii) the adoption of
a plan for the liquidation or dissolution of the Parent, Astor Holdings II or
the Company, (iii) the Parent, Astor Holdings II or the Company consolidates
with, or merges with or into, another "person" (as defined above) or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any "person" (as defined above) or "group"
(as defined above) in a transaction or series of related transactions in
which the Voting Stock of the Parent, Astor Holdings II or the Company is
converted into or exchanged for cash, securities or other property, other
than any transaction where (A) the outstanding Voting Stock of the Parent,
Astor Holdings II or the Company is converted into or exchanged for (1)
Voting Stock (other than Disqualified Stock) of the surviving or transferee
corporation and/or (2) cash, securities and other property in an amount which
could be paid by Astor Holdings II or the Company as a Restricted Payment
under this Indenture and (B) the "beneficial owners" (as defined in Rule
13d-3 under the Exchange Act) of the Voting Stock of the Parent, Astor
Holdings II or the Company immediately prior to such transaction own,
directly or indirectly, more than 50% of the total Voting Stock of the
surviving or transferee corporation immediately after such transaction, (iv)
the consummation of any transaction or series of related restrictions
(including, without limitation, by way of merger or consolidation) the result
of which is that any "person" (as defined above) or "group" (as defined
above), other than Excluded Persons, becomes the "beneficial owner" (as
defined above) of more than 50% of the Voting Stock of the Parent, Astor
Holdings II or the Company or (v) the first day on which a majority of the
members of the Board of Directors of the Parent, Astor Holdings II or the
Company are not Continuing Directors.
"CHANGE OF CONTROL OFFER" shall have the meaning specified in Section
11.1.
"CHANGE OF CONTROL PAYMENT" shall have the meaning specified in
Section 11.1.
"CHANGE OF CONTROL PAYMENT DATE" shall have the meaning specified in
Section 11.1.
"CHANGE OF CONTROL PUT DATE" shall have the meaning specified in
Section 11.1.
5
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"COMPANY" means Astor Corporation, a Delaware corporation, and its
successors and assigns.
"CONSOLIDATED NET INCOME" means, for any period, the aggregate of the
Net Income of Astor Holdings II and its Consolidated Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP, PROVIDED
that (i) the Net Income (but not loss) of any Person that is not a Consolidated
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to Astor Holdings II or a Consolidated Subsidiary thereof, (ii) the Net
Income of any Restricted Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not, at the date of determination, permitted
without any prior governmental approval (which has not been obtained) or
directly or indirectly by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its Consolidated Subsidiaries as of such date plus, (ii) the
respective amounts reported on, such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that is
outstanding on the date of this Indenture or, if not then outstanding, by its
terms is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within twelve months after the
acquisition of such business) subsequent to the Issue Date in the book value of
any asset owned by such Person or a Consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments) and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such
6
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date, all of the foregoing being determined in accordance with GAAP.
"CONSOLIDATED SUBSIDIARY" means, as to any Person at any date, the
Subsidiaries of such Person the accounts of which would be consolidated with
those of such Person in accordance with GAAP at such date, but excluding any
Unrestricted Subsidiary (except that the interest of Astor Holdings II, the
Company or any Restricted Subsidiary in any Unrestricted Subsidiary shall be
accounted for as an investment).
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of the Parent, Astor Holdings II or the Company
who (i) was a member of such Board of Directors on the Issue Date or (ii) was
nominated for election or elected to such Board of Directors with the approval
of a majority of the Continuing Directors who were members of such Board at the
time of such nomination or election.
"COVENANT DEFEASANCE" shall have the meaning specified in Section 8.3.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DEFAULTED INTEREST" shall have the meaning specified in Section 2.12.
"DEFINITIVE NOTES" means Notes that are in the form of Note attached
hereto as Exhibit A that do not include the information called by footnotes 1
and 3 thereof.
"DEPOSITARY" means, with respect to the Notes issuable or issued in
whole or in part in global form, the person specified in Section 2.3 as the
Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"DESIGNATED SENIOR DEBT" means (i) so long as the Company has any
Obligation under the Senior Bank Facility, the Senior Bank Facility and (ii) any
other Senior Debt of the Company permitted under the Indenture the aggregate
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principal amount of which is $5.0 million or more and that has been designated
by the Company by notice to the Trustee as "Designated Senior Debt."
"DISQUALIFIED STOCK" means (a) any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to date on
which the Notes mature and (b) with respect to any Restricted Subsidiary, any
Capital Stock other than any common stock with no preference, privilege, or
redemption or repayment provisions.
"DOMESTIC RESTRICTED SUBSIDIARY" means any Restricted Subsidiary that
is incorporated or organized under the laws of a jurisdiction in the United
States of America.
"EBITDA" means, for any period, the Consolidated Net Income of Astor
Holdings II for such period PLUS (i) an amount equal to any extraordinary loss
plus any net loss realized in connection with an Asset Sale (to the extent such
losses were deducted in computing such Consolidated Net Income) PLUS (ii)
provision for taxes based on income or profits of Astor Holdings II and its
Consolidated Subsidiaries for such period to the extent that such provision for
taxes was included in computing such Consolidated Net Income PLUS (iii)
consolidated interest expense of Astor Holdings II and its Consolidated
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized but without duplication (including, without limitation, amortization
of original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
operating leases, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, the interest
expense actually paid on Indebtedness of another Person that is Guaranteed by,
or secured by a Lien on assets of Astor Holdings II or a Consolidated Subsidiary
and net payments (if any) pursuant to Hedging Obligations) to the extent that
any such expense was deducted in computing such Consolidated Net Income PLUS
(iv) depreciation and amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) of Astor Holdings II and its Consolidated Subsidiaries for
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such period to the extent that such depreciation and amortization were deducted
in computing such Consolidated Net Income, in each case, on a consolidated basis
and determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization of, a Consolidated Subsidiary shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in same proportion) that the
Net Income of such Restricted Subsidiary was included in calculating such
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended (or paid pursuant to the Tax Sharing
Agreement) to Astor Holdings II by such Consolidated Subsidiary without prior
approval (that has not been obtained) pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted Subsidiary or its
stockholders.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for Capital Stock).
"EVENT OF DEFAULT" shall have the meaning specified in Section 6.1.
"EXCESS PROCEEDS PAYMENT" shall have the meaning specified in Section
4.13.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"EXCLUDED PERSON" means (a) the Parent, (b) Astor Holdings II, (c) the
Company, (d) Century City 1800 Partners L.P. (provided the current general
partner of Century City 1800 Partners L.P. remains the general partner or
controls the general partner of such partnership), (e) any partnership of which
Century City 1800 Partners L.P. is the general partner or controls the general
partner of such partnership (provided the current general partner of Century
City 1800 Partners L.P. remains the general partner or controls the general
partner of Century City 1800 Partners L.P.) and (f) all Related Persons of any
of the foregoing.
"EXISTING DISQUALIFIED STOCK" means Disqualified Stock in existence on
the Issue Date of the Company or any Restricted Subsidiary or Astor Holdings II
until such Disqualified Stock is redeemed or retired.
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"EXISTING INDEBTEDNESS" means Indebtedness in existence on the Issue
Date of the Company and its Restricted Subsidiaries and Astor Holdings II until
such amounts are repaid.
"FIXED CHARGES" means, for any period, the sum of (i) the consolidated
interest expense of Astor Holdings II and its Consolidated Subsidiaries for such
period, whether paid or accrued and whether or not capitalized but without
duplication (including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to operating leases,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, the interest expense actually paid
on Indebtedness of another Person that is Guaranteed by, or secured by a Lien on
assets of, Astor Holdings II or a Consolidated Subsidiary and net payments (if
any) pursuant to Hedging Obligations), and (ii) the product of (a) all cash
dividend payments (other than dividends on the Disqualified Stock of the Company
owned by ABI Corporation to the extent such dividends are returned by dividends
of the Company) on any series of Disqualified Stock of Astor Holdings II, the
Company or any Restricted Subsidiary that is not owned by Astor Holdings II, the
Company or a Restricted Subsidiary, times (b) a fraction, the numerator of which
is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of Astor Holdings II, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP
"FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio of
EBITDA for such period to Fixed Charges for such period. In the event that
Astor Holdings II or any Consolidated Subsidiary incurs, assumes, Guarantees or
repays or redeems any Indebtedness (other than revolving Indebtedness under the
Senior Bank Facility) or issues or redeems Disqualified Stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but on or prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee, repayment or redemption of
Indebtedness, or such issuance or redemption of Disqualified Stock (and the
application of the proceeds therefrom to the extent used to refinance or retire
other Indebtedness or Disqualified Stock), as if the same
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had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by Astor Holdings II or any Consolidated
Subsidiary, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period and EBITDA for such reference period shall be calculated without giving
effect to clause (iii) of the proviso set forth in the definition of
Consolidated Net Income, (ii) the EBITDA attributable to discontinued operations
as determined in accordance with GAAP and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed or prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations giving rise to such Fixed
Charges will not be obligations of Astor Holdings II or any Consolidated
Subsidiary following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States of America which are in effect on the Issue
Date.
"GLOBAL NOTE" means a Note that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in footnote 3 to the form of
Note attached hereto as Exhibit A.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness. The term "Guarantee" used as a verb has a corresponding meaning.
"GUARANTORS" means Astor Holdings II and all Restricted Subsidiaries
that become Subsidiary Guarantors in accordance with this Indenture after the
Issue Date.
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"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such person against fluctuations
in interest rates.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is
registered on the Registrar's books.
"INDEBTEDNESS" means, with respect to any Person, (i) any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments, (ii) letters of
credit (or reimbursement agreements in respect thereof), (iii) Capital Lease
Obligations, (iv) the balance deferred and unpaid of the purchase price of any
property, (v) any Hedging Obligations and Oil and Currency Obligations, other
than Hedging Obligations and Oil and Currency Obligations incurred in accordance
with such Person's customary practices for bona fide risk hedging purposes and
not for speculative purposes, (vi) Indebtedness referred to in the preceding
clauses of others secured by a Lien on any asset of such Person (whether or not
such Indebtedness is assumed by such Person) and (vii) to the extent not
otherwise included, any Guarantee by such Person of any Indebtedness referred to
in the preceding clauses of any other Person. The principal amount of
Indebtedness represented by letters of credit shall be deemed to be equal to the
maximum potential liability thereunder. With respect to the Company, issuances
by the Company of subordinated promissory notes in an aggregate principal amount
not to exceed $2.75 million to Quaker State Company in respect of certain
environmental liabilities of the Company under the Asset Purchase and Sale
Agreement dated as of March 30, 1990, as amended by the Amendment Agreement and
Joint Release dated April 22, 1994, between the Company and Quaker State Company
shall not be deemed to be an incurrence of Indebtedness. Notwithstanding the
foregoing, items referred to in clauses (i), (iii) and (iv) above shall not
constitute Indebtedness to the extent that such items constitute an accrued
expense or trade payable of such Person arising in the ordinary course of
business, and items referred to in clauses (i), (iii) and (iv) above shall
constitute Indebtedness of such Person only if and to the extent any of such
Indebtedness would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP at such time.
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"INDENTURE" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"INITIAL PURCHASERS" means Donaldson, Lufkin & Jenrette Securities
Corporation and Chase Securities Inc.
"INITIAL SECURITIES" means the 10 1/2% Senior Subordinated Notes due
2006, as supplemented from time to time in accordance with the terms hereof,
issued under this Indenture.
"INTEREST PAYMENT DATE" means the stated due date of an installment of
interest on the Notes.
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees or other Indebtedness but excluding
Guarantees and other Indebtedness permitted under Section 4.9), advances or
capital contributions (excluding commission, travel, relocation and similar
loans or advances to officers and employees, accounts receivable and bank demand
deposits made or arising in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; PROVIDED that
an acquisition of Indebtedness, Equity Interests or other securities by the
Company for consideration consisting of Equity Interests (other than
Disqualified Stock) of the Company or Astor Holdings II shall not be deemed to
be an Investment and a redemption or repurchase of the Notes or other
Indebtedness of the Company or any Restricted Subsidiary or Astor Holdings II
shall not be deemed an Investment. If the Company or any Restricted Subsidiary
sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary
or Wholly Owned Restricted Subsidiary such that, after giving effect to any such
sale or disposition, such Person is no longer a Restricted Subsidiary or a
Wholly Owned Restricted Subsidiary (as the case may be), the Company and/or such
Restricted Subsidiary making such sale or disposition shall be deemed to have
made an Investment on the date of any such sale or disposition equal to the fair
market value of the Equity Interests of such former Restricted Subsidiary not
sold or disposed of.
"ISSUE DATE" means the date and time at which the Notes are originally
issued under this Indenture.
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"LEGAL DEFEASANCE" shall have the meaning specified in Section 8.2.
"LEGAL HOLIDAY" shall have the meaning specified in Section 14.7.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
(other than precautionary filings by lessors in respect of operating leases)
under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" means liquidated damages payable by the Company
or a Guarantor as provided for under the Registration Rights Agreement.
"MANAGEMENT SERVICES AGREEMENT" means the Management Services
Agreement dated June 28, 1995 among the Parent, UBS Capital Corporation and
Century City 1800 Partners, L.P., a Delaware limited partnership, as in effect
on the Issue Date and as it may be amended from time to time; PROVIDED that no
such amendment shall increase any obligation thereunder in a manner that would
create a Restricted Payment.
"MATURITY DATE" means, when used with respect to any Note, the date
specified on such Note as the fixed date on which the final installment of
principal of such Note is due and payable (in the absence of any acceleration
thereof pursuant to the provisions of this Indenture regarding acceleration of
Indebtedness or any Change of Control Offer or Asset Sale Offer).
"MOODY'S" means Moody's Investors Service, Inc. and its successors.
"NET INCOME" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any deduction in
respect of Disqualified Stock dividends, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale or (b) the disposition of
any securities by such Person or the extinguishment of any Indebtedness of such
Person and (ii) any extraordinary gain
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(but not loss), together with any related provision for taxes on such
extraordinary gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the
Company or any Restricted Subsidiary or Astor Holdings II in respect of any
Asset Sale (including, without limitation, any cash received upon the sale or
other disposition of any non-cash consideration received in any Asset Sale), net
of the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits, tax loss
carryforwards or deductions and any tax sharing arrangements), amounts required
to be applied to the repayment of Indebtedness (other than Senior Debt) secured
by a Lien on the asset or assets that were the subject of such Asset Sale and
any reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"NEW NOTES" means the 10 1/2% Senior Subordinated Notes due 2006 to be
issued pursuant to this Indenture in connection with the offer to exchange the
Initial Securities that may be made by the Company and the Guarantor pursuant to
the Registration Rights Agreement.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the
Company nor any Restricted Subsidiary nor Astor Holdings II (a) provides credit
support of any kind (including any undertaking, agreement, or instrument that
would constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise), or (c) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both)any holder of any other Indebtedness (other than
the Notes being offered hereby) of the Company or any Restricted Subsidiary or
Astor Holdings II to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any Restricted
Subsidiary or Astor Holdings II.
"NOTE GUARANTEES" means the Guarantees of Astor Holdings II and any
Restricted Subsidiaries that become Subsidiary Guarantors in accordance with the
Indenture after
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the Issue Date with respect to the Company's payment obligations under the Notes
as provided under Article XIII.
"NOTEHOLDER" or "HOLDER" means the Person in whose name a Note is
registered on the Registrar's books.
"NOTES" means, collectively, the Initial Securities and, when and if
issued as provided in the Registration Rights Agreement, the New Notes.
"NOTES CUSTODIAN" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"NOTICE OF DEFAULT" shall have the meaning specified in Section
6.1(3).
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFICER" means, with respect to the Company or any Guarantor, the
Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer,
the President, any Vice President, the Treasurer or the Secretary of the Company
or such Guarantor.
"OFFICERS' CERTIFICATE" means, with respect to the Company or any
Guarantor, a certificate signed by two Officers of the Company or such Guarantor
and otherwise complying with the requirements of Sections 14.4 and 14.5.
"OIL AND CURRENCY OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) agreements designed to protect such Person
against fluctuations in the price of oil or oil-related products and (ii)
agreements designed to protect such Person against fluctuations in foreign
currencies.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
14.4 and 14.5.
"PARENT" means Astor Holdings, Inc., a Delaware corporation, and its
successors and assigns.
"PARI PASSU DEBT" means Indebtedness that is PARI PASSU with the Notes
maturing on the same day as the Notes.
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"PAYING AGENT" shall have the meaning specified in Section 2.3.
"PAYMENT BLOCKAGE NOTICE" shall have the meaning specified in Section
12.2.
"PAYMENT BLOCKAGE PERIOD" shall have the meaning specified in Section
12.2.
"PAYMENT DEFAULT" shall have the meaning specified in Section 12.2.
"PERMITTED BUSINESS" means any business engaged in the development,
manufacture, distribution or sale of (i) adhesives and sealants, (ii) special
waxes and other waxes or (iii) specialty chemicals; and businesses that are
reasonable extensions or reasonably incidental to the foregoing.
"PERMITTED INVESTMENTS" means (i) any Investment in the Company or in
a Subsidiary Guarantor that is a Wholly Owned Restricted Subsidiary, (ii) any
Investment in Cash Equivalents, (iii) any Investments by the Company or any
Restricted Subsidiary in a Person if, as a result of such Investment, (a) such
Person becomes a Subsidiary Guarantor that is a Wholly Owned Restricted
Subsidiary, or (b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets (or all or
substantially all the assets of a Subsidiary or operating division) to, or is
liquidated into, the Company, or a Subsidiary Guarantor that is a Wholly Owned
Restricted Subsidiary, (iv) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described under Section 4.13, (v) Investments
received as part of the settlement of litigation or in satisfaction of
extensions of credit to any Person otherwise permitted under this Indenture
pursuant to the reorganization, bankruptcy or liquidation of such Person or a
good faith settlement of debts with such Person, (vi) any Investment in a
Restricted Subsidiary, other than a Domestic Restricted Subsidiary, which
Investment is represented by a Guarantee of Indebtedness incurred by such
Restricted Subsidiary pursuant to and in compliance with the provision described
in clause (vi) of the second paragraph of Section 4.9, (vii) any Investment not
permitted by the foregoing clauses of this definition by the Company or its
Restricted Subsidiaries in a Person that is, or immediately after giving effect
to such Investment becomes, a Wholly Owned Restricted Subsidiary that is not a
Subsidiary Guarantor, in aggregate amount not exceeding $9.0 million (or its
foreign currency equivalent)
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and (viii) any Investment not permitted by the foregoing clauses of this
definition by the Company or its Restricted Subsidiaries in (a) a Person in
which the Company and/or its Restricted Subsidiaries owns, or immediately after
giving effect to such Investment will own, more than 20% of such Person's
outstanding Capital Stock (but which Person is not, and will not be, after
giving effect to such Investment, a Subsidiary) and (b) an Unrestricted
Subsidiary in aggregate amount for all such Investments permitted solely by this
clause (viii) not exceeding $1.0 million (or its foreign currency equivalent).
"PERMITTED JUNIOR SECURITIES" means any Qualified Capital Stock and
debt securities of the Company or any Guarantor, as the case may be, that (i)
are subordinated at least to the same extent as the Notes to Senior Debt of the
Company or the Note Guarantee of such Guarantor to the Senior Debt of such
Guarantor, as the case may be, and (ii) have no scheduled installment of
principal due, by redemption, sinking fund payment or otherwise, on or prior to
the stated maturity of the Notes; provided that the effect of any such security
is not to cause the Notes to be treated in any case or proceeding or similar
event related to bankruptcy, insolvency or receivership as part of the same
class of claims as the Senior Debt or any class of claims on a parity with or
senior to the Senior Debt for any payment or distribution and, PROVIDED FURTHER,
that if any such security includes any shares of stock of the Company or any
Guarantor as reorganized or readjusted, or securities of the Company or any
Guarantor or any other corporation provided for by a plan of arrangement,
reorganization or readjustment, (a) the Senior Debt is assumed by the new
corporation, if any, resulting from any such arrangement, reorganization or
adjustment, and (b) the rights of the holders of the Senior Debt are not,
without the consent of such holders, altered by such arrangement, reorganization
or readjustment.
"PERMITTED LIENS" means (i) Liens on assets securing Senior Debt
permitted under this Indenture; (ii) Liens on assets securing Indebtedness
incurred pursuant to and in compliance with clause (vi) or (vii) of the second
paragraph of Section 4.9; (iii) Liens in favor of the Company; (iv) Liens on
assets of any Restricted Subsidiary that is not a Subsidiary Guarantor in favor
of Astor Holdings II or a Subsidiary Guarantor; (v) Liens on property of a
Person existing at the time such Person is merged into or consolidated with the
Company or any Restricted Subsidiary, PROVIDED, that such Liens (x) were not
incurred in connection with, or in contemplation of, such merger or
consolidation and (y) do not extend to any assets other than
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those of the Person merged into or consolidated with the Company or such
Restricted Subsidiary; (vi) Liens on property existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary (including (A)
Liens securing or comprising Capital Lease Obligations and (B) Liens securing
Oil and Currency Obligations that do not constitute Indebtedness; PROVIDED that
such Liens do not extend to any assets of the Company or any Restricted
Subsidiary other than the property that is the subject of such Oil and Currency
Obligations); (vii) Liens to secure the performance of statutory obligations,
surety or appeal bonds or performance bonds, or landlords', carriers',
warehousemen's, mechanics', suppliers', materialmen's or other like Liens, in
any case incurred in the ordinary course of business and with respect to amounts
not yet delinquent or being contested in good faith by appropriate process of
law, if a reserve or other appropriate provision, if any, as is required by GAAP
shall have been made therefor; (viii) Liens existing on the Issue Date; (ix)
Liens for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded; PROVIDED that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (x) Liens securing Indebtedness incurred to refinance
Indebtedness that has been secured by a Lien permitted under this Indenture;
PROVIDED that (a) any such Lien shall not extend to or cover any assets or
property not securing the Indebtedness so refinanced and (b) the refinancing
Indebtedness secured by such Lien shall have been permitted to be incurred under
Section 4.9; and (xi) Liens to secure the Obligations under the Notes, this
Indenture or the New Notes (or Indebtedness evidenced by instruments that rank
PARI PASSU in right of payment with the Notes as permitted under this
Indenture).
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness or
Disqualified Stock of the Company or any Restricted Subsidiary of the Company or
Astor Holdings II issued in exchange for, or the net proceeds of which are used
to extend, refinance, renew, replace, defease or refund other Indebtedness or
Disqualified Stock of the Company or any Restricted Subsidiary or Astor Holdings
II, as the case may be, or constituting an amendment, modification or supplement
thereto (but such new or modified Indebtedness shall have only the same obligor
or obligors as the Indebtedness so extended, refinanced, renewed, replaced,
defeased, refunded, amended, modified or supplemented); PROVIDED that: (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness
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does not exceed the principal amount (or accreted value, if applicable) of the
Indebtedness or the liquidation value of Disqualified Stock so extended,
refinanced, renewed, replaced, defeased, refunded, amended, modified or
supplemented (plus the amount of reasonable expenses incurred in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness or Disqualified Stock being extended, refinanced, renewed,
replaced, defeased, refunded, amended, modified or supplemented and (iii) if the
Indebtedness or Disqualified Stock being extended, refinanced, renewed,
replaced, defeased, refunded, amended, modified or supplemented is subordinated
in right of payment to the Notes, such Permitted Refinancing Indebtedness has a
final maturity date not earlier than and is subordinated in right of payment to
the Notes on terms at least as favorable to the Noteholders as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
"PERSON" or "PERSON" means any corporation, individual, limited
liability company, joint stock company, joint venture, partnership,
unincorporated association, governmental regulatory entity, country, state or
political subdivision thereof, trust, municipality or other entity.
"PRINCIPAL" of any Indebtedness means the principal of such
Indebtedness plus, without duplication, any applicable premium, if any, on such
Indebtedness.
"PROPERTY" means any right or interest in or to property or assets of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PUBLIC EQUITY OFFERING" means an underwritten offering of common
stock of the Company, Astor Holdings II or the Parent pursuant to an effective
registration statement under the Securities Act after which the common stock of
the Company, Astor Holdings II or the Parent, as applicable, is listed on a
national securities exchange or quoted on the NASDAQ National Market.
"PURCHASE AGREEMENT" means that certain Purchase Agreement dated
October 2, 1996 by and among the Company, the Guarantor and the Initial
Purchasers, as such agreement may be amended, modified or supplemented from time
to time in accordance with the terms thereof.
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"QUALIFIED CAPITAL STOCK" means any Capital Stock of the Company that
is not Disqualified Stock.
"RCI" means Rheochem Inc., a New Jersey corporation, and its
successors and assigns.
"RECORD DATE" means a Record Date specified in the Notes whether or
not such Record Date is a Business Day.
"REDEMPTION DATE" when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to Article III of this
Indenture and paragraph 5 in the form of Note.
"REDEMPTION PRICE" when used with respect to any Note to be redeemed,
means the redemption price for such redemption pursuant to paragraph 5 in the
form of Note, which shall include, without duplication, in each case, accrued
and unpaid interest to the Redemption Date.
"REGISTRAR" shall have the meaning specified in Section 2.3.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated the date hereof by and among the Initial Purchasers, the Company
and Astor Holdings II, as such agreement may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"REGULATION S GLOBAL NOTE" shall have the meaning specified in Section
2.6.
"RELATED PERSON" means, with respect to any Excluded Person, (a) any
Person who controls, is controlled by or under common control with such Excluded
Person; PROVIDED that for purposes of this definition "control" means the
beneficial ownership of more than 50% of the total voting power of a Person
normally entitled to vote in the election of directors, managers or trustees, as
applicable of a Person and (b) as to any natural person, (i) such Person's
spouse, parents and descendants (whether by blood or adoption, and including
stepchildren) and the spouses of any of such natural persons and (ii) any
corporation, partnership, trust or other Person in which no one has any interest
(directly or indirectly) except for any of such natural person, such spouse,
parents and descendants (whether by blood or adoption, and including
stepchildren) and the spouses of any of such natural persons.
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"RESTRICTED GLOBAL NOTE" shall have the meaning specified in Section
2.6.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" means a Subsidiary of the Company other than
an Unrestricted Subsidiary.
"REVOLVING CREDIT FACILITY" means the revolving credit facility
provided under the Senior Bank Facility.
"RHEOCHEM" means Rheochem Technologies, Inc., a Delaware corporation,
and its successors and assigns.
"RHEOCHEM SHAREHOLDERS' AGREEMENT" means the Rheochem Shareholders'
Agreement dated as of June 30, 1994 by and among ABI Corporation, Rheochem Inc.
and Rheochem, as in effect on the Issue Date and as it may be amended from time
to time; PROVIDED that no such amendment shall increase any obligation
thereunder in a manner that would create a Restricted Payment.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SENIOR BANK FACILITY" means that certain credit agreement, dated on
or about the Issue Date, by and among the Company, The Chase Manhattan Bank, as
administrative agent, and the lenders (and their successors and assigns) from
time to time party thereto, including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith and in
each case as amended, modified, renewed, extended, refunded, replaced or
refinanced from time to time, whether or not with the same agent, trustee,
representative lenders or holders, and irrespective of any changes in the terms
and conditions thereof. Without limiting the generality of the foregoing, the
term "Senior Bank Facility" shall include agreements in respect of Hedging
Obligations entered into with respect to loans thereunder with lenders party to
the Senior Bank Facility and shall also include any amendment, amendment and
restatement, renewal, extension, restructuring, supplement
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or modification to any Senior Bank Facility and all refundings, refinancings and
replacements of any Senior Bank Facility, including any agreement (i) extending
the maturity of any Indebtedness incurred thereunder or contemplated thereby,
(ii) adding or deleting borrowers, issuers or guarantors thereunder, (iii)
increasing the amount of Indebtedness incurred thereunder or available to be
borrowed thereunder or (iv) otherwise altering the terms and conditions thereof.
"SENIOR DEBT" means (i) with respect to the Company (A) Obligations
under the Senior Bank Facility and (B) any other Indebtedness permitted to be
incurred by the Company under the terms of this Indenture, unless the instrument
under which such Indebtedness is incurred expressly provides that it is PARI
PASSU with or subordinated in right of payment to the Notes and (ii) with
respect to any Guarantor (A) Obligations under the Senior Bank Facility and (B)
any other Indebtedness permitted to be incurred by such Guarantor under the
terms of this Indenture unless the instrument under which such Indebtedness is
incurred expressly provides that such Indebtedness is PARI PASSU with or
subordinated in right of payment to the Note Guarantee of such Guarantor,
including in any event in the case of all such Obligations of the Company or any
Guarantor, interest accruing after the filing of a petition initiating any
proceeding under any bankruptcy, insolvency or similar law, whether or not
allowable as a claim in any such proceeding. Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not include (w) any liability for
federal, state, local or other taxes, (x) any Indebtedness of the Company or any
Guarantor to any Affiliates, (y) any trade payables or (z) that portion of any
Indebtedness that is incurred in violation of this Indenture.
"SPECIAL RECORD DATE" for payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 2.12.
"STATED MATURITY," when used with respect to any Note, means October
15, 2006.
"SIGNIFICANT SUBSIDIARY" means, with respect to any Person, or any
Subsidiary of such Person that would be a "significant subsidiary" as defined in
Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities
Act, as such Regulation is in effect on the date hereof.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of
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which more than 50% of the total voting power of Voting Stock is at the time
owned or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of that Person (or a combination thereof) and (ii) any
partnership (a) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are such Person or one or more Subsidiaries of such Person (or
any combination thereof). ABI Acquisition 1 plc shall be deemed to be a
Subsidiary of the Company for all purposes of this Agreement at any time if at
such time it is a Subsidiary (as determined above) of the Company and/or Astor
Holdings II. Because on the Issue Date, the Company owns, directly or
indirectly, no more than 50% of the Voting Stock of Rheochem, on the Issue Date
Rheochem is not a Subsidiary of the Company.
"SUBSIDIARY GUARANTOR" means any Restricted Subsidiary that executes a
Note Guarantee in accordance with the provisions of this Indenture, and their
respective successors and assigns.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of the execution of this Indenture.
"TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated June 28,
1995 among the Parent, Astor Holdings II and the Company.
"TRANSFER RESTRICTED NOTES" means Notes that bear or are required to
bear the legend set forth in Section 2.6 hereof.
"TRUSTEE" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"TRUST OFFICER" means any officer within the corporate trust division
(or any successor group) of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by the Persons who
at that time shall be such officers, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
trust matter is referred because of his knowledge of and familiarity with the
particular subject.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company that at
the time of determination shall be
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designated by the Board of Directors of the Company as an Unrestricted
Subsidiary pursuant to a Board Resolution, but only if such Subsidiary: (a) has
no Indebtedness other than Non-Recourse Debt; (b) is not party to any material
agreement, contract, arrangement or understanding with the Company or any
Restricted Subsidiary unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; and (c) is a Person with respect to which
neither the Company nor any of Restricted Subsidiary has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results. Any such designation by the Board of
Directors shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted under Section 4.10 If, at any time, any
Unrestricted Subsidiary, would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary as of such
date (and, if such Indebtedness is not permitted to be incurred as of such date
under Section 4.9 the Company shall be in default of such covenant). The Board
of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under Section 4.9,
and (ii) no Default or Event of Default would be in existence following such
designation.
"U.S. GOVERNMENT OBLIGATIONS" means direct noncallable obligations of,
or noncallable obligations Guaranteed by, the United States of America for the
payment of which obligation or Guarantee the full faith and credit of the United
States of America is pledged.
"U.S. LEGAL TENDER EQUIVALENTS" means securities issued or directly
and fully Guaranteed or insured by the United States of America or any agency or
instrumentality thereof with a maturity of 90 days or less (provided that the
full faith and credit of the United States of America is pledged in support
thereof).
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"VOTING STOCK" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have or might have, voting power by reason of
the happening of any contingency).
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the then
outstanding principal amount of such Indebtedness into (ii) the total of the
product obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means a Restricted Subsidiary all
of the outstanding Capital Stock or other ownership interests of which (other
than directors' qualifying shares or one share held by a director for statutory
purposes) shall at the time be owned by the Company, Astor Holdings II or by one
or more Wholly Owned Restricted Subsidiaries of the Company, or by the Company,
Astor Holdings II and one or more Wholly Owned Restricted Subsidiaries.
SECTION 1.2 INCORPORATION BY REFERENCE OF TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"COMMISSION" means the SEC.
"INDENTURE NOTES" means the Notes.
"INDENTURE NOTEHOLDER" means a Holder or a Noteholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee.
"OBLIGOR" on the indenture notes means the Company and any other
obligor on the Notes.
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All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.3 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(l) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section or
other subdivision; and
(7) references to Sections or Articles means reference to such
Section or Article in this Indenture, unless stated otherwise.
ARTICLE II
THE NOTES
SECTION 2.1 FORM AND DATING.
The Notes and the Trustee's certificate of authentication, in respect
thereof, shall be substantially in the form of Exhibit A hereto, which Exhibit
is part of this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company shall
approve the form of the Notes and any notation, legend or endorsement on them.
Any such notations, legends or endorsements not contained in the form of Note
attached as Exhibit A hereto shall be delivered in writing to the Trustee. Each
Note shall be dated the date of its authentication.
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The terms and provisions contained in the forms of Notes shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
SECTION 2.2 EXECUTION AND AUTHENTICATION.
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Note for the Company by manual or facsimile signature.
If an Officer whose signature is on a Note was an Officer at the time
of such execution but no longer holds that office at the time the Trustee
authenticates the Note, the Note shall be valid nevertheless and the Company
shall nevertheless be bound by the terms of the Notes and this Indenture.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note and such signature
shall be conclusive evidence that the Note has been authenticated pursuant to
the terms of this Indenture.
The Trustee shall authenticate Initial Securities for original issue
in the aggregate principal amount of up to $110.0 million, except as provided in
Section 9.1(8), and shall authenticate New Notes for original issue in the
aggregate principal amount of up to $110.0 million, except as provided in
Section 9.1(8), in each case upon a written order of the Company in the form of
an Officers' Certificate; PROVIDED that such New Notes shall be issuable only
upon the valid surrender for cancellation of Initial Securities of a like
aggregate principal amount in accordance with the Registration Rights Agreement.
The Officers' Certificate shall specify the amount of Notes to be authenticated
and the date on which the Notes are to be authenticated. The aggregate
principal amount of Notes outstanding at any time may not exceed $110.0 million,
except as provided in Section 2.7 and Section 9.1(8). Upon the written order of
the Company in the form of an Officers' Certificate, the Trustee shall
authenticate Notes in substitution of Notes originally issued to reflect any
name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. Unless otherwise provided in the appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do so.
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Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company, any Affiliate of the Company, or any of their
respective Subsidiaries.
Notes shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof PROVIDED that Notes
will initially be issued only to institutional "accredited investors" within the
meaning of Rule 501(A)(1), (2), (3) or (7) under the Securities Act who are not
also "qualified institutional buyers" (as defined in Rule 144A under the
Securities Act) in denominations of $250,000 and any integral multiple of $1,000
in excess thereof.
SECTION 2.3 REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Notes may be presented for registration
of transfer or for exchange ("Registrar") and an office or agency where Notes
may be presented for payment ("Paying Agent") and where notices and demands to
or upon the Company in respect of the Notes may be served. The Company may act
as Registrar or Paying Agent, except that, for the purposes of Articles III,
VIII, XI, and Section 4.13 and as otherwise specified in the Indenture, neither
the Company nor any Affiliate of the Company shall act as Paying Agent. The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may have one or more co-Registrars and one or more additional Paying
Agents. The term "Paying Agent" includes any additional Paying Agent. The
Company hereby initially appoints the Trustee as Registrar and Paying Agent, and
the Trustee hereby initially agrees so to act.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as Notes Custodian
with respect to the Global Notes.
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SECTION 2.4 PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, and premium, if any, interest and Liquidated Damages on, the Notes
(whether such assets have been distributed to it by the Company or any other
obligor on the Notes), and shall notify the Trustee in writing of any Default in
making any such payment. If either of the Company, Astor Holdings II or a
Subsidiary of the Company acts as Paying Agent, it shall segregate such assets
and hold them as a separate trust fund for the benefit of the Holders or the
Trustee. The Company at any time may require a Paying Agent to distribute all
assets held by it to the Trustee and account for any assets disbursed and the
Trustee may at any time during the continuance of any payment Default, upon
written request to a Paying Agent, require such Paying Agent to distribute all
assets held by it to the Trustee and to account for any assets distributed.
Upon distribution to the Trustee of all assets that shall have been delivered by
the Company to the Paying Agent, the Paying Agent (if other than the Company)
shall have no further liability for such assets.
SECTION 2.5 NOTEHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before the third Business Day preceding each Interest Payment Date
and at such other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee reasonably may require of the names and
addresses of Holders.
SECTION 2.6 TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive Notes
are presented to the Registrar or a co-Registrar with a request:
(x) to register the transfer of such Definitive Notes; or
(y) to exchange such Definitive Notes for an equal principal
amount of Definitive Notes of other authorized denominations,
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the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
PROVIDED that the Definitive Notes surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument
of transfer in form reasonably satisfactory to the Company and the
Registrar or co-Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing; and (ii) in the case of Transfer
Restricted Notes that are Definitive Notes, shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Transfer Restricted Notes are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Note); or
(B) if such Transfer Restricted Note is being transferred to an
institutional "accredited investor" within the meaning of Rule 501
(A)(1), (2), (3) or (7) under the Securities Act that is acquiring the
note for its own account, or for the account of such an institutional
accredited investor, in each case in a minimum principal amount of the
Notes of $250,000, not with a view to or for offer or sale in
connection with any distribution in violation of the Securities Act,
a certification to that effect (in substantially the form set forth on
the reverse of the Note.)
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL
INTEREST IN A GLOBAL NOTE. A Definitive Note may not be exchanged for a
beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive Note,
duly endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
(i) if such Definitive Note is a Transfer Restricted Note,
certification, substantially in the form set forth on the reverse of the
Note, that such Definitive Note is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A or Regulation S under the Securities Act; and
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(ii) whether or not such Definitive Note is a Transfer Restricted
Note, written instructions directing the Trustee to make, or to direct the
Notes Custodian to make, an endorsement on the Global Note to reflect an
increase in the aggregate principal amount of the Notes represented by the
Global Note; provided that no Definitive Note, or portion thereof, in
respect of which the Company or an Affiliate of the Company held any
beneficial interest shall be included in such Global Note until such
Definitive Note is freely tradeable in accordance with Rule 144(k);
provided further that the Trustee shall issue Definitive Notes upon any
transfer of a beneficial interest in a Global Note to the Company or any
Affiliate of the Company;
then the Trustee shall cancel such Definitive Note and cause, or direct the
Notes Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Notes Custodian, the
aggregate principal amount of Notes represented by the Global Note to be
increased accordingly. If no Global Notes are then outstanding, the Company
shall issue and the Trustee shall authenticate a new Global Note in the
appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. Notes that upon initial
issuance are beneficially owned by "qualified institutional buyers" (as defined
in Rule 144A under the Securities Act) will be represented by a Global Note (the
"Restricted Global Note"), and Notes that upon original issuance are
beneficially owned by Non-U.S. Persons will be represented by another Global
Note (the "Regulation S Global Note"). Transfers of interest in the Notes
between the Restricted Global Note and the Regulation S Global Note will be made
in accordance with the standing instructions and procedures of the DTC and its
participants.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR A
DEFINITIVE NOTE. Except as provided below in this Section 2.6(d) and in 2.6(f),
owners of beneficial interests in a Global Note shall not be entitled to receive
physical delivery of Definitive Notes and will not be considered Holders of such
Global Notes.
If any Person having a beneficial interest in a Global Note that is a
Transfer Restricted Security wishes transfer, as provided below, such an
interest to an institutional "accredited investor" within the meaning of Rule
501(A)(1), (2), (3) or (7) under the Securities Act, then, upon receipt by the
Trustee of (i) written instructions (or such other form of instructions as is
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customary for the Depository) from the Depository or its nominee on behalf of
any Person having a beneficial interest in a Global Note, (ii) a certificate (in
substantially the form set forth on the reverse of the Note) that the transferee
is acquiring the security for its own account, or for the account of an
institutional accredited investor, in each case in a minimum principal amount of
the Notes of $250,000 and not with a view to or for offer or sale in connection
with any distribution in violation of the Securities Act and (iii) an
authentication order from the Company in the form of an Officers' Certificate,
the Trustee or the Note Custodian, at the direction of the Trustee, will cause,
in accordance with the standing instructions and procedures existing between the
Depository and the Note Custodian, the aggregate principal amount of the Global
Note to be reduced and, following such reduction, the Company will execute and
the Trustee will authenticate and deliver to the transferee a Definitive Note.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL NOTES.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Note may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) AUTHENTICATION OF DEFINITIVE NOTES. If at any time:
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the Global
Notes and a successor Depositary for the Global Notes is not appointed by
the Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Notes under this
Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Notes, will
authenticate and deliver Definitive Notes, in an aggregate principal amount
equal to the principal amount of the Global Notes, in exchange for such Global
Notes.
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(g) LEGENDS.
(i) Except as permitted by the following paragraph (ii), each
Note certificate evidencing the Global Notes and the Definitive Notes (and
all Notes issued in exchange therefor or substitution thereof) shall bear a
legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. BY
ITS ACCEPTANCE HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QUALIFIED INSTITUTIONAL BUYER") OR (B) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN
OFFSHORE TRANSACTION OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2) (3) OR (7) UNDER THE
SECURITIES ACT).
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE OF THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISIONS) (THE "RESALE RESTRICTION TERMINATION DATE") ONLY
(A) TO ASTOR CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT
OCCUR OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL ACCREDITED
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INVESTOR THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE
IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000 AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO ASTOR CORPORATION'S AND THE TRUSTEE'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE
FOREGOING CLAUSE (E), A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO ASTOR CORPORATION AND THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
(ii) Upon any sale or transfer of a Transfer Restricted Note
(including any Transfer Restricted Note represented by a Global Note)
pursuant to Rule 144 under the Act or an effective registration statement
under the Act:
(A) in the case of any Transfer Restricted Note that is a
Definitive Note, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Note for a Definitive Note that does
not bear the legend set forth above and rescind any restriction on the
transfer of such Transfer Restricted Note; and
(B) any such Transfer Restricted Note represented by a Global
Note shall not be subject to the provisions set forth in (i) above
(such sales or transfers being subject only to the provisions of
Section 2.6(c) hereof).
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time as
all beneficial interests in a Global Note have either been exchanged for
Definitive Notes, redeemed, repurchased or cancelled, such Global Note shall be
returned to or retained and cancelled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for
Definitive Notes, redeemed, repurchased or cancelled, the principal amount of
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Notes represented by such Global Note shall be reduced and an endorsement shall
be made on such Global Note, by the Trustee or the Notes Custodian, at the
direction of the Trustee, to reflect such reduction.
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF DEFINITIVE
NOTES.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive
Notes and Global Notes at the Registrar's or co-Registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments, or similar governmental charge
payable upon exchanges or transfers pursuant to Section 2.2 (fourth
paragraph), 2.10, 3.7, 4.13(8), 9.5, or 11.1 (final paragraph)).
(iii) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Note
selected for redemption in whole or in part pursuant to Article III,
except the unredeemed portion of any Definitive Note being redeemed in
part, or (b) any Note for a period beginning 15 Business Days before
the mailing of a notice of an offer to repurchase pursuant to Article
XI or Section 4.13 hereof or redeem Notes pursuant to Article III
hereof and ending at the close of business on the day of such mailing.
SECTION 2.7 REPLACEMENT NOTES.
If a mutilated Note is surrendered to the Trustee or if the Holder of
a Note claims and submits an affidavit or other evidence, satisfactory to the
Trustee, to the Trustee to the effect that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Note
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is replaced. The Company or Registrar may charge such Holder for its
reasonable, out-of-pocket expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company.
SECTION 2.8 OUTSTANDING NOTES.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee (including any Note represented by a Global Note)
except those cancelled by it, those delivered to it for cancellation, those
reductions in the interest in a Global Note effected by the Trustee hereunder
and those described in this Section 2.8 as not outstanding. A Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note, except as provided in Section 2.9.
If a Note is replaced pursuant to Section 2.7 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
BONA FIDE purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of the Company) holds Cash or U.S. Government
Obligations sufficient to pay all of the principal and interest due on the Notes
payable on that date and payment of the Notes called for redemption is not
otherwise prohibited pursuant to Article XII hereof or otherwise, then on and
after that date such Notes cease to be outstanding and interest on them ceases
to accrue.
SECTION 2.9 TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, amendment, supplement, waiver or consent,
Notes owned by the Company or Affiliates of the Company shall be disregarded,
except that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, amendment, supplement, waiver or
consent, only Notes that the Trustee knows are so owned shall be disregarded.
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SECTION 2.10 TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Company may
prepare, the Guarantors shall endorse and the Trustee shall authenticate
temporary Notes. Temporary Notes shall be substantially in the form of
definitive Notes but may have variations that the Company reasonably and in good
faith considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare, the Guarantors shall endorse and the Trustee shall
authenticate Definitive Notes in exchange for temporary Notes. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes authenticated and delivered
hereunder.
SECTION 2.11 CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee,
or at the direction of the Trustee, the Registrar or the Paying Agent (other
than the Company or any Affiliate of the Company), and no one else, shall cancel
and, at the written direction of the Company, shall dispose of all Notes
surrendered for transfer, exchange, payment or cancellation. Subject to Section
2.7, the Company may not issue new Notes to replace Notes that have been paid or
delivered to the Trustee for cancellation. No Notes shall be authenticated in
lieu of or in exchange for any Notes cancelled as provided in this Section 2.11,
except as expressly permitted in the form of Notes and as permitted by this
Indenture.
SECTION 2.12 DEFAULTED INTEREST.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the person in whose
name that Note (or one or more predecessor Notes) is registered at the close of
business on the Record Date for such interest.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date plus, to the extent lawful,
any interest payable on the defaulted interest (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered holder on the
relevant Record Date, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (i) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in
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whose names the Notes (or their respective predecessor Notes) are
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Note and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of Cash equal to the aggregate amount proposed to be paid
in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment; such Cash when deposited to be held in trust for the
benefit of the persons entitled to such Defaulted Interest as provided in
this clause (1). Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Note register not less
than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid to
the persons in whose names the Notes (or their respective predecessor
Notes) are registered on such Special Record Date and shall no longer be
payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this clause, such manner
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Note shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Note.
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ARTICLE III
REDEMPTION
SECTION 3.1 RIGHT OF REDEMPTION.
Redemption of Notes, as permitted by any provision of this Indenture,
shall be made in accordance with such provision and this Article III. The
Company will not have the right to redeem any Notes prior to October 15, 2001
(other than out of the Net Proceeds of certain issuances of Capital Stock of the
Company, Astor Holdings II or the Parent described under "Redemption" in
paragraph 5 of the form of the Notes attached as Exhibit A hereto). On or after
October 15, 2001, the Company will have the right to redeem all or any part of
the Notes at the Redemption Prices specified in the form of Note attached as
Exhibit A set forth therein under the caption "Redemption," in each case,
including accrued and unpaid interest and Liquidated Damages thereon to the
Redemption Date.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to Section
3.1, an equivalent premium shall also become and be immediately due and payable
to the extent permitted by law upon the acceleration of the Notes. If an Event
of Default occurs prior to October 15, 2001 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding the prohibition on redemption of the Notes prior to October 15,
2001, then an amount equivalent to the Redemption Price applicable to
redemptions made during the twelve-month period following October 15, 2001 shall
also become immediately due and payable to the extent permitted by law upon the
acceleration of the Notes.
SECTION 3.2 NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to paragraph 5 of the
Notes, it shall notify the Trustee in writing of the Redemption Date and the
principal amount of Notes to be redeemed and whether it wants the Trustee to
give notice of redemption to the Holders.
If the Company elects to reduce the principal amount of Notes to be
redeemed pursuant to paragraph 5 of the Notes by crediting against any such
redemption Notes it has not previously delivered to the Trustee for
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cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Notes with such notice.
The Company shall give each notice to the Trustee provided for in this
Section 3.2 at least 45 days before the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee). Any such notice may be cancelled at any
time prior to notice of such redemption being mailed to any Holder and shall
thereby be void and of no effect.
SECTION 3.3 SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed pursuant to paragraph
5 thereof, the Trustee shall select the Notes to be redeemed by lot or by such
other method as the Trustee shall determine to be fair and appropriate and in
such manner as complies with any applicable Depositary, legal and stock exchange
requirements.
The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption and shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to be redeemed;
PROVIDED that no Notes with a principal amount of $1,000 or less shall be
redeemed in part. Provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
SECTION 3.4 NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to the Trustee and each Holder whose Notes are to be redeemed. At the
Company's request, the Trustee shall give notice of redemption in the Company's
name and at the Company's expense. Each notice for redemption shall identify
the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of accrued
and unpaid interest to be paid upon such redemption;
(3) the name, address and telephone number of the Paying
Agent;
(4) that Notes called for redemption must be surrendered to
the Paying Agent at the address
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specified in such notice to collect the Redemption Price;
(5) that, unless (a) the Company defaults in its obligation
to deposit Cash with the Paying Agent in accordance with Section 3.6 hereof
or (b) such redemption payment is prohibited pursuant to Article XII hereof
or otherwise, interest on Notes called for redemption ceases to accrue on
and after the Redemption Date and the only remaining right of the Holders
of such Notes is to receive payment of the Redemption Price, including
accrued and unpaid interest and Liquidated Damages to the Redemption Date,
upon surrender to the Paying Agent of the Notes called for redemption and
to be redeemed;
(6) if any Note is being redeemed in part, the portion of
the principal amount, equal to $1,000 or any integral multiple thereof, of
such Note to be redeemed and that, after the Redemption Date, and upon
surrender of such Note, a new Note or Notes in aggregate principal amount
equal to the unredeemed portion thereof will be issued;
(7) if less than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be redeemed,
as well as the aggregate principal amount of such Notes to be redeemed and
the aggregate principal amount of Notes to be outstanding after such
partial redemption;
(8) the CUSIP number of the Notes to be redeemed; and
(9) that the notice is being sent pursuant to this Section
3.4 and pursuant to the optional redemption provisions of paragraph 5 of
the Notes.
SECTION 3.5 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.4,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price, including accrued and unpaid interest and Liquidated
Damages to the Redemption Date. Upon surrender to the Trustee or Paying Agent,
such Notes called for redemption shall be paid at the Redemption Price,
including interest and Liquidated Damages, if any, accrued and unpaid to the
Redemption Date; PROVIDED that if the Redemption Date is after a regular Record
Date and on or prior to the Interest Payment Date, the accrued interest shall be
payable to the Holder of the redeemed Notes registered on the relevant Record
Date; and
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PROVIDED FURTHER that if a Redemption Date is a Legal Holiday, payment shall be
made on the next succeeding Business Day and no interest shall accrue for the
period from such Redemption Date to such succeeding Business Day.
SECTION 3.6 DEPOSIT OF REDEMPTION PRICE.
On or prior to the Redemption Date, the Company shall deposit with the
Paying Agent (other than the Company or an Affiliate of the Company) Cash
sufficient to pay the Redemption Price of, including accrued and unpaid interest
and Liquidated Damages on, all Notes to be redeemed on such Redemption Date
(other than Notes or portions thereof called for redemption on that date that
have been delivered by the Company to the Trustee for cancellation). The Paying
Agent shall promptly return to the Company any Cash so deposited which is not
required for that purpose upon the written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Notes called for redemption is
not prohibited under Article XII or otherwise, interest on the Notes to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Notes are presented for payment. Notwithstanding anything herein to the
contrary, if any Note surrendered for redemption in the manner provided in the
Notes shall not be so paid upon surrender for redemption because of the failure
of the Company to comply with the preceding paragraph, interest shall continue
to accrue and be paid from the Redemption Date until such payment is made on the
unpaid principal, and, to the extent lawful, on any interest not paid on such
unpaid principal, in each case at the rate and in the manner provided in Section
4.1 hereof and the Note.
SECTION 3.7 NOTES REDEEMED IN PART.
Upon surrender of a Note that is to be redeemed in part, the Company
shall execute, the Guarantors shall endorse and the Trustee shall authenticate
and deliver to the Holder, without service charge to the Holder, a new Note or
Notes equal in principal amount to the unredeemed portion of the Note
surrendered.
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ARTICLE IV
COVENANTS
SECTION 4.1 PAYMENT OF NOTES.
The Company shall pay the principal of and interest on the Notes on
the dates and in the manner provided herein and in the Notes. An installment of
principal of or interest on the Notes shall be considered paid on the date it is
due if the Trustee or Paying Agent (other than the Company, a Subsidiary of the
Company or an Affiliate of the Company) holds for the benefit of the Holders, on
or before 10:00 a.m. New York City time on that date, Cash in immediately
available funds deposited and designated for and sufficient to pay the
installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Notes compounded
semi-annually, to the extent lawful.
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY.
The Company and the Guarantors shall maintain in the Borough of
Manhattan, The City of New York, an office or agency where Notes may be
presented or surrendered for payment, where Notes may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company and the Guarantors in respect of the Notes and this Indenture may be
served. The Company and the Guarantors shall give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company and the Guarantors shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 14.2.
The Company and the Guarantors may also from time to time designate
one or more other offices or agencies where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; PROVIDEd that no such designation or rescission shall in any
manner relieve the Company and the Guarantors of their obligation to maintain an
office or agency in the Borough of Manhattan, the City of New York, for such
purposes. The Company and the Guarantors shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency. The Company and the Guarantors
hereby initially designate the office of State
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Street Bank and Trust Company, National Association, 61 Broadway, Concourse
Level, New York, New York as such office.
SECTION 4.3 CORPORATE EXISTENCE.
Subject to Article V, the Company and the Guarantors shall do or cause
to be done all things necessary to preserve and keep in full force and effect
their respective corporate existence and the corporate existence of each of
their Subsidiaries in accordance with the respective organizational documents of
each of them and the rights (charter and statutory) and corporate franchises of
the Company, the Guarantors and each of their respective Subsidiaries; PROVIDED
that neither the Company nor any Guarantor shall be required to preserve, with
respect to themselves, any right or franchise, and with respect to any of their
respective Subsidiaries, any such existence, right or franchise, if (a) the
Board of Directors of the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of such entity and (b) the
loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 4.4 PAYMENT OF TAXES AND OTHER CLAIMS.
Except with respect to immaterial items, the Company and the
Guarantors shall, and shall cause each of their Subsidiaries to, pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges (including
withholding taxes and any penalties, interest and additions to taxes) levied or
imposed upon the Company, any Guarantor or any of their Subsidiaries or any of
their respective properties and assets and (ii) all lawful claims, whether for
labor, materials, supplies, services or anything else, which have become due and
payable and which by law have or may become a Lien upon the property and assets
of the Company, any Guarantor or any of their Subsidiaries; PROVIDED that
neither the Company nor any Guarantor shall be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which disputed amounts adequate reserves have
been established in accordance with GAAP.
SECTION 4.5 MAINTENANCE OF PROPERTIES AND INSURANCE.
The Company and the Guarantors shall cause all material properties
used or useful to the conduct of their business and the business of each of
their Subsidiaries to
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be maintained and kept in good condition, repair and working order (reasonable
wear and tear excepted) and supplied with all necessary equipment and shall
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof; all as in their reasonable judgment may be necessary, so
that the business carried on in connection therewith may be properly conducted
at all times; PROVIDED that nothing in this Section 4.5 shall prevent the
Company or any Guarantor from discontinuing any operation or maintenance of any
of such properties, or disposing of any of them, if such discontinuance or
disposal is (a) in the judgment of the Board of Directors of the Company,
desirable in the conduct of business of such entity and (b) not disadvantageous
in any material respect to the Holders.
The Company and the Guarantors shall provide, or cause to be provided,
for themselves and each of their Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the reasonable,
good faith opinion of the Company, is adequate and appropriate for the conduct
of the business of the Company, the Guarantors and such Subsidiaries in a
prudent manner, with (except for self-insurance) reputable insurers or with the
government of the United States of America or any agency or instrumentality
thereof, in such amounts, with such deductibles, and by such methods as shall be
customary, in the reasonable, good faith opinion of the Company and adequate and
appropriate for the conduct of the business of the Company, the Guarantors and
such Subsidiaries in a prudent manner for entities similarly situated in the
industry, unless failure to provide such insurance (together with all other such
failures) would not have a material adverse effect on the financial condition of
results of operations of the Company, such Guarantor or such Subsidiary.
SECTION 4.6 COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company and the Guarantor shall deliver to the Trustee
within 120 days after the end of its fiscal year an Officers' Certificate
complying with Section 314(a)(4) of the TIA and stating that a review of its
activities and the activities of each of their Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture and further stating, as to each
such Officer signing such certificate, whether or not the signer knows of any
failure by the Company, any Guarantor or any Subsidiary of the Company to comply
with any conditions or covenants in this Indenture and, if such signer does know
of such a failure to
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comply, the certificate shall describe such failure with particularity. The
Officers' Certificate shall also notify the Trustee should the relevant fiscal
year end on any date other than the current fiscal year end date.
(b) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, promptly upon becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take in
connection with remedying such Default or Event of Default. The Trustee shall
not be deemed to have knowledge of any Default, any Event of Default or any such
fact unless one of its Trust Officers receives notice thereof from the Company
or any of the Holders.
SECTION 4.7 REPORTS.
Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, Astor Holdings II will furnish to the
Noteholders (at their addresses set forth in the Register of Notes) (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if Astor
Holdings II were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of Astor Holdings II
and its Consolidated Subsidiaries and, with respect to the annual information
only, a report thereon by Astor Holdings II's certified independent accountants
and (ii) all current reports that would be required to be filed with the
Commission on Form 8-K if Astor Holdings II were required to file such reports.
In addition, whether or not required by the rules and regulations of the
Commission, Astor Holdings II will file a copy of all such information and
reports with the Commission for public availability (unless the Commission will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. In addition, the Company and
the Guarantors will be required, for so long as any Notes remain outstanding, to
furnish to the Noteholders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
SECTION 4.8 STATUS AS INVESTMENT COMPANY.
The Company will not, and will not permit any Restricted Subsidiary
to, and Astor Holdings II will not, take or fail to take any action which would
require the Company, such Restricted Subsidiary or Astor Holdings II to
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register as an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended) or cause any of the foregoing Persons to become
subject to regulation under the Investment Company Act of 1940.
SECTION 4.9 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED
STOCK.
The Company will not, and will not permit any Restricted Subsidiary
to, and Astor Holdings II will not, directly or indirectly, create, incur,
issue, assume, Guarantee or otherwise become directly or indirectly liable with
respect to (collectively, "incur") any Indebtedness (including as a result of an
acquisition) and will not issue any Disqualified Stock; PROVIDED that the
Company and the Subsidiary Guarantors may incur Indebtedness or issue shares of
Disqualified Stock if (i) no Default or Event of Default shall have occurred and
be continuing at the time of, or would occur after giving effect on a pro forma
basis to, such incurrence of Indebtedness or issuance of Disqualified Stock and
(ii) the Fixed Charge Coverage Ratio for Astor Holdings II's most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least (x) 2.0 to 1 if
such incurrence or issuance occurs on or before October 8, 1998 or (y) 2.25 to 1
if such incurrence or issuance occurs at any time thereafter, in each case
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom) as if the additional Indebtedness had been incurred or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The foregoing provisions will not apply to: (i) the incurrence by
the Company and any Domestic Restricted Subsidiary of Indebtedness pursuant
to the Senior Bank Facility in a maximum amount not to exceed at any time (A)
an aggregate principal amount of $20.0 million (or its foreign currency
equivalent) under the Bank Term Loan LESS the aggregate amount of all Net
Proceeds applied to permanently reduce principal Indebtedness under the Bank
Term Loan pursuant to the covenant under Section 4.13 and (B) in the case of
other Indebtedness under the Senior Bank Facility consisting of revolving
credit, working capital and/or letters of credit issued thereunder, in an
aggregate principal amount (with letters of credit being deemed to have a
principal amount equal to the maximum reimbursement obligation of the Company
or the relevant Restricted Subsidiary thereunder) outstanding at any time not
greater than the greater of (such greater amount, the "Working Capital
Amount") (1) $30.0 million (or its foreign currency equivalent), LESS the
amount of all Net Proceeds applied to
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permanently reduce the commitments under the Revolving Credit Facility and
(2) the Borrowing Base; PROVIDED that a change in currency exchange rates
which causes the amount of Indebtedness of the Company and its Domestic
Restricted Subsidiaries outstanding to exceed the levels specified above
shall not be deemed an incurrence of Indebtedness; (ii) the incurrence by the
Company and any Restricted Subsidiary of Indebtedness that is fully secured
by letters of credit permitted pursuant to clause (i)(B) above or clause (vi)
below; (iii) the incurrence by the Company and any Guarantor of Indebtedness
represented by the Notes and the Note Guarantees; (iv) the incurrence by the
Company or any Restricted Subsidiary of Permitted Refinancing Indebtedness in
exchange for, or the net proceeds of which are used to extend, refinance,
renew, replace, defease or refund Existing Indebtedness, Existing
Disqualified Stock or other Indebtedness that was permitted by this Indenture
to be incurred; (v) the incurrence (A) by any Wholly Owned Restricted
Subsidiary of Indebtedness owing to and held by the Company, (B) by the
Company or any Wholly Owned Restricted Subsidiary of Indebtedness owing to
and held by any Wholly Owned Subsidiary or (C) by ABI Acquisition 2 plc of
Indebtedness owing to and held by ABI Acquisition 1 plc, by ABI Acquisition 1
plc of Indebtedness owing to and held by Astor Holdings II or by Astor
Holdings II of Indebtedness owing to and held by the Parent, in each case
pursuant to the provisions of the ABI Shareholder Intercompany Notes;
PROVIDED that such Indebtedness owed by the Company or any Wholly Owned
Restricted Subsidiary that is a Guarantor to any Wholly Owned Restricted
Subsidiary that is not a Guarantor is made expressly subordinate to the
payment in full of all Obligations with respect to the Notes and the Note
Guarantees; (vi) the incurrence by Restricted Subsidiaries, other than
Domestic Restricted Subsidiaries, of Indebtedness incurred for working
capital purposes and any Guarantee thereof by the Company or Astor Holdings
II in an aggregate outstanding principal amount for all such Indebtedness
permitted solely pursuant to this clause (vi), and together with the
aggregate outstanding principal amount of Indebtedness permitted pursuant to
clause (i)(B) above, does not exceed at any time the Working Capital Amount;
and (vii) the incurrence by the Company, Astor Holdings II or any Restricted
Subsidiary of Indebtedness (in addition to Indebtedness permitted by any
other clause of this paragraph) in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding not to exceed $10 million (or
its foreign currency equivalent). For purposes of this covenant each of the
following events (but not solely the following events) shall be deemed to
constitute an "incurrence" of Indebtedness upon the happening thereof: (i)
any event that causes any Unrestricted Subsidiary to be a Restricted
Subsidiary shall be deemed to be the incurrence of such former Unrestricted
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Subsidiary's Indebtedness by such Restricted Subsidiary and (ii) any sale of
equity or other event that results in any Wholly Owned Restricted Subsidiary
ceasing to be a Wholly Owned Restricted Subsidiary or a transfer of any such
Indebtedness by the Company to a Person that is not the Company, or by a Wholly
Owned Restricted Subsidiary to a Person that is not a Wholly Owned Restricted
Subsidiary, shall be deemed to be an incurrence by such former Wholly Owned
Restricted Subsidiary or such Person upon the happening of such event.
SECTION 4.10 RESTRICTED PAYMENTS.
The Company will not, and will not permit any Restricted Subsidiary
to, and Astor Holdings II will not, directly or indirectly; (i) declare or pay
any dividend or make any other payment or distribution on account of any Equity
Interests of Astor Holdings II, the Company or any Restricted Subsidiaries
including, without limitation, any payment in connection with any merger or
consolidation involving the Company (other than (x) dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company,
Astor Holdings II or a Restricted Subsidiary and (y) dividends or distributions
payable to the Company or any other Restricted Subsidiary (and, if such
Restricted Subsidiary has shareholders other than the Company or another
Restricted Subsidiary, to its other shareholders on a PRO RATA basis to such
other shareholders); (ii) purchase, redeem or otherwise acquire or retire for
value any Equity Interests of Astor Holdings II, the Company or any Restricted
Subsidiary; (iii) make any principal payment on, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated to
the Notes, except at the original final maturity thereof or in accordance with
the scheduled mandatory redemption or repayment provisions set forth in the
documentation governing such Indebtedness at the Issue Date or, if later, the
date such Indebtedness was incurred or (iv) make any Restricted Investment (all
such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto (including, in the case of Restricted
Investments, the pro forma effect thereof) as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period, have
been permitted
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to incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of Section 4.9;
and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and any Restricted Subsidiary and
Astor Holdings II, without duplication, after the Issue Date (excluding
Restricted Payments permitted by any of clauses (ii), (iv), (v)(B), (vi),
(vii) and (viii) of the next succeeding paragraph), is less than the sum of
(1) 50% of the Consolidated Net Income for the period (taken as one
accounting period) from the beginning of the fiscal quarter during which
this Indenture is executed to the end of Astor Holdings II's most recently
ended fiscal quarter for which internal financial statements are available
at the time of such Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, minus 100% of such deficit) PLUS (2) 100% of
the aggregate net cash proceeds received by the Company from the issue or
sale since the Issue Date of Equity Interests of the Company or of debt
securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or convertible debt securities)
sold to a Restricted Subsidiary and other than Disqualified Stock or debt
securities that have been converted into Disqualified Stock) or by way of
other capital contributions to the Company PLUS (3) to the extent that any
Restricted Investment that was made after the Issue Date is sold for cash
or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost
of disposition, if any) and (B) the initial amount of such Restricted
Investment; PROVIDED that no amounts received by the Company by way of
capital contributions will be counted in determining the amount available
for Restricted Payments under this clause (c) to the extent such proceeds
or amounts are excluded in accordance with clause (ii) of the next
succeeding paragraph.
The foregoing provisions will not prohibit the following: (i) the
payment of any dividend within 60 days after the date of declaration thereof, if
at such date of declaration such payment would have complied with the provisions
of this Indenture; (ii) the defeasance, redemption or repurchase of subordinated
Indebtedness with (A) the proceeds from an incurrence of Permitted Refinancing
Indebtedness or (B) the proceeds from the substantially concurrent sale (other
than to a Subsidiary of the Parent) of Equity Interests of the Parent received
by the Company by way of capital contributions; PROVIDED that the amounts of
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any such capital contributions that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded from clause (c)(2)
of the preceding paragraph; (iii) the payment of dividends by the Company or ABI
Acquisition 1 plc to Astor Holdings II and by Astor Holdings II to the Parent,
solely in amounts and at the times necessary, to permit payment of amounts
required for any repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Parent (or of Equity Interests of Astor
Holdings II) held by any member of the Company's, Astor Holdings II's or the
Parent's management pursuant to any management equity subscription agreement or
stock option agreement or similar agreement, or otherwise upon their death,
disability, retirement or termination of employment or departure from the Board
of Directors of the Parent, Astor Holdings II or the Company; PROVIDED that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed (A) $500,000 in any twelve-month period and
(B) $2.0 million in the aggregate from and after the Issue Date; (iv) the
repurchase or other acquisition of Existing Disqualified Stock held by ABI
Corporation or Astor Holdings II; (v) the payment of dividends by the Company or
ABI Acquisition 1 plc to Astor Holdings II, or by Astor Holdings II to the
Parent, in amounts and at times necessary to permit payment of (A) unless
prohibited and not waived by or on behalf of the lenders under the Senior Bank
Facility, amounts payable by the Parent under the Management Services Agreement,
consisting of (1) management fees in aggregate amount not to exceed $412,000 in
any twelve-month period (adjusted in proportion to increases in the consumer
price index), (2) transaction fees equal to not more than 2% of the aggregate
acquisition consideration (as the amount of such consideration is determined in
accordance with the Management Services Agreement as in effect on the Issue
Date) in connection with merger and acquisition services rendered by certain
financial advisors in connection with acquisitions by Astor Holdings II and its
Subsidiaries and (3) certain reasonable expenses incurred by such advisors in
connection with the performance of their obligations under such Management
Services Agreement, (B) amounts due under the Tax Sharing Agreement, (C)
administrative fees in respect of certain partnerships that are investors in the
Parent, in an aggregate amount not exceeding $28,000 in any twelve-month period,
and (D) operating expenses of the Parent and Astor Holdings II incurred in the
ordinary course of business in an aggregate amount not to exceed $50,000 in any
twelve-month period PLUS audit fees and fees paid with respect to filings by the
Parent or Astor Holdings II with the Commission; (vi) the payment of dividends
on Existing Disqualified Stock owned by ABI Corporation or Astor Holdings II;
(vii) subject to the subordination provisions contained in the ABI Shareholder
Intercompany Notes,
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payments under the ABI Shareholder Intercompany Notes by ABI Acquisition 2 plc
to ABI Acquisition 1 plc, by ABI Acquisition 1 plc to Astor Holdings II and by
Astor Holdings II to the Parent, in each case of amounts due and payable under
the terms of the ABI Shareholder Notes and necessary for any required
repurchase, payment of principal or payment of interest of or on the ABI
Shareholder Notes; and (viii) the purchase of the remaining Equity Interests of
Rheochem owned by RCI such that Rheochem becomes a Wholly Owned Restricted
Subsidiary that is a Subsidiary Guarantor pursuant to the Rheochem Shareholders'
Agreement, if the Company delivers to the Trustee an Officer's Certificate
certifying that such purchase has been approved by a majority of the
disinterested members of the Board of Directors and attaching a resolution of
the Board of Directors (A) to such effect and (B) to the effect that it has
determined in good faith that such purchase is at a price no less favorable to
the Company than the fair market value of such Equity Interests; PROVIDED that,
in the case of clauses (ii), (iii), (iv), (v)(C) and (vi), of this paragraph, no
Default or Event of Default shall have occurred or be continuing at the time of
such Restricted Payment or would occur as a consequence thereof.
The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default. For purposes of making such determination, all outstanding
Investments by the Company and any Restricted Subsidiary and Astor Holdings II
(except to the extent repaid in cash) in the Subsidiary so designated will be
deemed to be Restricted Payments at the time of such designation and will reduce
the amount available for Restricted Payments under the first paragraph of this
covenant. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the greater of (x) the net book value of such
Investments at the time of such designation and (y) the fair market value of
such Investments at the time of such designation. Such designation will only be
permitted if such Restricted Payment would be permitted at such time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
Not later than the date of making any Restricted Payment under the
first paragraph of this Section 4.10, the Company shall deliver to the Trustee
an Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
4.10 were computed, which calculations shall be based upon the Astor Holdings
II's latest available financial statements; PROVIDED that the Company shall not
have to deliver such an Officer's Certificate in connection with Restricted
Payments of less
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than $200,000 in aggregate amount in any twelve-month period.
SECTION 4.11 DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company will not, and will not permit any Restricted Subsidiary
to, and Astor Holdings II will not, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Restricted Subsidiary to: (i)(a) pay
dividends or make any other distributions to the Company or any Restricted
Subsidiary (1) on its Capital Stock or (2) with respect to any other interest or
participation in, or measured by, its profits or (b) pay any Indebtedness owed
to the Company or any Restricted Subsidiary; (ii) make loans or advances to the
Company or any Restricted Subsidiary; or (iii) transfer any of its properties or
assets to the Company or any Restricted Subsidiary, except for such encumbrances
or restrictions existing under or by reasons of (a) Existing Indebtedness; (b)
the Senior Bank Facility as in effect on the Issue Date and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, PROVIDED that the applicable restrictions
in such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are not materially more
restrictive with respect to such transactions than those contained in the Senior
Bank Facility as in effect on the Issue Date; (c) this Indenture, the Note
Guarantees, the Notes, Pari Passu Debt and any notes with substantially
identical terms as the Notes issued in exchange for the Notes or the Pari Passu
Debt; (d) applicable law; (e) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Company or any Restricted Subsidiary, as in
effect at the time of acquisition (except to the extent such Indebtedness was
incurred in connection with, or in contemplation of, such acquisition), which
encumbrance or restriction is not applicable to the Company, any Restricted
Subsidiary (other than the Person acquired) or Astor Holdings II, or the
properties or assets thereof (other than the properties or assets of the Person
so acquired), PROVIDED that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred; (f) by reason of
customary non-assignment or no-subletting provisions in leases or other
contracts entered into in the ordinary course of business and consistent with
past practices; (g) purchase money obligations or Capital Lease Obligations for
property acquired in the ordinary course of business that impose restrictions of
the nature described in clause (iii) above on the property so acquired; (h)
Permitted Liens on assets
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securing permitted Senior Debt; (i) Permitted Refinancing Indebtedness, PROVIDED
that the applicable restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are not materially more restrictive than
those contained in the agreements governing the Indebtedness being refinanced;
(j) restrictions with respect solely to a Restricted Subsidiary imposed pursuant
to a binding agreement which has been entered into for the sale or disposition
(including by merger or consolidation) of all or substantially all of the
Capital Stock or assets of such Restricted Subsidiary, PROVIDED such
restrictions apply solely to the Capital Stock or assets of such Restricted
Subsidiary; or (k) the agreement governing Indebtedness permitted pursuant to
the provision described in clause (vi) of the second paragraph of Section 4.9 to
the extent such agreement restricts transfers of collateral securing such
Indebtedness.
SECTION 4.12 ANTI-LAYERING.
The Company will not incur, create, issue, assume, Guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt and senior in any respect in right of
payment to the Notes, (ii) no Guarantor will incur, create, issue, assume,
Guarantee or otherwise become liable for any Indebtedness that is subordinate or
junior in right of payment to its Senior Debt and senior in any respect in right
of payment to the Note Guarantee executed by such Guarantor and (iii) no
Restricted Subsidiary which is not a Guarantor will incur, create, issue,
assume, Guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to its Senior Debt (other than
Indebtedness owing to Astor Holdings II, the Company or any Restricted
Subsidiary as permitted under this Indenture).
SECTION 4.13 ASSET SALES AND SALES OF SUBSIDIARY STOCK.
The Company will not, and will not permit any Restricted Subsidiary
to, and Astor Holdings II will not, engage in any Asset Sale unless (i) the
Company delivers to the Trustee an Officers' Certificate stating that such
officers have determined in good faith that the Company, the Restricted
Subsidiary or Astor Holdings II, as the case may be, will receive consideration
(including by way of relief from, or by any other Person assuming sole
responsibility for, any liabilities, contingent or otherwise) at the time of
such Asset Sale at least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 80% of the
consideration therefor (excluding contingent liabilities
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assumed by the transferee of any such assets) received by the Company, such
Restricted Subsidiary or Astor Holdings II, as the case may be, is in the form
of cash paid at the closing thereof, PROVIDED that the amount of (x) any
liabilities as shown on the most recent balance sheet of the Company or such
Restricted Subsidiary or Astor Holdings II, as the case may be (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any Guarantee thereof) that are assumed by the transferee of any
such assets pursuant to an agreement that releases the Company or such
Restricted Subsidiary or Astor Holdings II, as the case may be, from further
liability with respect thereto will be deemed to be cash for purposes of this
provision and (y) any notes, securities or other items of property received by
the Company or any such Restricted Subsidiary or Astor Holdings II, as the case
may be, from such transferee that are promptly and in any event within 30 days
converted by the Company or such Restricted Subsidiary or Astor Holdings II, as
the case may be, into cash (to the extent of the cash received) will be deemed
to be cash for purposes of this provision and (iii) the Company delivers to the
Trustee (a) with respect to any Asset Sale or series of related Asset Sales
involving aggregate consideration in excess of $1.0 million, an Officers'
Certificate certifying that such Asset Sale has been approved by a majority of
the disinterested members of the applicable Board of Directors, and attaching a
resolution of such Board of Directors (x) to such effect and (y) to the effect
that it has determined in good faith that the consideration to be received by
the Company, the Restricted Subsidiary or Astor Holdings II at the time of such
Asset Sale is at least equal to the fair market value of the assets or Equity
Interests to be issued or otherwise disposed of and (b) with respect to any
Asset Sale or series of related Asset Sales involving aggregate consideration in
excess of $5.0 million, a written opinion as to the fairness to the Company or
such Restricted Subsidiary or Astor Holdings II, as the case may be, of such
Asset Sale from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing. Notwithstanding the foregoing
provision, if the Company is required to sell all of its Equity Interests in
Rheochem in accordance with the terms of the Rheochem Shareholders' Agreement,
the consideration received by the Company therefor shall be deemed to be fair
market value, and the Company shall not have to provide any evidence to the
Trustee as to the fairness of the consideration so received.
Within 300 days after the receipt of any Net Proceeds from an Asset
Sale, the Company and Astor Holdings II may or may cause the relevant Restricted
Subsidiary to apply such Net Proceeds, at the Company's option, (a) to
permanently reduce Indebtedness under the Senior Bank
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Facility (and, in the case of revolving Indebtedness under the Senior Bank
Facility, to permanently reduce the commitments thereunder), (b) to permanently
reduce Senior Debt of the Company or a Subsidiary Guarantor or (c) to make an
investment in a Permitted Business or to make capital expenditures or to acquire
other long-term/tangible assets, in each case, engaged or used in a Permitted
Business (or make a binding commitment to make such investment, subject only to
reasonable and customary closing conditions, and in fact to make such investment
within 60 additional days). Pending the final application of any such Net
Proceeds, the Company or Astor Holdings II may or may cause the relevant
Restricted Subsidiary to temporarily reduce revolving indebtedness under the
Senior Bank Facility or otherwise invest such Net Proceeds in any manner that is
not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are
not applied or invested as provided in the immediately preceding sentence of
this paragraph will be deemed to constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds received by the Company, if any, any
Restricted Subsidiary, if any, and Astor Holdings II, if any, exceeds $5.0
million (the "Minimum Accumulation Date"), Astor Holdings II and the relevant
Restricted Subsidiaries will pay to the Company all Excess Proceeds, and the
Company will be required within 10 business days to make an irrevocable
unconditional offer to all Noteholders and to holders of Pari Passu Debt (an
"Asset Sale Offer") to purchase, on a PRO RATA basis from the Noteholders and
the holders of Pari Passu Debt, the maximum principal amount of Notes and Pari
Passu Debt that may be purchased out of the Excess Proceeds, at an offer price
in cash in an amount equal to 100% of the principal amount thereof PLUS accrued
and unpaid interest and Liquidated Damages, if any, thereon to the date of
purchase (the "Excess Proceeds Payment"). The Asset Sale Offer shall remain
open for 20 Business Days, except to the extent that a longer period is required
by applicable law. Notice of an Asset Sale Offer will be sent on or before the
commencement of any Asset Sale Offer by first-class mail, by the Company to each
Noteholder or holder of Pari Passu Debt at its registered address, with a copy
to the Trustee. The notice to the Noteholder or holder of Pari Passu Debt will
contain all information, instructions and materials required by applicable law
or otherwise material to such Noteholder's or holder of Pari Passu Debt's
decision to tender Notes or Pari Passu Debt pursuant to the Asset Sale Offer.
The notice, which (to the extent consistent with the Indenture) shall govern the
terms of the Asset Sale Offer, shall state:
(1) that the Asset Sale Offer is being made pursuant to
such notice and this Section 4.13;
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(2) the maximum principal amount of Notes and Pari Passu
Debt that may be purchased out of the Excess Proceeds, the Excess Proceeds
Payment, the amount of accrued and unpaid interest and Liquidated Damages
as of the then applicable date of purchase, the Final Put Date (as defined
below), and the then applicable date of purchase (the "Asset Sale Purchase
Date");
(3) that any Note or portion thereof or Pari Passu Debt not
tendered or accepted for payment will continue to accrue interest;
(4) that, unless the Company defaults in depositing Cash
with the Paying Agent in accordance with the penultimate paragraph of this
Section 4.13 or such payment is otherwise prevented, any Note or portion
thereof or Pari Passu Debt accepted for payment pursuant to the Offer to
Purchase shall cease to accrue interest after the date of purchase;
(5) that Noteholders or holders of Pari Passu Debt electing
to have a Note or portions thereof or Pari Passu Debt purchased pursuant to
an Asset Sale Offer will be required to surrender the Note or Pari Passu
Debt, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Paying Agent (which may not for
purposes of this Section 4.13, notwithstanding anything in this Indenture
to the contrary, be the Company or any Affiliate of the Company) at the
address specified in the notice prior to the close of business on the
earlier of (a) the third Business Day prior to the date of purchase and
(b) the third Business Day following the expiration of the Asset Sale Offer
(such earlier date being the "Final Put Date");
(6) that Noteholders or holders of Pari Passu Debt will be
entitled to withdraw their elections, in whole or in part, if the Paying
Agent (which may not for purposes of this Section 4.13, notwithstanding any
other provision of this Indenture, be the Company or any Affiliate of the
Company) receives, up to the close of business on the date of purchase, a
telegram, telex, facsimile transmission or letter setting forth the name of
the Noteholders or holders of Pari Passu Debt, the principal amount of the
Notes or Pari Passu Debt the Noteholders or holders of Pari Passu Debt are
withdrawing and a statement that such Noteholders or holders of Pari Passu
Debt is withdrawing their election to have such principal amount of Notes
or Pari Passu Debt purchased;
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(7) that if Notes and Pari Passu Debt in an aggregate
principal amount in excess of the Excess Proceeds are tendered on or prior
to the Final Put Date and not withdrawn, the Trustee shall select the Notes
and the Pari Passu Debt to be purchased on a PRO RATA basis (with such
adjustments as may be deemed appropriate by the Company so that only Notes
in denominations of $1,000 or integral multiples of $1,000 shall be
acquired);
(8) that Holders whose Notes were purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered; and
(9) a brief description of the circumstances and relevant
facts regarding such Asset Sale.
Any such Asset Sale Offer shall comply with all applicable provisions
of Federal and state laws, including those regulating tender offers, if
applicable, and any provisions of this Indenture that conflict with such laws
shall be deemed to be superseded by the provisions of such laws.
On or before a date of purchase, the Company shall (i) accept for
payment Notes or portions thereof and Pari Passu Debt properly tendered pursuant
to the Asset Sale Offer on or before the Final Put Date (on a PRO RATA basis if
required pursuant to paragraph (7) of this Section 4.13), (ii) deposit with the
Paying Agent Cash sufficient to pay the Excess Proceeds Payment for all Notes or
portions thereof and Pari Passu Debt so tendered and accepted and (iii) deliver
to the Trustee Notes and Pari Passu Debt so accepted together with an Officers'
Certificate stating the Notes or portions thereof and Pari Passu Debt being
purchased by the Company. The Paying Agent shall on each date of purchase mail
or deliver to Noteholders and holders of Pari Passu Debt so accepted payment in
an amount equal to the Excess Proceeds Payment for such Notes and Pari Passu
Debt, and the Trustee shall promptly authenticate and mail or deliver to such
Noteholders a new Note equal in principal amount to any unpurchased portion of
the Note surrendered. The Company shall not have any obligation to accept for
payment or pay for any Notes or Pari Passu Debt tendered by a Noteholder or
holder of Pari Passu Debt after the Final Put Date. Any Note or Pari Passu Debt
not so accepted shall be promptly mailed or delivered by the Company to the
Noteholder or holder of Pari Passu Debt thereof.
If the amount required to be paid by the Company in order to acquire
all Notes and Pari Passu Debt duly
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tendered by Noteholders or holders of Pari Passu Debt (and not withdrawn)
pursuant to an Asset Sale Offer (the "Acceptance Amount") made pursuant to the
third paragraph of this Section 4.13 is less than the Excess Proceeds, the
excess of the Excess Proceeds over the Acceptance Amount may be used by the
Company for general corporate purposes without restriction, unless otherwise
restricted by the other provisions of this Indenture. Upon consummation of any
Asset Sale Offer made in accordance with the terms of this Indenture, the amount
of Excess Proceeds will be reduced to zero irrespective of the amount of Notes
and Pari Passu Debt tendered pursuant to the Asset Sale Offer.
SECTION 4.14 LIENS.
The Company will not, and will not permit any Restricted Subsidiary
to, and Astor Holdings II will not, directly or indirectly, create, incur,
assume or suffer to exist any Lien on any property or asset now owned or
hereafter acquired, or on any income or profits therefrom or assign or convey
any right to receive income therefrom except Permitted Liens, unless the
Obligations due under this Indenture and the Notes are secured, on an equal and
ratable basis (or on a senior basis, in the case of Obligations under
Indebtedness subordinated in right of payment to the Notes), with the
Obligations so secured.
SECTION 4.15 TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any Restricted Subsidiary
to, and Astor Holdings II will not, make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make or amend any contract,
agreement, understanding, loan, advance or Guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or such Restricted Subsidiary or Astor Holdings II, as the case may be,
than those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary or Astor Holdings II, as the case may be,
with an unrelated Person and (ii) the Company delivers to the Trustee (a)
with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $500,000, an
Officers' Certificate certifying that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors
and attaching a resolution of the Board of Directors (x) to such effect and
(y) to the effect that it has determined in good faith that such transaction
complies with clause (i) above, and (b) with respect to any Affiliate
Transaction or series
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of related Affiliate Transactions involving aggregate consideration in excess of
$500,000, an Officers' Certificate certifying that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and attaching a resolution of the Board of Directors (x) to such
effect and (y) to the effect that it has determined in good faith that such
transaction complies with clause (i) above, and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, a written opinion as to the
fairness to the Company or such Restricted Subsidiary or Astor Holdings II, as
the case may be, of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing; PROVIDED that transactions with Rheochem in the ordinary course of
business consistent with past practices will not be subject to clause (ii)
above, and PROVIDED FURTHER that the following shall not be deemed Affiliate
Transactions (a) any reasonable and customary employment agreement, employment
benefit plan or other compensation plan entered into by the Company or any
Restricted Subsidiary or Astor Holdings II, as the case may be, in the ordinary
course of business, (b) reasonable and customary directors' fees and
indemnification arrangements in the ordinary course of business, (c) reasonable
and customary payment of compensation to employees, officers, directors or
consultants in the ordinary course of business, (d) loans or advances to
officers or employees of the Company or any Restricted Subsidiary to pay
business related travel expenses or reasonable relocation costs of such officers
or employees in connection with their employment by the Company or any
Restricted Subsidiary, (e) transactions between or among any combination of the
Company and the Guarantors, (f) any transfer of tax benefits and any tax sharing
or tax loss surrender arrangements and any intercompany sales of inventory
between or among any combination of the Company, Astor Holdings II and any
Restricted Subsidiary or between or among one or more Restricted Subsidiaries,
(g) payments under the Management Services Agreement, (h) payments under the Tax
Sharing Agreement, (i) payment of administrative fees in respect of certain
partnerships that are investors in the Parent, in an aggregate amount not
exceeding $28,000 per twelve-month period, (j) payments to the Parent or Astor
Holdings II to pay operating expenses of the Parent and Astor Holdings II
incurred in the ordinary course of business in an aggregate amount not to exceed
$50,000 in any twelve-month period, (k) payments made to the Parent or Astor
Holdings II to reimburse the Parent or Astor Holdings II for costs, fees and
expenses incident to a registration of any of the capital stock of the Parent or
Astor Holdings II for an offering under the Securities Act, so long as (A) a
portion of the proceeds of such offering (if it is completed) are contributed
to, or otherwise used for the benefit of, the Company and (B) the costs, fees
and expenses are allocated among the Parent or Astor Holdings and any selling
shareholders in such proportions as is required by the Stockholders Agreement as
in effect on the Issue Date or, if or to the extent that the Stockholders
Agreement is not applicable, as is appropriate to reflect the relative proceeds
received by the Parent or Astor Holdings II and
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such selling shareholders and (l) Restricted Payments permitted by the
provisions described above under clauses (i), (iii), (iv), (v), (vi), (vii) of
the second paragraph of Section 4.10.
SECTION 4.16 LINE OF BUSINESS.
The Company will not, and will not permit any Restricted Subsidiary
to, engage in any business other than a Permitted Business. Astor Holdings II
will hold the Capital Stock of and certain instruments representing the
Indebtedness of the Company and/or Restricted Subsidiaries, but will not have
any other assets.
SECTION 4.17 FUTURE SUBSIDIARY GUARANTORS.
If the Company shall acquire or create after the Issue Date, directly
or indirectly, another Domestic Restricted Subsidiary (including upon any
Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary and becoming a
Domestic Restricted Subsidiary), then such newly acquired or created Domestic
Restricted Subsidiary shall execute a Note Guarantee and a supplemental
indenture evidencing its Guarantee of the Notes and deliver an opinion of
counsel in accordance with the terms of this Indenture. The Company may elect,
from time to time, on or after the Issue Date, to cause one or more other
Restricted Subsidiaries to become a Subsidiary Guarantor by executing a Note
Guarantee and a supplemental indenture evidencing its Guarantee of the Notes.
The Company shall also deliver an Opinion of Counsel to the Trustee stating that
such Note Guarantee and supplemental indenture comply with the applicable
provisions of this Indenture and that all conditions precedent have been met.
As of the Issue Date, (i) ABI Corporation holds Capital Stock of the
Company and (ii) ABI Acquisitions 1 plc holds Capital Stock of a Restricted
Subsidiary and certain instruments representing Indebtedness of ABI Acquisition
2 plc. The Company will not permit either of ABI Corporation or ABI Acquisition
1 plc to have any other assets or to conduct any other business activities until
such time as such entity executes a Note Guarantee and a supplemental indenture
in accordance with the provisions of this Section.
In the event of a sale or other disposition of all of the assets of
any Subsidiary Guarantor by way of merger, consolidation or otherwise, or a sale
or other disposition of all of the Capital Stock of any Subsidiary Guarantor,
then such Subsidiary Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the Capital Stock of
such Subsidiary Guarantor) or the corporation acquiring the property (in the
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event of a sale or other disposition of all of the assets of such Subsidiary
Guarantor) will be released and relieved of any obligations under its Note
Guarantee, PROVIDED that such sale or other disposition is permitted by and the
Net Proceeds of such sale or other disposition are applied in accordance with
Section 4.13.
SECTION 4.18 WAIVER OF STAY, EXTENSION OR USURY LAWS.
Each of the Company and the Guarantors covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Company or any Guarantor from paying all or any portion of the principal of, or
premium of, or interest or Liquidated Damages on the Notes as contemplated
herein, wherever enacted, nor or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) each of the Company and the Guarantors hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 LIMITATION ON MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company and Astor Holdings II may not consolidate or merge with or
into (whether or not the Company or Astor Holdings II, as the case may be, is
the surviving entity), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions to, another corporation, Persons or entity unless (i) the
Company or Astor Holdings II, as the case may be, is the surviving corporation
or entity or the Person formed by or surviving any such consolidation or merger
(if other than the Company or Astor Holdings II, as the case may be) or to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company or Astor
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Holdings II, as the case may be) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been made
assumes all the obligations of the Company or Astor Holdings II, as the case may
be, under the Notes and this Indenture pursuant to a supplemental indenture in
form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction, no Default or Event of Default exists; and (iv) except in the case
of a merger of the Company or Astor Holdings II, as the case may be, with or
into the Company or Astor Holdings II, as the case may be, or the entity or
Person formed by or surviving any such consolidation or merger, or to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made (A) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of the Company or Astor
Holdings II, as the case may be, immediately preceding the transaction and (B)
will, at the time of such transaction after giving pro forma effect thereto as
if such transaction had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 4.9.
SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company or Astor Holdings II in
accordance with the foregoing, the successor corporation formed by such
consolidation or into which the Company or Astor Holdings II is merged or to
which such transfer is made, shall succeed to, and be substituted for, and may
exercise every right and power of, the Company or Astor Holdings II, as the case
may be, under this Indenture with the same effect as if such successor
corporation had been named therein as the Company or Astor Holdings II, as the
case may be, and the Company or Astor Holdings II, as the case may be, shall be
released from the obligations under the Notes, the Note Guarantees and this
Indenture except with respect to any obligations that arise from, or are related
to, such transaction.
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ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1 EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default for 30 days in the payment when due of interest or
Liquidated Damages, if any, on the Notes (whether or not prohibited by the
provisions of Article XII);
(2) default in payment when due of principal of, or premium, if
any, on the Notes when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise (whether or not prohibited by the
provisions of Article XII) including, without limitation, payments of any
required Change of Control Payment or Excess Proceeds Payment;
(3) failure by the Company or any Guarantor to comply with its
obligations with respect to the making of a Change of Control Offer or an
Asset Sale Offer as described under Article XI or under Section 4.13;
(4) failure by the Company or any Guarantor to comply with its
other obligations described under Article XI or Section 4.13 or its
obligations described under Section 4.9 or Section 4.10 and such failure
continues for a period of 30 consecutive days after there has been given,
by registered or certified mail, to the Company by the Trustee, or to the
Company and the Trustee by Holders of at least 25% in aggregate principal
amount of the Notes then outstanding, a written notice specifying such
default or breach, requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder;
(5) failure by the Company or any Guarantor to comply with its
other agreements in the Indenture or the Notes and such failure continues
for 60 consecutive days after written notice by the Trustee or the holders
of at least 25% in aggregate principal amount of the Notes then
outstanding;
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(6) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any Restricted Subsidiary
or Astor Holdings II (or the payment of which is Guaranteed by the Company
or any Restricted Subsidiary or Astor Holdings II) whether such
Indebtedness or Guarantee exists on the Issue Date, or is created after the
Issue Date, which default (a) is caused by a failure to pay any such
Indebtedness at its stated final maturity after giving effect to any grace
period provided in such Indebtedness on the date of such default (the
amount of such missed payment of principal, a "Payment Default Amount") or
(b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the aggregate principal amount of all such
Indebtedness referred to in clause (b) together with the aggregate Payment
Default Amount at such time aggregates $5.0 million or more;
(7) failure by the Company or any Restricted Subsidiary or Astor
Holdings II to pay final judgments aggregating in excess of $5.0 million,
which judgments are not stayed, bonded or discharged within 60 days after
their entry;
(8) except as permitted by the Indenture, any Note Guarantee
shall be held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any Guarantor,
or any Person acting on behalf of any Guarantor, shall deny or disaffirm
its obligations under its Note Guarantee;
(9) a decree, judgment or order by a court of competent
jurisdiction shall have been entered adjudicating the Company or any of its
Significant Subsidiaries or Astor Holdings II as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization of the
Company or any of its Significant Subsidiaries or Astor Holdings II under
any bankruptcy or similar law, and such decree or order shall have
continued undischarged and unstayed for a period of 60 days; or a decree or
order of a court of competent jurisdiction regarding the appointment of a
receiver, liquidator, trustee or assignee in bankruptcy or insolvency of
the Company or any of its Significant Subsidiaries or Astor Holdings II, or
of the property of any such Person, or for the winding up or liquidation of
the affairs of any such Person, shall have been entered, and such decree,
judgment or order
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shall have remained in force undischarged and unstayed for a period of 60
days; or
(10) the Company or any of its Significant Subsidiaries or Astor
Holdings II shall institute proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of a bankruptcy proceeding against
it, or shall file a petition or answer or consent seeking reorganization
under any bankruptcy or similar law or similar statute, or shall consent to
the filing of any such petition, or shall consent to the appointment of a
Custodian, receiver, liquidator, trustee or assignee in bankruptcy or
insolvency of it or any of its assets or property, or shall make a general
assignment for the benefit or creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or shall, within
the meaning of any Bankruptcy Law, become insolvent, fail generally to pay
its debts as they become due, or take any corporate action in furtherance
of or to facilitate, conditionally or otherwise, any of the foregoing.
Notwithstanding the 30-day period and notice requirement contained in
Section 6.1(4) above, (i) with respect to a default under Article XI the 30-day
period referred to in Section 6.1(4) shall be deemed to have begun as of the
date the Change of Control notice is required to be sent in the event that the
Company has not complied with the provisions of Section 11.1, and the Trustee or
Holders of at least 25% in principal amount of the outstanding Notes thereafter
give the Notice of Default referred to in Section 6.1(4) to the Company and, if
applicable, the Trustee; PROVIDED that if the breach or default is a result of a
default in the payment when due of the Change of Control Payment, such default
shall be deemed, for purposes of this Section 6.1, to arise no later than on
such due date; and (ii) with respect to a default under Section 4.13, the 30-day
period referred to in Section 6.1(4) shall be deemed to have begun as of the
date the notice of an Asset Sale Offer is required to be sent in the event that
the Company has not complied with the provisions of Section 4.13 requiring the
giving of such notice, and the Trustee or Holders of at least 25% in principal
amount of the outstanding Notes thereafter give the Notice of Default referred
to in Section 6.1(4) to the Company and, if applicable, the Trustee; PROVIDED
that if the breach or default is a result of a default in the payment when due
of the Excess Proceeds Payment, such default shall be deemed, for purposes of
this Section 6.1, to arise no later than on such due date.
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If a Default occurs and is continuing, the Trustee must, within 90
days after the occurrence of such default, give to the Holders notice of such
default.
SECTION 6.2 ACCELERATION OF MATURITY DATE; RESCISSION AND
ANNULMENT.
If an Event of Default (other than an Event of Default specified in
Section 6.1(9) or (10) relating to the Company or any of its Significant
Subsidiaries) occurs and is continuing, then, and in every such case, unless the
principal of all of the Notes shall have already become due and payable, either
the Trustee or the Holders of not less than 25% in aggregate principal amount of
then outstanding Notes, by a notice in writing to the Company (and to the
Trustee if given by Holders) (an "Acceleration Notice"), may declare all of the
principal of the Notes, determined as set forth below, including in each case
accrued interest thereon, to be due and payable immediately; PROVIDED that if
any Designated Senior Debt is outstanding, upon a declaration of such
acceleration, such principal and interest shall be due and payable upon the
earlier of (x) the day that is five Business Days after the provision to the
Company and the Agent under the Senior Bank Facility and the holders of other
Designated Senior Debt or their representative (in each case at the address for
notices then most recently provided to the Trustee by such holders or such
representative) of written notice, unless such Event of Default is cured or
waived prior to such date and (y) the date of acceleration of any Senior Debt
under the Senior Bank Facility. In the event a declaration of acceleration
resulting from an Event of Default described in Section 6.1(6) above has
occurred and is continuing, such declaration of acceleration shall be
automatically annulled if such default is cured or waived or the holders of the
Indebtedness which is the subject of such default have rescinded their
declaration of acceleration in respect of such Indebtedness within 45 days
thereof and the Trustee has received written notice of such cure, waiver or
rescission and no other Event of Default described in Section 6.1(6) above has
occurred that has not been cured or waived, or as to which the declaration has
not been rescinded, within 45 days of the declaration of such acceleration in
respect of such Indebtedness. Notwithstanding the foregoing, if an Event of
Default specified in Section 6.1(9) or (10) relating to the Company, any
Subsidiary that would constitute a Significant Subsidiary (or any group of
Subsidiaries that, taken together, would constitute a Significant Subsidiary) or
Astor Holding II occurs, all principal and accrued interest thereon will be
immediately due and payable on all outstanding Notes without any declaration or
other act on the part of Trustee or the Holders.
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At any time after such a declaration of acceleration being made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article VI, the Holders of a
majority in aggregate principal amount of then outstanding Notes, by written
notice to the Company and the Trustee, may rescind, on behalf of all Holders,
any such declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee Cash
sufficient to pay
(A) all overdue interest or Liquidated Damages on all Notes,
(B) the principal of (and premium, if any, applicable to)
any Notes which would become due other than by reason of such
declaration of acceleration, and interest thereon at the rate borne by
the Notes,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Notes,
(D) all sums paid or advanced by the Trustee hereunder and
the compensation, expenses, disbursements and advances of the Trustee
and its agents and counsel, and
(2) all Events of Default, other than the non-payment of the
principal of, or premium, if any, or interest or Liquidated Damages on
Notes which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 6.12, including, if
applicable, any Event of Default relating to the covenants contained in
Section 11.1.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Note affected thereby, unless all such affected
Holders agree, in writing, to waive such Event of Default or other event. No
such waiver shall cure or waive any subsequent default or impair any right
consequent thereon.
SECTION 6.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
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The Company covenants that if an Event of Default in payment of
principal, premium, interest or Liquidated Damages specified in clause (1) or
(2) of Section 6.1 occurs and is continuing, the Company shall, upon demand of
the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole
amount then due and payable on such Notes for principal, and premium (if any),
interest and Liquidated Damages (if any), and, to the extent that payment of
such interest shall be legally enforceable, interest on any overdue principal,
(premium, if any) and on any overdue interest, at the rate borne by the Notes,
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including compensation to, and expenses,
disbursements and advances of the trustee and its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or any other obligor upon the Notes,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 6.4 TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Notes
or the property of the Company or of such other obligor or their creditors, the
trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company for the payment
of overdue principal or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise to take any and all actions under
the TIA, including
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(1) to file and prove a claim for the whole amount of principal
(and premium, if any), interest and Liquidated Damages owing and unpaid in
respect of the Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agent and counsel) and of
the Holders allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and any
other amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust in favor of the Holders, and any recovery of judgment shall,
after provision for the payment of compensation to, and expenses, disbursements
and advances of the Trustee and its agents and counsel, be for the ratable
benefit of the Holders of the Notes in respect of which such judgment has been
recovered.
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SECTION 6.6 PRIORITIES.
Any money collected by the Trustee pursuant to this Article VI shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal, premium
(if any), Liquidated Damages (if any) or interest, upon presentation of the
Notes and the notation thereon of the payment if only partially paid and upon
surrender thereof if full paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.7;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, or premium (if any), interest or Liquidated Damages (if any)
on the Notes, in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Notes for principal, premium (if any),
interest or Liquidated Damages (if any), respectively; and
THIRD: To the Company or such other Person as may be lawfully
entitled thereto, the remainder, if any.
The Trustee may, but shall not be obligated to, fix a record date and
payment date for any payment to the Holders under this Section 6.6.
SECTION 6.7 LIMITATION ON SUITS.
No Holder of any Note shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(A) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in principal amount of then
outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee
reasonable note or indemnity against the costs, expenses and liabilities to
be incurred or reasonably probable to be incurred in compliance with such
request;
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(D) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;
and
(E) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the outstanding Notes;
is being understood and intended that no one or more Holders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal ratable benefit of all the Holders.
SECTION 6.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM, INTEREST AND LIQUIDATED DAMAGES.
Except as provided in Article XII, notwithstanding any other provision
of this Indenture, the Holder of any Note shall have the right, which is
absolute and unconditional, to receive payment of the principal of, and premium
(if any), interest and Liquidated Damages (if any) on, such Note on the dates
such amounts become due and payable (in the case of redemption, the Redemption
Price on the applicable Redemption Date, in the case of the Change of Control
Payment, on the applicable Change of Control Payment Date, and in the case of
the Excess Proceeds Payment, on the Asset Sale Purchase Date) and to institute
suit for the enforcement of any such payment after such respective dates, and
such rights shall not be impaired without the consent of such Holder.
SECTION 6.9 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in Section 2.7, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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SECTION 6.10 DELAY OR OMISSION NOT WAIVER.
No delay or omission by the Trustee or by any Holder of any Note to
exercise any right or remedy arising upon any Event of Default shall impair the
exercise of any such right or remedy or constitute a waiver of any such Event of
Default. Every right and remedy given by this Article VI or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 6.11 CONTROL BY HOLDERS.
The Holder or Holders of a majority in aggregate principal amount of
then outstanding Notes shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee, PROVIDED that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture.
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudiced to the Holders not taking part in such
direction, and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such discretion.
SECTION 6.12 WAIVER OF PAST DEFAULT.
Subject to Section 6.8, the Holder or Holders of at least fifty
percent in aggregate principal amount of the outstanding Notes may, on behalf of
all Holders, prior to the declaration of acceleration of the maturity of the
Notes, waive any past default hereunder and its consequences, except a default.
(A) in the payment of the principal of, premium, if any, or
interest or Liquidated Damages on, any Note as specified in clauses (1) and
(2) of Section 6.1 and not yet cured, or
(B) in respect of a covenant or provision hereof which, under
Article IX, cannot be modified or amended without the consent of the Holder
of each outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be
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deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair the exercise of
any right arising therefrom.
SECTION 6.13 UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that in any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken, suffered or omitted to be taken by it as
Trustee, any court may in its discretion require the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 6.13 shall not apply to any suit instituted
by the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
aggregate principal amount of the outstanding Notes, or to any suit instituted
by any Holder for enforcement of the payment of principal of, or premium (if
any) or interest or Liquidated Damages on, any Note on or after the respective
Maturity Date expressed in such Note (including, in the case of redemption, on
or after the Redemption Date).
SECTION 6.14 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Guarantors, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
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SECTION 7.1 DUTIES OF TRUSTEE.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in their exercise
as a prudent Person would exercise or use under the circumstances in the conduct
of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no covenants or
obligations shall be implied in or read into this Indenture which are
adverse to the Trustee, and
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that;
(1) This paragraph does not limit the effect or paragraph (b) of
this Section 7.1,
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts, and
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity
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against such risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section
7.1.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
SECTION 7.2 RIGHTS OF TRUSTEE.
Subject to Section 7.1:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 14.4 and 14.5. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such certificates or advice of counsel.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond, debenture
or other paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee
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reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby.
(g) Unless otherwise specifically provided for in this
Indenture, any demand, request, direction or notice from the Company or any
Guarantor shall be sufficient if signed by an Officer of the Company or such
Guarantor, as applicable.
(h) The Trustee shall have no duty to inquire as to the
performance of the Company's or any Guarantor's covenants in Article IV hereof.
In addition, the Trustee shall not be deemed to have knowledge of any Default or
Event of Default except (i) any Event of Default occurring pursuant to Sections
6.1(1), 6.1(2) and 5.1, or (ii) any Default or Event of Default of which the
Trustee shall have received written notification or obtained actual knowledge.
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Guarantor, any of their Subsidiaries, or their respective Affiliates with the
same rights it would have if it were not Trustee. Any Agent may do the same
with like rights. However, the Trustee must comply with Section 7.10 and 7.11.
SECTION 7.4 TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes, and it shall not be accountable for the Company's
use of the proceeds from the Notes, and it shall not be responsible for any
statement in the Notes, other than the Trustee's certificate of authentication,
or the use or application of any funds received by a Paying Agent other than the
Trustee.
SECTION 7.5 NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Noteholder notice of the
uncured Default or Event of Default within 90 days after such Default or Event
of Default occurs. Except in the case of a Default or an Event of Default in
payment of principal (or premium, if any) of, or interest or Liquidated Damages
on, any Note (including the payment of the Change of Control Payment on the
Change of Control Payment Date, the payment of the Redemption Price on the
Redemption Date and the payment of the Offer Price on the Purchase Date), the
Trustee may withhold the notice if and so long as a Trust Officer in
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good faith determines that withholding the notice is in the interest of the
Noteholders.
The Company is required upon becoming aware of any Default or Event of
Default to deliver to the Trustee a statement specifying such Default or Event
of Default.
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall, if required by law, mail to each
Noteholder a brief report dated as of such May 15 that complies with TIA Section
313(a). The Trustee also shall comply with TIA Sections 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the Notes
become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Noteholders shall
be mailed to the Company and filed with the SEC and each stock exchange, if any,
on which the Notes are listed.
SECTION 7.7 COMPENSATION AND INDEMNITY.
The Company and the Guarantors jointly and severally agree to pay to
the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company and the Guarantors shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by it in accordance with this Indenture. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents, accountants, experts and counsel.
The Company and the Guarantors jointly and severally agree to
indemnify the Trustee (in its capacity as Trustee) and each of its officers,
directors, attorneys-in-fact and agents for, and hold it harmless against, any
claim, demand, expense (including but not limited to reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel) loss or
liability incurred by it without negligence or bad faith on the part of the
Trustee, arising out of or in connection with the administration of this trust
and its rights or duties hereunder, including the reasonable costs and expenses
of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The Trustee
shall notify the
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Company promptly of any claim asserted against the Trustee for which it may seek
indemnity. The Company and the Guarantors shall defend the claim, and the
Trustee shall provide reasonable cooperation at the Company's and the
Guarantors' expense in the defense. The Trustee may have separate counsel, and
the Company and the Guarantors shall pay the reasonable fees and expenses of
such counsel; PROVIDED that the Company and the Guarantors will not be required
to pay such fees and expenses if they assume the Trustee's defense and there is
no conflict of interest between the company and the Guarantors and the Trustee
in connection with such defense. The Company and the Guarantors need not pay
for any settlement made without their written consent. The Company and the
Guarantors need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Trustee through its negligence, bad
faith or willful misconduct.
To secure the Company's and the Guarantors' payment obligations in
this Section 7.7, the Trustee shall have a Lien prior to the Notes on all assets
held or collected by the Trustee, in its capacity as Trustee, except assets held
in trust to pay principal of, and premium, if any, interest and Liquidated
Damages on particular Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(9) or (10) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's and the Guarantors' obligations under this Section 7.7
and any lien arising hereunder shall survive the resignation or removal of the
Trustee, the discharge of the Company's and the Guarantors' obligations pursuant
to Article VIII of this Indenture and any rejection or termination of this
Indenture under any Bankruptcy Law.
SECTION 7.8 REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company in writing. The
Holder or Holders of a majority in principal amount of the outstanding Notes may
remove the Trustee by so notifying the Company and the Trustee in writing and
may appoint a successor trustee with the Company's consent. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
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(c) a receiver, Custodian or other public officer takes charge
of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder
of Holders of a majority in principal amount of the Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and after all amounts provided for in Section 7.7 have been paid, the retiring
Trustee shall transfer all property held by it as trustee to the successor
Trustee, subject to the lien provided in Section 7.7, the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. A
successor Trustee shall mail notice of its succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company and the Guarantors' obligations under Section 7.7 shall
continue for the benefit of the retiring Trustee.
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
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SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.
The Trustee shall at all times satisfy the requirements of TIA Section
310(a)(1), (2) and (5). The Trustee shall have a combined capital and surplus
of at least $25,000,000 as set forth in its most recent published annual report
of condition. The Trustee shall comply with TIA Section 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE.
The Company may, at its option at any time, elect to have Section 8.2
or Section 8.3 applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article VIII.
SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.2, the Company and the Guarantors shall be deemed to have been
discharged from their respective obligations with respect to all outstanding
Notes on the date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.5 and the other sections of
this Indenture referred to in (a) and (b) below, and the Company and the
Guarantors shall be deemed to have satisfied all other of their respective
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.4, and as more fully set forth in such section, payments
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in respect of the principal of, and premium, if any, interest and Liquidated
Damages, if any, on such Notes when such payments are due, (b) the Company's
obligations with respect to such Notes under Sections 2.4, 2.6, 2.7. 2.10 and
5.2, (c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's and the Guarantors' obligations in connection
therewith and (d) this Article VIII. Subject to compliance with this Article
VIII, the Company may exercise its option under this Section 8.2 notwithstanding
the prior exercise of its option under Section 8.3 with respect to the Notes.
SECTION 8.3 COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.3, the Company and the Guarantors shall be released from their
respective obligations under the covenants contained in Sections 4.4, 4.5, 4.6,
4.7, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.17 and Article V with
respect to the outstanding Notes on and after the date the conditions set forth
below are satisfied (hereinafter, "COVENANT DEFEASANCE"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Notes, neither the
Company nor any Guarantor need comply with and shall have any liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document (and Section 6.1(5) shall not
apply to any such covenant), but, except as specified above, the remainder of
this Indenture and such Notes shall be unaffected thereby. In addition, upon
the Company's exercise under Section 8.1 of the option applicable to this
Section 8.3, Sections 6.1(6) and 6.1(7) shall not constitute Events of Default.
SECTION 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.2 or Section 8.3 to the outstanding Notes:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the provisions of this Article
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VIII applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Notes, (a) Cash in an amount, or (b) U.S.
Government Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, Cash in an amount, or (c)
a combination thereof, in such amounts, as in each case will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge, the principal of, and premium, if any, interest
and Liquidated Damages, if any, on, the outstanding Notes on the stated maturity
or on the applicable redemption date, as the case may be; PROVIDED that the
Trustee shall have been irrevocably instructed to apply such Cash and the
proceeds of such U.S. Government Obligations to said payments with respect to
the Notes.
(b) In the case of an election under Section 8.2 prior to April 15,
2006, the Company shall have delivered to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the Issue Date, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of the outstanding Notes will not
recognize income, gain or loss for Federal income tax purposes as a result of
such Legal Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) In the case of an election under Section 8.3 prior to April 15,
2006, the Company shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably acceptable to the Trustee to the effect that the
Holders of the outstanding Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such Covenant Defeasance and will be
subject to Federal income tax in the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred;
(d) No Default or Event of Default with respect to the Notes shall
have occurred and be continuing on the date of such deposit (other than a
Default or Event of Default resulting from the borrowing of funds to be applied
to such deposit) or, in so far as Section 6.1(9) or (10) is
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concerned, at any time in the period ending on the 91st day after the date of
such deposit (it being understood that this condition is a condition subsequent
of which shall not be deemed satisfied until the expiration of such period, but
in the case of Covenant Defeasance, the covenants which are defeased under
Section 8.3 will cease to be in effect unless an Event of Default under Section
6.1(9) or (10) occurs during such period);
(e) Such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under any material agreement
or instrument other than the Indenture to which the Company, the Guarantors, or
any Restricted Subsidiary is a party or by which any of them is bound;
(f) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Company pursuant to its
election under Section 8.2 or 8.3 was not made by the Company with the intent of
preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company or others; and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States, each stating that
all conditions precedent provided for relating to either the Legal Defeasance
under Section 8.2 or the Covenant Defeasance under Section 8.3 (as the case may
be) have been complied with as contemplated by this Section 8.4.
SECTION 8.5 DEPOSITED CASH AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.6, all Cash and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.5, the "Trustee") pursuant
to Section 8.4 in respect of the outstanding Notes shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, interest, and
Liquidated Damages, if any, but such money need not be segregated from other
funds except to the extent required by law.
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SECTION 8.6 REPAYMENT TO THE COMPANY.
(a) The Trustee and the Paying Agent shall promptly pay to the
Company upon written request any Cash and U.S. Government Obligations (including
the proceeds thereof) held by them at any time in excess of amounts required to
pay principal of, and premium, if any, interest and Liquidated Damages, if any,
on the outstanding Notes on the applicable date.
(b) Any Cash and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of, or premium, if any, or
interest or Liquidated Damages, if any, on any Note and remaining unclaimed for
two years after such principal, premium, if any, or interest or Liquidated
Damages, if any, has become due and payable shall be paid to the Company on its
request; and the Holder of such Notes shall thereafter look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; PROVIDED that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the NEW YORK TIMEs and THE
WALL STREET JOURNAL (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
SECTION 8.7 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any Cash or U.S.
Government Obligations in accordance with Section 8.2 or 8.3, as the case may
be, by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's and the Guarantors' obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.2 or 8.3 until such time as the Trustee or Paying Agent is permitted
to apply such money in accordance with Section 8.2 and 8.3, as the case may be;
PROVIDED that, if the Company makes any payment of principal of, or premium, if
any, or interest or Liquidated Damages, if any, on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the Cash or U.S.
Government Obligations held by the Trustee or Paying Agent.
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ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holder, the Company (when authorized by
Board Resolutions) and the Trustee, at any time and from time to time, may amend
or supplement the Indenture or the Notes or the Note Guarantees in form
satisfactory to the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect or inconsistency, or to make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this Indenture,
provided such action pursuant to this clause (1) shall not adversely affect the
interests of any Holder in any respect;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(3) to add to the covenants of the Company or the Guarantors for the
benefit of the Holders, or to surrender any right or power herein conferred upon
the Company or the Guarantors or to make any other change that does not
adversely affect the legal rights of any Holder under the Indenture, provided
that the Company or the Guarantors have delivered to the Trustee an Opinion of
Counsel stating that such change does not adversely affect the rights of any
Holder;
(4) to provide for additional Guarantors of the Notes or the release,
in accordance with Section 4.17, of any Guarantor or the Note Guarantees;
(5) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the obligations of the Company, herein
and in the Notes in accordance with Article V;
(6) to comply with requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA;
(7) to provide for the issuance and authorization of the New Notes;
or
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(8) if no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof, to provide for the issuance
of Pari Passu Debt pursuant to such an indenture supplemental hereto in an
aggregate principal amount at any time outstanding not to exceed $40.0 million;
PROVIDED that the provisions of such a supplemental indenture would not have a
material adverse effect on the rights and entitlements of the Holders of the
original issuance of Notes hereunder.
SECTION 9.2 AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH
CONSENT OF HOLDERS.
Subject to Section 6.8, with the consent of the Holders of at least
the majority in aggregate principal amount of then outstanding Notes (including
consents obtained in connection with a purchase of or tender offer or exchange
offer for, Notes), by written act of said Holders delivered to the Company and
the Trustee, the Company when authorized by Board Resolutions, and the Trustee
may amend or supplement this Indenture or the Notes or enter into an indenture
or supplemental indentures hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
the Notes or of modifying in any manner the rights of the Holders under this
Indenture or the Notes. Subject to Section 6.8, the Holder or Holders of not
less than a majority in principal amount of then outstanding Notes may waive
compliance by the Company or any Guarantor with any provision of this Indenture
or the Notes. Notwithstanding any of the above, however, no such amendment,
supplemental indenture or waiver shall, (a) without the consent of the Holders
of at least 75% in aggregate principal amount of the Notes at the time
outstanding (including consents obtained in connection with a tender offer or
exchange offer for Notes), make any change in the provision contained in
Sections 4.13, 11.1 and Article XII that adversely affects the rights of any
Holder of Notes (other than a reduction of the Change of Control Payment or the
Excess Proceeds Payment as provided in clause (3) below or a change in the time
of any such payment not required by applicable law), and (b) without the consent
of the Holder of each outstanding Note affected thereby:
(1) reduce the percentage of principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver of any provision of this
Indenture or the Notes;
(2) reduce the rate or change the time for payment of interest on any
Note;
(3) reduce the principal amount of any Note, or reduce the Change of
Control Payment, the Excess Proceeds
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Payment or the Redemption Price or change the time (other than changes required
by applicable law) of any required redemption or repurchase with respect to the
Notes;
(4) change the Stated Maturity of any Note;
(5) waive a Default or Event of Default in the payment of principal
of, or premium, if any, or interest or Liquidated Damages, if any, on the Notes
(except that Holders of more than 50% in aggregate principal amount of the Notes
may rescind acceleration of the Notes and waive the payment default that
resulted from such acceleration);
(6) make any changes to the provisions of this third sentence of this
Section 9.2;
(7) make the principal of, or the interest on, any Note payable with
anything or in any manner other than as provided for in this Indenture
(including changing the place of payment where, or the coin or currency in
which, any Note or any premium or the interest thereon is payable) and the Notes
as in effect on the date hereof; or
(8) release any Note Guarantee other than pursuant to Section 4.17.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
After an amendment, supplement or waiver under this Section 9.2 or
Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
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SECTION 9.3 COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect.
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as
to his Note or portion of his Note by written notice to the Company or the
Person designated by the Company as the Person to whom consents should be sent
if such revocation is received by the Company or such Person before the date on
which the Trustee receives an Officers' Certificate certifying that the Holders
of the requisite principal amount of Notes have consented (and not theretofore
revoked such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Person (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Noteholder, unless it makes a change described in any of clauses (1)
through (9) of Section 9.2, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; PROVIDED that any such waiver shall not impair or
affect the right of any Holder to receive payment of principal of, and premium,
interest and Liquidated Damages on a Note, on or after the respective dates set
for such amounts to become due and payable expressed in such Note, or to bring
suit for the enforcement of any such payment on or after such respective dates.
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SECTION 9.5 NOTATION ON OR EXCHANGE OF NOTES.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver it to the Trustee or
require the Holder to put an appropriate notation on the Note. The Trustee may
place an appropriate notation on the Note about the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Note shall issue and the Trustee shall authenticate
a new Note that reflects the changed terms. Any failure to make the appropriate
notation or to issue a new Note shall not affect the validity of such amendment,
supplement or waiver.
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; PROVIDED, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article IX is
authorized or permitted by this Indenture.
SECTION 9.7 EFFECT ON SENIOR DEBT.
No supplemental indenture shall adversely affect the rights of any
holders of Senior Debt under Article Twelve unless the requisite holders of each
issue of Senior Debt affected thereby shall have consented to such supplemental
indenture.
ARTICLE X
MEETINGS OF NOTEHOLDERS
SECTION 10.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Noteholders may be called at any time and from time to
time pursuant to the provisions of this Article X for any of the following
purposes:
(a) to give any notice to the Company, any Guarantor or the Trustee,
or to give any directions to the Trustee, or to waive or to consent to the
waiving of any Default or Event of Default hereunder and its consequences,
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or to take any other action authorized to be taken by Noteholders pursuant to
any of the provisions of Article VI;
(b) to remove the Trustee or appoint a successor Trustee pursuant to
the provisions of Article VII;
(c) to consent to an amendment, supplement or waiver and the
execution of an indenture or indentures supplemental hereto pursuant to the
provisions of Section 9.2; or
(d) to take any other action (i) authorized to be taken by or on
behalf of the Holder or Holders of any specified aggregate principal amount of
the Notes under any other provision of this Indenture, or authorized or
permitted by law or (ii) which the Trustee deems necessary or appropriate in
connection with the administration of this Indenture.
SECTION 10.2 MANNER OF CALLING MEETINGS.
The Trustee may at any time call a meeting of Noteholders to take any
action specified in Section 10.1, to be held at such time and at such place in
the City of New York, New York or elsewhere as the Trustee shall determine.
Notice of each meeting of Noteholders, setting forth the time and place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be mailed by the Trustee, first-class postage prepaid, to the Company, the
Guarantors and the Holders at their last addresses as they shall appear on the
registration books of the Registrar, not less than 10 nor more than 60 days
prior to the date fixed for such meeting.
Any meeting of Noteholders shall be valid without notice if the
Holders of all Notes then outstanding are present in Person or by proxy, or if
notice is waived before or after the meeting by the Holders of all Notes
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
SECTION 10.3 CALL OF MEETINGS BY THE COMPANY OR HOLDERS.
In case at any time the Company or the Holders of not less than 20% in
aggregate principal amount of the Notes then outstanding shall have requested
the Trustee to call a meeting of Noteholders of take any action specified in
Section 10.1, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have mailed the
notice of such meeting within 20 days after receipt of such request, then the
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Company or the Holders of Notes in the amount above specified may determine the
time and place in The City of New York, New York or elsewhere for such meeting
and may call such meeting, for purpose of taking such action, by mailing or
causing to be mailed notice thereof as provided in Section 10.2, or by causing
notice thereof to be published at least once in each of two successive calendar
weeks (on any Business Day during such week) in a newspaper or newspapers
printed in the English language, customarily published at least five days a week
of a general circulation in The City of New York, State of New York; the first
such publication to be not less than 10 nor more than 60 days prior to the date
fixed for the meeting.
SECTION 10.4 WHO MAY ATTEND AND VOTE AT MEETINGS.
To be entitled to vote at any meeting of Noteholders, a Person shall
(a) be a registered holder of one or more Notes, or (b) be a Person appointed by
an instrument in writing as proxy for the registered Holder or Holders of Notes.
The only Persons who shall be entitled to be present or to speak at any meeting
of Noteholders shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and the Guarantors and their counsel.
SECTION 10.5. REGULATIONS MAY BE MADE BY TRUSTEE; CONDUCT OF THE
MEETING; VOTING RIGHTS; ADJOURNMENT.
Notwithstanding any other provision of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any action by or
any meeting of Noteholders, in regard to proof of the holding of Notes and of
the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, and submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think appropriate. Such regulations may fix
a record date and time for determining the Holders of record of Notes entitled
to vote at such meeting, in which case those and only those Persons who are
Holders of Notes at the record date and time so fixed, or their proxies, shall
be entitled to vote at such meeting whether or not they shall be such Holders at
the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case
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may be, shall in like manner appoint a temporary chairman. A permanent chairman
and a permanent secretary of the meeting shall be elected by vote of the Holders
of a majority in principal amount of the Notes represented at the meeting and
entitled to vote.
At any meeting each Noteholder or proxy shall be entitled to one vote
for each $1,000 principal amount of Notes held or represented by him; PROVIDED
that no vote shall be cast or counted at any meeting in respect of any Notes
challenged as not outstanding and ruled by the chairman of the meeting to be not
then outstanding. The chairman of the meeting shall have no right to vote other
than by virtue of Notes held by him as the proxy to vote on behalf of other
Noteholders. Any meeting of Noteholders duly called pursuant to the provisions
of Section 10.2 or Section 10.3 may be adjourned from time to time by vote of
the Holder or Holders of a majority in aggregate principal amount of the Notes
represented at the meeting and entitled to vote, and the meeting may be held as
so adjourned without further notice.
SECTION 10.6 VOTING AT THE MEETING AND RECORD TO BE KEPT.
The vote upon any resolution submitted to any meeting of Noteholders
shall be by written ballots on which shall be subscribed the signatures of the
Holders of Notes or of their representatives by proxy and the principal amount
of the Notes voted by the ballot. Subject to the Trustee's regulations adopted
under Section 10.5, the permanent chairman of the meeting shall appoint two
inspectors of votes, who shall count all votes cast at the meeting for or
against any resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of
Noteholders shall be prepared by the secretary of the meeting, and there shall
be attached to such record the original reports of the inspectors of votes on
any vote by ballot taken thereat and affidavits, by one or more Persons having
knowledge of the facts, setting forth a copy of the notice of the meeting and
showing that such notice was mailed as provided in Section 10.2 or published as
provided in Section 10.3. The record shall be signed and verified by the
affidavits of the permanent chairman and the secretary of the meeting, and one
of the duplicates shall be delivered to the Company and the other to the Trustee
to be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
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SECTION 10.7 EXERCISE OF RIGHTS OF TRUSTEE OR NOTEHOLDERS MAY NOT BE
HINDERED OR DELAYED BY CALL OF MEETING.
Nothing contained in this Article X shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Noteholders or any
rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Noteholders under any of the provisions of
this Indenture or of the Notes.
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE
SECTION 11.1 REPURCHASE OF NOTES AT OPTION OF THE HOLDER UPON A
CHANGE OF CONTROL.
(a) In the event that a Change of Control occurs, each Holder shall
have the right, at such Holder's option, subject to the terms and conditions of
this Indenture, to require the Company to repurchase all or any part of such
Holder's Notes (provided, that the principal amount of such Notes at maturity
must be $1,000 or an integral multiple thereof) at a cash price (the "Change of
Control Payment") equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, to and including the
date (the "Change of Control Payment Date") the Notes tendered are purchased and
paid for in accordance with this Article XI which shall be three Business Days
after the Change of Control Put Date.
Prior to complying with the provisions of this Article XI, but in any
event within 30 days following a Change of Control, the Company will either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes under this Article XI.
(b) In the event of a Change of Control, the Company shall be
required to commence an offer to purchase Notes (a "Change of Control Offer") as
follows:
(1) the Company shall provide the Trustee with notice of the Change
of Control Offer at least five Business Days before the commencement of any
Change of Control Offer;
(2) the Change of Control Offer shall remain open for 20 Business
Days, except to the extent that a
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longer period is required by applicable law after the occurrence of the
Change of Control; and
(3) within 30 days following any Change of Control, the Company or
the Trustee (upon the request and at the expense of the Company) shall
send, by first-class mail, a notice to each of the Noteholders which (to
the extent consistent with this Indenture) shall govern the terms of the
Change of Control Offer and shall state:
(i) that the Change of Control Offer is being made pursuant to
such notice and this Section 11.1 and that all Notes, or portions thereof,
tendered will be accepted for payment;
(ii) the Change of Control Payment, including the amount of
accrued and unpaid interest and Liquidated Damages as of the then
applicable Change of Control Payment Date and the Change of Control Put
Date (as defined below);
(iii) that any Note, or portion thereof, not tendered or accepted
for payment will continue to accrue interest;
(iv) that, unless the Company defaults in depositing Cash with
the Paying Agent in accordance with the last paragraph of this Article XI
or such payment is prevented, any Note, or portion thereof, accepted for
payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Payment Date;
(v) that Holders electing to have a Note, or portion thereof,
purchased pursuant to a Change of Control Offer will be required to
surrender the Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Paying Agent (which
may not for purposes of this Section 11.1, notwithstanding anything in this
Indenture to the contrary, be the Company or any Affiliate of the Company)
at the address specified in the notice prior to the close of business on
the third Business Day prior to the Change of Control Payment Date (the
"Change of Control Put Date");
(vi) that Holders will be entitled to withdraw their election, in
whole or in part, if the Paying Agent (which may not for purposes of this
Section 11.1, notwithstanding anything in this Indenture to the contrary,
be the Company or any Affiliate of the Company) receives, up to the close
of
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business on the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Notes the Holder is withdrawing and a statement
that such Holder is withdrawing his election to have such principal amount
of Notes purchased;
(vii) that Holders whose Notes are purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered; and
(viii) a brief description of the events resulting in such Change
of Control.
Any such Change of Control Offer shall comply with all applicable
provisions of Federal and state laws, including those regulating tender offers,
if applicable, and any provisions of this Indenture which conflict with such
laws shall be deemed to be superseded by the provisions of such laws.
On or before the Change of Control Payment Date, the Company shall (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Change of Control Offer on or before the Change of Control Put Date, (ii)
deposit with the Paying Agent Cash sufficient to pay the Change of Control
Payment (including accrued and unpaid interest and Liquidated Damages) for all
Notes or portions thereof so tendered and (iii) deliver or cause to be delivered
to the Trustee Notes so accepted together with an Officers' Certificate listing
the Notes or portions thereof being purchased by the Company. The Paying Agent
shall on the Change of Control Payment Date mail to Holders of Notes so accepted
payment in an amount equal to the Change of Control Payment for such Notes, and
the Trustee shall promptly authenticate and mail or deliver (or cause to be
transferred by book entry) to such holders a new Note equal in principal amount
to any unpurchased portion of the Note surrendered PROVIDED, that each such new
Note will be in a principal amount of $1,000 or an integral multiple thereof.
The Company shall not have any obligation to accept for payment or pay for any
Notes tendered by a Holder after the Change of Control Put Date. Any Note not
so accepted shall be promptly mailed or delivered by the Company to the Holder
thereof.
The Company will publicly announce the results of the Change of
Control Offer as soon as practicable after the Change of Control Payment. The
Company will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the
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requirements set forth in this Section and purchases all Notes validly tendered
and not withdrawn under such Change of Control Offer
ARTICLE XII
SUBORDINATION
SECTION 12.1 NOTES SUBORDINATED TO SENIOR DEBT.
The Company and the Guarantors and each Holder, by its acceptance of
Notes, agree that (a) the payment of the principal of and interest on the Notes
and (b) any other payment in respect of the Notes, including on account of the
acquisition or redemption of the Notes by the Company and the Guarantors
(including, without limitation, pursuant to Section 4.13 or 11.1 or by
acceleration) is subordinated, to the extent and in the manner provided in this
Article XII, to the prior payment in full in Cash or U.S. Legal Tender
Equivalents of all Senior Debt of the Company and the Guarantors and that these
subordination provisions are for the benefit of the holders of Senior Debt.
This Article XII shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Debt, and such provisions are made for the benefit of the holders of
Senior Debt, and such holders are made obligees hereunder and anyone or more of
them may enforce such provisions.
SECTION 12.2 NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES.
(a) No payment (by set-off or otherwise) shall be made by or on
behalf of the Company or a Guarantor, as applicable, on account of any
Obligation in respect of the Notes, including the principal of, or premium, if
any, interest or Liquidated Damages on the Notes (including any repurchases of
Notes), or on account of the redemption provisions of the Notes (or Liquidated
Damages pursuant to the Registration Rights Agreement), in any such case for
cash, property or securities (except in Permitted Junior Securities or from the
trust described under Article VIII), in the event of default in payment of any
principal of, or premium, if any, or interest on Designated Senior Debt of the
Company or such Guarantor (and, in the case of Senior Debt under the Senior Bank
Facility, all other monetary obligations in respect thereof) when the same
becomes due and payable beyond any applicable period of grace, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise (a
"Payment Default") unless and
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until such Payment Default has been cured or waived or otherwise has ceased to
exist.
(b) Upon (i) the happening of an event of default (other than a
Payment Default) that permits the holders of Designated Senior Debt to declare
such Designated Senior Debt to be due and payable (or, in the case of letters of
credit, require cash collateralization thereof) and (ii) written notice of such
event of default given to the Trustee by the Company or the representative under
the Senior Bank Facility or the holders of any other Designated Senior Debt or
their representative (a "Payment Blockage Notice"), then, unless and until such
event of default has been cured or waived or otherwise has ceased to exist, no
payment (by set-off or otherwise) may be made by or on behalf of the Company or
any guarantor which is an obligor under such Designated Senior Debt on account
of any Obligation in respect of the Notes, including the principal of, or
premium, if any, interest or Liquidated Damages on the Notes, or to repurchase
any of the Notes, or on account of the redemption provisions of the Notes (or
liquidated damages pursuant to the Registration Rights Agreement), in any such
case, other than payments made in Permitted Junior Securities or from the trust
described under Article VIII. Notwithstanding the foregoing, unless the
Designated Senior Debt in respect of which such event of default exists has been
declared due and payable in its entirety (or cash collateral is required for
letters of credit) within 179 days after the Payment Blockage Notice is
delivered as set forth above (such period of 179 or fewer days being hereinafter
referred to as the "Payment Blockage Period") (and such declaration has not been
rescinded or waived), at the end of the Payment Blockage Period, the Company and
the Guarantors shall be required to pay all sums not paid to the Holders of the
Notes during the Payment Blockage Period due to the foregoing prohibitions and
to resume all other payments as and when due on the Notes. Any number of
Payment Blockage Notices may be given; PROVIDED that (i) not more than one
Payment Blockage Notice shall be given within a period of any 360 consecutive
days, and (ii) no default that existed upon the date of such Payment Blockage
Notice or the commencement of such Payment Blockage Period (whether or not such
event of default is on the same issue of Designated Senior Debt) shall be made
the basis for the commencement of any other Payment Blockage Period.
(c) In furtherance of the provisions of Section 12.1, in the event
that, notwithstanding the foregoing provisions of this Section 12.2, any payment
or distribution of assets on account of any Obligation in respect of the Notes,
including principal of or interest on the Notes or to defease or acquire any of
the Notes (including repurchases of Notes pursuant to Section 4.13 or 11.1), or
on account of
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the redemption provisions of the Notes (or Liquidated Damages pursuant to the
Registration Rights Agreement) shall be made for cash, property or securities
(excluding payments made with Permitted Junior Securities or from the trust
described under Article VIII) by the Company or any of the Guarantors and
received by the Trustee, by any Holder or by any Paying Agent (or, if the
Company is acting as the Paying Agent, money for any such payment shall be
segregated and held in trust), at a time when such payment or distribution was
prohibited by the provisions of this Section 12.2, then, unless such payment or
distribution is no longer prohibited by this Section 12.2, such payment or
distribution (subject to the provisions of Section 12.7) shall be received and
held in trust by the Trustee or such Holder or Paying Agent for the benefit of
the holders of Senior Debt of the Company or such Guarantor, and shall be paid
or delivered by the Trustee or such Holders or such Paying Agent, as the case
may be, to the holders of Senior Debt of the Company or such Guarantor remaining
unpaid or unprovided for, or to their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Debt of the Company or such Guarantor may have been
issued, ratably, according to the aggregate amounts unpaid on account of such
Senior Debt held or represented by each, for application to the payment of all
such Senior Debt remaining unpaid or unprovided for, to the extent necessary to
pay or provide for the payment of all such Senior Debt in full in Cash or U.S.
Legal Tender Equivalents or otherwise to the extent holders accept satisfaction
of amounts due by settlement in other than Cash or U.S. Legal Tender Equivalents
after giving effect to all concurrent payments and distributions to or for the
holders of such Senior Debt.
SECTION 12.3 NOTES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR DEBT
ON DISSOLUTION, LIQUIDATION OR REORGANIZATION.
Upon any distribution of assets of the Company or any Guarantor or
upon any dissolution, winding up, total or partial liquidation or reorganization
of the Company or any Guarantor, whether voluntary or involuntary, in
bankruptcy, insolvency, receivership or similar proceeding or upon assignment
for the benefit of creditors or any marshalling of assets or liabilities:
(a) the holders of all Senior Debt of the Company or such Guarantor,
as applicable, shall first be entitled to receive payments in full of all
Obligations due in respect of such Senior Debt (including interest after the
commencement of any such proceeding at the rate specified in the applicable
Senior Debt, whether or not payable or allowable in such proceeding) in Cash or
U.S. Legal Tender
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Equivalents or otherwise to the extent holders accept satisfaction of amounts
due by settlement in other than Cash or U.S. Legal Tender Equivalents (or have
such payment duly provided for) before the Holders are entitled to receive any
payment on account of any Obligation in respect of the Notes, including the
principal of, and premium, if any, interest and Liquidated Damages, if any, on
the Notes (except Holders may receive Permitted Junior Securities and payments
made from the trust described in Article VIII);
(b) any payment or distribution of assets of the Company or such
Guarantor of any kind or character from any source, whether in cash, property or
securities (excluding payments made with Permitted Junior Securities and from
the trust described in Article VIII), to which the Holders or the Trustee on
behalf of the Holders would be entitled (by set-off or otherwise) except for the
provisions of this Article XII, shall be paid by the liquidating trustee or
agent or other Person making such a payment or distribution, directly to the
holders of such Senior Debt or their representative or representatives or to the
Trustee or trustees under any indenture pursuant to which any instrument
evidencing such Senior Debt may have been issued, ratably according to the
respective amounts of Senior Debt held or represented by each, to the extent
necessary to make payment in full in Cash or U.S. Legal Tender Equivalents (or
have such payment duly provided for) all such Senior Debt remaining unpaid after
giving effect to all concurrent payments and distributions to the holders of
such Senior Debt; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or any Guarantor of any kind or character
from any source, whether in Cash, property or securities (other than Permitted
Junior Securities or payments from the trust described in Article VIII), shall
be received by the Trustee or the Holders or any Paying Agent (or, if the
Company is acting as its own Paying Agent, money for any such payment or
distribution shall be segregated or held in trust) on account of any Obligation
in respect of the Notes, including the principal of, and premium, if any,
interest and Liquidated Damages, if any, on the Notes or to repurchase any of
the Notes, or on account of the redemption provisions of the Notes, before all
Senior Debt of the Company or any Guarantor is paid in full in Cash or U.S.
Legal Tender Equivalents or otherwise to the extent holders accept satisfaction
of amounts due by settlement in other than Cash or U.S. Legal tender
Equivalents, such payment or distribution (subject to the provisions of Section
12.7) shall be received and held in trust by the Trustee or such Holder or
Paying Agent for the benefit of the holders of such Senior Debt, or their
respective representative or
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representatives, or to the trustee or trustees under any indenture pursuant to
which any instrument evidencing such Senior Debt may have been issued, ratably
according to the respective amounts of such Senior Debt held or represented by
each, to the extent necessary to make payment as provided herein of all such
Senior Debt remaining unpaid after giving effect to all concurrent payments and
distributions and all provisions therefor to or for the holders of such Senior
Debt, but only to the extent that as to any holder of such Senior Debt, as
promptly as practical following notice from the Trustee to the holders of such
Senior Debt that such prohibited payment has been received by the Trustee,
Holder(s) or Paying Agent (or has been segregated as provided above), such
holder (or a representative therefor) notifies the Trustee of the amounts then
due and owing on such Senior Debt, if any, held by such holder and only the
amounts specified in such notices to the Trustee shall be paid to or for the
holders of such Senior Debt.
SECTION 12.4 NOTEHOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF
SENIOR DEBT.
Subject to the payment in full in Cash or U.S. Legal Tender
Equivalents of all Senior Debt of the Company or any Guarantor as provided
herein or otherwise to the extent holders accept satisfaction of amounts due by
settlement in other than Cash or U.S. Legal Tender Equivalents, the Holders of
Notes shall be subrogated to the rights of the holders of such Senior Debt to
receive payments or distributions of assets of the Company or such Guarantor
applicable to the Senior Debt until all amounts owing on the Notes shall be paid
in full, and for the purpose of such subrogation no such payments or
distributions to the holders of such Senior Debt by or on behalf of the Company
or any Guarantor, or by or on behalf of the Holders by virtue of this Article
XII, which otherwise would have been made to the Holders shall, as between the
Company or any Guarantor and the Holders, be deemed to be payment by the Company
or any Guarantor on account of such Senior Debt, it being understood that the
provisions of this Article XII are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
such Senior Debt, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article XII shall have been
applied pursuant to the provisions of this Article XII, to the payment of
amounts payable under Senior Debt of the Company or any Guarantor, then the
Holders shall be entitled to receive from the holders of such Senior Debt any
payments or distributions received by such holders of Senior Debt in
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excess of the amount sufficient to pay all amounts payable under or in respect
of such Senior Debt in full in Cash or U.S. Legal Tender Equivalents.
SECTION 12.5 OBLIGATIONS OF THE COMPANY AND THE GUARANTORS
UNCONDITIONAL.
Nothing contained in this Article XII or elsewhere in this Indenture
or in the Notes is intended to or shall impair, as between the Company and the
Guarantors and the Holders, the obligation of each such Person, which is
absolute and unconditional, to pay to the Holders the Obligations in respect of
the Notes as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company and the Guarantors other than the holders
of the Senior Debt, nor shall anything herein or therein prevent the Trustee or
any Holder from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article XII, of the holders of Senior Debt in respect of cash, property or
securities of the Company and the Guarantors received upon the exercise of any
such remedy. Notwithstanding anything to the contrary in this Article XII or
elsewhere in this Indenture or in the Notes, upon any distribution of assets of
the Company and the Guarantors referred to in this Article XII, the Trustee,
subject to the provisions of Section 7.1 and 7.2, and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other Person making any distribution to the Trustee or to
the Holders for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Debt and other Indebtedness of
the Company or any Guarantor, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article XII so long as such court has been apprised of, or the order,
decree or certificate makes reference to, the provisions of this Article XII.
Nothing in this Section 12.5 shall apply to the claims of, or payments to, the
Trustee under or pursuant to Section 7.7.
SECTION 12.6 TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN
ABSENCE OF NOTICE.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until a Trust Officer of the Trustee or any Paying Agent
shall have received, no later than one Business Day prior to
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such payment, written notice thereof from the Company or from one or more
holders of Senior Debt or from any representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instrument
evidencing such Senior Debt may have been issued and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections 7.1
and 7.2, shall be entitled in all respects conclusively to assume that no such
fact exists. Nothing in this Article XII shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 7.7 hereof.
SECTION 12.7 APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT.
Amounts deposited in trust with the Trustee pursuant to and in
accordance with Article VIII shall be for the sole benefit of Noteholders and,
to the extent (i) the making of such deposit by the Company shall not be in
contravention of any term or provision of the Senior Bank Facility and (ii)
allocated for the payment of Notes, shall not be subject to the subordination
provisions of this Article XII. Otherwise, any deposit of assets with the
Trustee or the Agent (whether or not in trust) for the payment of principal of,
or premium, if any, or interest on any Notes shall be subject to the provisions
of Sections 12.1, 12.2, 12.3 and 12.4; PROVIDED, THAT, if prior to one Business
Day preceding the date on which by the terms of this Indenture any such assets
may become distributable for any purpose (including without limitation, the
payment of principal of, or premium, of any, or interest or Liquidated Damages
on any Note) the Trustee or such Paying Agent shall not have received with
respect to such assets the written notice provided for in Section 12.6, then the
Trustee or such Paying Agent shall have full power and authority to receive such
assets and to apply the same to the purpose for which they were received, and
shall not be affected by any notice to the contrary which may be received by it
on or after such date.
SECTION 12.8 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS
OF THE COMPANY, THE GUARANTOR OR HOLDERS OF SENIOR DEBT.
No right of any present or future holders of any Senior Debt to
enforce subordination provisions contained in this Article XII shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or any Guarantor or by any act or failure to act, in good faith, by
any such holder, or by any noncompliance by the Company or any Guarantor with
the terms of this Indenture, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The
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holders of Senior Debt may extend, renew, modify or amend the terms of the
Senior Debt or any note therefor and release, sell or exchange such note and
otherwise deal freely with the Company and the Guarantors, all without affecting
the liabilities and obligations of the parties to this Indenture or the Holders.
Any renewal or extension of the time of payment of any Senior Debt or
the exercise by the holders of Senior Debt of any of their rights under any
instrument creating or evidencing Senior Debt, including, without limitation,
the waiver of default thereunder, may be made or done all without notice to or
assent from the Holders or the Trustee.
No compromise, alteration, amendment, modification, extension, renewal
or other change of, or waiver, consent or other action in respect of, any
liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of any indenture or other instrument under which any
Senior Debt is outstanding or of such Senior Debt, whether or not such release
is in accordance with the provisions of any applicable document, shall in any
way alter or affect any of the provisions of this Article Twelve or of the Notes
relating to the subordination thereof.
SECTION 12.9 NOTEHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE
SUBORDINATION OF NOTES.
Each Holder of the Notes by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such actions as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article XII and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company or any Guarantor (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or any other marshalling of assets and liabilities of the Company or
any Guarantor), the immediate filing of a claim for the unpaid balance of his
Notes in the form required in said proceedings and cause said claim to be
approved. if the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then each holder of the Senior Debt or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instrument evidencing such Senior Debt may have
been issued is hereby authorized to have the right to file and is hereby
authorized to file an appropriate claim for and on behalf of the Holders of said
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Notes. Nothing herein contained shall be deemed to authorize the Trustee or the
holders of Senior Debt or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instrument
evidencing such Senior Debt may have been issued to authorize or consent to or
accept or adopt on behalf of any Note holder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof, or to authorize the Trustee or the holders of Senior Debt or
their representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instrument evidencing such Senior Debt may have
been issued to vote in respect of the claim of any Noteholder in any such
proceeding.
SECTION 12.10 RIGHT OF TRUSTEE TO HOLD SENIOR DEBT.
The Trustee shall be entitled to all of the rights set forth in this
Article XII in respect of any Senior Debt at any time held by it to the same
extent as any other holder of Senior Debt, and nothing in this indenture shall
be construed to deprive the Trustee of any of its rights as such holder.
SECTION 12.11 ARTICLE XII NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of, or premium,
if any, or interest or Liquidated Damages on the Notes by reason of any
provision of this Article XII shall not be construed as preventing the
occurrence of a Default or an Event of Default under Section 6.1 or in any way
prevent the holders from exercising any right hereunder other than the right to
receive payment on the Notes.
SECTION 12.12 NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF SENIOR DEBT.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders (other than
for its willful misconduct or negligence) if it shall in good faith mistakenly
pay over or distribute to the Holders of Notes or the Company, any Guarantor or
any other Person, cash, property or securities to which any holders of Senior
Debt shall be entitled by virtue of this Article XII or otherwise. Nothing in
this Section 12.12 shall affect the obligation of any other such Person to hold
such payment for the benefit of, and to pay such payment over to, the holders of
Senior Debt or their representative.
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ARTICLE XIII
NOTE GUARANTEE
SECTION 13.1 NOTE GUARANTEE.
(a) In consideration of good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, to the fullest extent permitted
by applicable law, each of the Guarantors hereby irrevocably and unconditionally
Guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes or the obligations of the
Company under this Indenture or the Notes, that: (w) the principal of, and
premium (if any), interest and Liquidated Damages (if any) on the Notes will be
paid in full when due, whether at the maturity or interest payment date, by
acceleration, call for redemption, upon a Change of Control, an Asset Sale Offer
or otherwise; (x) all other obligations of the Company to the Holders or the
Trustee under this Indenture or the Notes will be promptly paid in full or
performed, all in accordance with the terms of this Indenture and the Notes; and
(y) in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, they will be paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration, call for redemption, upon a Change of Control, an Asset Sale Offer
or otherwise. Failing payment when due of any amount so Guaranteed for whatever
reason, each Guarantor shall be obligated, subject to the provisions of Article
XII, to pay the same before failure so to pay becomes an Event of Default.
(b) Each Guarantor hereby agrees to the fullest extent permitted by
applicable law, that its obligations with regard to this Note Guarantee shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
delays in obtaining or realizing upon or failures to obtain or realize upon
collateral, the recovery of any judgment against the Company, any action to
enforce the same or any other circumstances that might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company or right to require the prior disposition
of the assets of the Company to meet its obligations, protest, notice and all
demands whatsoever and covenants that this
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Note Guarantee will not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture.
(c) If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or any Guarantor, or any Custodian or
similar official acting in relation to either the Company or such Guarantor, any
amount paid by either the Company or such Guarantor to the Trustee or such
holder, this Note Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor agrees that it will not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations Guaranteed hereby until payment in full of all obligations
Guaranteed hereby. Each Guarantor further agrees that, as between such
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(i) the maturity of the obligations Guaranteed hereby may be accelerated as
provided in Section 6.2 for the purposes of this Note Guarantee, notwithstanding
any stay, injunction or other prohibition preventing such acceleration as to the
Company of the obligations Guaranteed hereby, and (ii) in the event of any
declaration of acceleration of those obligations as provided in Section 6.2,
those obligations (whether or not due and payable) will forthwith become due and
payable by each of the Guarantors for the purpose of this Note Guarantee.
(d) It is the intention of each Guarantor and the Company that the
obligations of each Guarantor hereunder shall be in, but not in excess of, the
maximum amount permitted by applicable law. Accordingly, if the obligations in
respect of the Note Guarantee would be annulled, avoided or subordinated to the
creditors of any Guarantor by a court of competent jurisdiction in a proceeding
actually pending before such court as a result of a determination both that such
Note Guarantee was made by such Guarantor without fair consideration and,
immediately after giving effect thereto, such Guarantor was insolvent or unable
to pay its debts as they mature or left with an unreasonably small capital, then
the obligations of such Guarantor under such Note Guarantee shall be reduced by
such court if and to the extent such reduction would result in the avoidance of
such annulment, avoidance or subordination; PROVIDED that any reduction pursuant
to this paragraph shall be made in the smallest amount as is strictly necessary
to reach such result. For purposes of this paragraph, "fair consideration",
"insolvency", "unable to pay its debts as they mature", "unreasonably small
capital" and the effective times of reductions, if any, required by this
paragraph shall be determined in accordance with applicable law.
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SECTION 13.2 EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 13.1, each
Guarantor agrees that a notation of such Note Guarantee substantially in the
form annexed hereto as Exhibit B shall be endorsed on each Note authenticated
and delivered by the Trustee and that this Indenture shall be executed on behalf
of such Guarantor by two Officers or an Officer and an Assistant Secretary by
manual or facsimile signature.
Each Guarantor agrees that its Note Guarantee set forth in Section
13.1 shall remain in full force and effect and apply to all the Notes
notwithstanding any failure to endorse on each Note a notation of such Note
Guarantee.
If an Officer whose signature is on a Note Guarantee no longer holds
that office at the time the Trustee authenticates the Note on which such Note
Guarantee is endorsed, such Note Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of each Guarantor.
SECTION 13.3 FUTURE SUBSIDIARY GUARANTORS.
The Company and the Guarantors covenant and agree that they shall
cause each Domestic Restricted Subsidiary of the Company acquired or created
after the Issue Date to execute a Note Guarantee in the form of EXHIBIT B hereto
in accordance with the covenant provided under Section 4.17 and will cause such
Domestic Restricted Subsidiary to execute a supplemental Indenture hereto for
the purpose of adding such Domestic Restricted Subsidiary as a Guarantor
hereunder.
SECTION 13.4 CERTAIN BANKRUPTCY EVENTS.
Each Guarantor hereby covenants and agrees, to the fullest extent that
it may do so under applicable law, that in the event of the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Company, such
Guarantor shall not file (or join in any filing of), or otherwise seek to
participate in the filing of, any motion or request seeking to stay or prohibit
(even temporarily) execution on the Note Guarantee hereby and hereby waives and
agrees not to take the benefit of any such stay of execution, whether under
Section 362 or 105 of the United States Bankruptcy Code or otherwise.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 TIA CONTROLS.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
SECTION 14.2 NOTICES.
Any notices or other communications to the Company or any Guarantor or
the Trustee required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company or any Guarantor:
Astor Corporation
8521 Six Forks Road
Raleigh, North Carolina 27615
Attention: Chief Financial Officer
Telecopy: (919) 846-8283
if to the Trustee:
State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Telecopy: (617) 664-5374
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; made as of the date so
delivered, if personally delivered; when answered back, if telexed; when receipt
is acknowledged, if telecopied; and five Business Days after mailing if sent by
registered or certified mail, postage prepaid (except that a notice of change of
address shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication made to a Noteholder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the
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registration books of the Registrar and shall be sufficiently given to him if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 14.3 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA Section 312(c).
SECTION 14.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or any Guarantor to the
Trustee to take any action under this Indenture, such Person shall furnish to
the Trustee:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the
opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action
have been met; and
(2) an Opinion of Counsel (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of such
counsel, all such conditions precedent have been met.
SECTION 14.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions
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contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such
covenant or condition has been met; and
(4) a statement as to whether or not, in the opinion of
each such Person, such condition or covenant has been met;
PROVIDED, HOWEVER, that with respect to such matters of fact an
Opinion of Counsel may rely on an Officers' Certificate or
certificates of public officials.
SECTION 14.6 RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting of
the Noteholders. The Paying Agent or Registrar may make reasonable rules for
its functions.
SECTION 14.7 LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close. If a payment date is a Legal Holiday at such place,
payment may be made at such place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 14.8 GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK. EACH OF THE COMPANY AND THE
GUARANTORS HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND
THE NOTES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH OF
THE COMPANY AND THE GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
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BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL EFFECT THE RIGHT OF THE TRUSTEE OR ANY NOTEHOLDER TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY AND THE GUARANTORS IN ANY OTHER
JURISDICTION.
SECTION 14.9 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any Guarantor or any of their respective
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 14.10 NO RECOURSE AGAINST OTHERS.
No partner, incorporator, direct or indirect stockholder, director,
officer, employee or affiliate (other than the Company and the Guarantors), as
such, past, present or future, of the Company or any Guarantor, or any successor
entity, shall have any personal liability for any obligations of the Company and
the Guarantors under the Notes, the Note Guarantees or this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation, by reason of his, her or its status as such partner, incorporator,
stockholder, director, officer or employee or affiliate (other than the Company
and the Guarantors). Each Noteholder by accepting a Note waives and releases
all such liability. Such waiver and release are part of the consideration for
the issuance of the Notes.
SECTION 14.11 SUCCESSORS.
All agreements of the Company and the Guarantor in this Indenture and
the Notes shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 14.12 DUPLICATE ORIGINALS.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
SECTION 14.13 SEVERABILITY.
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity,
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legality and enforceability of any such provision in every other respect and of
the remaining provisions shall not in any way be affected or impaired thereby,
it being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
SECTION 14.14 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of the
Articles and the sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 14.15 QUALIFICATION OF INDENTURE.
The Company shall qualify this Indenture under the TIA in accordance
with the terms and conditions of the Registration Rights Agreement and shall pay
all costs and expenses (including attorneys' fees for the Company and the
Trustee) incurred in connection therewith, including but not limited to, costs
and expenses of qualification of the Indenture and the Notes and printing this
Indenture and the Notes. The Trustee shall be entitled to receive from the
Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 14.16 REGISTRATION RIGHTS.
Certain Holders of the Notes may be entitled to certain registration
rights with respect to such Notes pursuant to, and subject to the terms of, the
Registration Rights Agreement.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
ASTOR CORPORATION,
[Seal]
By: /s/ John F. Gottshall
-----------------------
Name:
Title:
Attest: /s/ David E. Hawkins
----------------------
Secretary
GUARANTOR: ASTOR HOLDINGS II, INC.
By: /s/ John F. Gottshall
---------------------
Name:
Title:
STATE STREET BANK
AND TRUST COMPANY,
---------------------------
as Trustee
By: /s/ E. Decker Adams
-----------------------
Name:
Title:
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Exhibit A
FORM OF NOTE
ASTOR CORPORATION
10 1/2% SENIOR SUBORDINATED NOTE
DUE 2006
No. CUSIP No.
$
Astor Corporation, a Delaware corporation (hereinafter called the
"Company", which term includes any successors under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of $___________ Dollars, on October 15,
2006.
Interest Payment Dates: October 15 and April 15, commencing on April
15, 1997.
Record Dates: October 1 and April 1.
Reference is made to the further provisions of this Note on the
reverse side, which will, for all purposes, have the same effect as if set forth
as this place.
Dated: ____________, 1996
ASTOR CORPORATION
By: ______________________
Name:
Title:
Attest: ________________
Secretary
A-1
<PAGE>
FORM OF TRUSTEE'S CERTIFICATION OF AUTHENTICATION
This is one of the Notes described in the within-mentioned Indenture.
________________________
as Trustee
By: ________________________
Authorized Signature
Dated: ___________, ____
A-2
<PAGE>
ASTOR CORPORATION
10 1/2% SENIOR SUBORDINATED NOTE
DUE 2006
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the depositary or another nominee of the Depositary or by the Depositary of any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or such other entity as is requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.(1)
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION. BY ITS ACCEPTANCE HEREOF, THE HOLDER
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QUALIFIED INSTITUTIONAL BUYER") OR (B) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN
OFFSHORE TRANSACTION OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR"
- --------------------
(1) This paragraph should only be added if the Note is issued in global
form.
A-3
<PAGE>
(AS DEFINED IN RULE 501(A)(1), (2) (3) OR (7) UNDER THE
SECURITIES ACT).
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE OF THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE
TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K)
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISIONS) (THE
"RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO ASTOR
CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR
THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF
$250,000 AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO ASTOR CORPORATION'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (F) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE
FOREGOING CLAUSE (E), A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON
A-4
<PAGE>
THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED
BY THE TRANSFEROR TO ASTOR CORPORATION AND THE TRUSTEE.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.(2)
1. INTEREST.
Astor Corporation, a Delaware corporation (hereinafter called the
"Company," which term includes any successors under the Indenture hereinafter
referred to), promises to pay interest on the principal amount of this Note at
the rate of 10 1/2% per annum. To the extent it is lawful, the Company promises
to pay interest on any interest payment due but unpaid on such principal amount
at a rate of 10 1/2% per annum compounded semi-annually.
The Company will pay interest semi-annually on
October 15 and April 15 of each year (each, and "Interest Payment Date"),
commencing on April 15, 1997. Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid on
the Notes, from the date of original issuance. Interest will be computed on the
basis of a 360-day year consisting of twelve 30-day months.
2. METHOD OF PAYMENT.
The Company shall pay interest on the Notes (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders
must surrender Notes to a Paying Agent to collect principal payments. Except as
provided below, the Company shall pay principal and interest in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("U.S. Legal Tender"). The
Company will pay principal and interest by its check payable in such U.S. Legal
Tender. The Company may deliver any such interest payment to the Paying Agent
or the Company may mail any such interest payment to a Holder at the Holder's
registered address.
- --------------------
(2) This legend should not be added to New Notes.
A-5
<PAGE>
3. PAYING AGENT AND REGISTRAR.
Initially, State Street Bank and Trust Company (the "Trustee") will
act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-Registrar without notice to the Holders. The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or co-Registrar.
4. INDENTURE.
The Company issued the Notes under an Indenture, dated as of October
8, 1996 (the "Indenture"), among the Company, the Guarantors named therein and
the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act, as in effect on the date of the Indenture. The Notes are subject
to all such terms, and Holders of Notes are referred to the Indenture and said
Act for a statement of them. The Notes are general unsecured obligations of the
Company.
5. REDEMPTION.
The Notes may be redeemed in whole or from time to time in part at any
time on and after October 15, 2001, at the option of the Company, at the
Redemption Price (expressed as a percentage of principal amount) set forth below
with respect to the indicated Redemption Date, in each case, plus any accrued
but unpaid interest and Liquidated Damages thereon to the Redemption Date. The
Notes may not be so redeemed prior to October 15, 2001 (other than out of the
Net Proceeds of certain issuances of common stock of the Company described
below).
-----------------------------------------------------------------------
If redeemed during the
12-month period
beginning Redemption Price
-----------------------------------------------------------------------
2001 . . . . . . . . . . . . . . . . . . . 105.25%
2002 . . . . . . . . . . . . . . . . . . . 103.50%
2003 . . . . . . . . . . . . . . . . . . . 101.75%
2004 and thereafter. . . . . . . . . . . . 100.00%
-----------------------------------------------------------------------
Notwithstanding the foregoing, at any time prior to October 15, 1999,
the Company may also redeem up to $35.0 million aggregate principal amount of
the Notes at a Redemption Price equal to 109.5% of the principal amount of the
Notes, together with accrued and unpaid interests to the Redemption Date with
the Net Proceeds from one or more Public Equity Offering in the case of an
offering by the
A-6
<PAGE>
Company, or from such proceeds invested directly or indirectly by the Parent or
Astor Holdings II in Qualified Capital Stock in the case of an offering by the
Parent or Astor Holdings II; PROVIDED that at least $75.0 million in aggregate
principal amount of the Notes originally issued remain outstanding after each
such redemption and that each such redemption occurs within 75 days after the
receipt of such Net Proceeds.
Any such redemption will comply with Article III of the Indenture.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to Section
3.1 of the Indenture, an equivalent premium shall also become and be immediately
due and payable to the extent permitted by law upon the acceleration of the
Notes. If an Event of Default occurs prior to October 15, 2001 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding the prohibition on redemption of the Notes prior
to October 15, 2001, then an amount equivalent to the Redemption Price
applicable to redemptions made during the twelve-month period following October
15, 2001 shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the Notes.
6. NOTICE OF REDEMPTION.
Notice of redemption will be sent by first class mail, at least 30
days and not more than 60 days prior to the Redemption Date to the Holder of
each Note to be redeemed at such Holder's last address as then shown upon the
registry books of the Registrar. Notes may be redeemed in part in multiples of
$1,000 only.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Notes called for redemption shall have
been deposited with the Paying Agent on such Redemption Date and payment of the
Notes called for redemption is not prohibited under Article XII of the
Indenture, the Notes called for redemption will cease to bear interest and the
only right of the Holders of such Notes will be to receive payment of the
Redemption Price, plus any accrued and unpaid interest to the Redemption Date.
A-7
<PAGE>
7. DENOMINATIONS; TRANSFER; EXCHANGE.
The Notes are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000; provided that Notes will initially be
issued only to Institutional Accredited Investors in denominations of $250,000
and any multiple of $1,000 in excess thereof. A Holder may register the
transfer of, or exchange Notes in accordance with, the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsement and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Notes selected for redemption.
8. PERSONS DEEMED OWNERS.
The registered Holder of a Note may be treated as the owner of it for
all purposes.
9. UNCLAIMED MONEY.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee
and such Paying Agent(s) with respect to such money shall cease.
10. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
Except as set forth in the Indenture, if the Company irrevocably
deposits with the Trustee, in trust, for the benefit of the Holders, Cash, U.S.
Government Obligations or a combination thereof, in such amounts as will be
sufficient in the opinion of a nationally recognized firm of independent public
accountants selected by the Trustee, to pay the principal of, and premium, if
any, interest and Liquidated Damages on the Notes to redemption or maturity and
complies with the other provisions of the Indenture relating thereto, the
Company and the Guarantors will be discharged from certain provisions of the
Indenture and the Notes (including the financial covenants, but excluding their
obligation to pay principal of, and premium, if any, interest and Liquidated
Damages, if any, on the Notes). Upon satisfaction of certain additional
conditions set forth in the Indenture, the Company may, within one year of the
Stated Maturity of the Notes, elect to have its and the Guarantors' obligations
discharged with respect to outstanding Notes.
A-8
<PAGE>
11. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Notes then outstanding. Without
notice to or consent of any Holder, the parties thereto may under certain
circumstances amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency, or make any other change
that does not adversely affect the rights of any Holder of a Note.
12. RESTRICTIVE COVENANTS.
The Indenture imposes certain limitations on the ability of the
Company and the Guarantors to, among other things, incur additional Indebtedness
and issue Disqualified Stock, pay dividends or make certain other restricted
payments, enter into certain transactions with Affiliates, incur Liens, sell
assets, merge or consolidate with any other Person or transfer (by lease,
assignment or otherwise) substantially all of the properties and assets of the
Company. The limitations are subject to a number of important qualifications
and exceptions. The Company must periodically report to the Trustee on
compliance with such limitations.
13. RANKING.
Payment of principal, and premium, if any, interest and Liquidated
Damages, if any, on the Notes is subordinated, in the manner and to the extent
set forth in the Indenture, to the prior payment in full of all Senior Debt.
14. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to
offer to purchase on the Change of Control Payment Date all outstanding Notes at
a purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, to the Change of Control Payment
Date. Holders of Notes will receive a Change of Control Offer from the Company
prior to any related Change of Control Payment Date and may elect to have such
Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" appearing below.
(b) The Indenture imposes certain limitations on the ability of the
Company, the Guarantors or any of their respective Subsidiaries to sell assets.
In the event the
A-9
<PAGE>
proceeds from a permitted Asset Sale exceed certain amounts, as specified in the
Indenture, the Company will be required either to reinvest the proceeds of such
Asset Sale in its business or to make an offer to purchase each Holder's Notes
at 100% of the principal amount thereof, plus accrued interest and Liquidated
Damages, if any, to the purchase date.
15. SUCCESSORS.
When a successor assumes all the obligations of its predecessor under
the Notes and the Indenture, the predecessor will be released from those
obligations.
16. DEFAULTS AND REMEDIES.
If an Event of Default occurs and is continuing (other than as an
Event of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
Notes shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Notes then outstanding may
declare all the Notes to be due and payable immediately in the manner and with
the effect provided in the Indenture. Holders of Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Notes. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Notes then outstanding may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of Notes
notice of any continuing Default or Event of Default (except a Default in
payment of principal or interest), if it determines that withholding notice is
in their interest.
17. TRUSTEE DEALINGS WITH COMPANY.
The Trustee under the Indenture may, in its individual or any other
capacity, make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. NO RECOURSE AGAINST OTHERS.
No partner, incorporator, direct or indirect stockholder, director,
officer, employee or affiliate (other than the Company or the Guarantors), as
such, past, present or future, of the Company or any Guarantor, or any successor
entity, shall have any personal liability for any obligations of the Company and
the Guarantors under the Notes or the Indenture or for any claim based on, in
respect
A-10
<PAGE>
of, or by reason of, such obligations or their creation by reason of his, her or
its status as such partner, incorporator, stockholder, director, officer,
employee or affiliate. Each Holder of a Note by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
19. AUTHENTICATION.
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
20. ABBREVIATIONS AND DEFINED TERMS.
Customary abbreviations may be used in the name of a Holder of a Note
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
21. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Note Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
22. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED NOTES.
In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Notes shall have all the rights set forth in the
Registration Rights Agreement, including without limitation the right to receive
Liquidated Damages as provided therein.
A-11
<PAGE>
FORM OF ASSIGNMENT
I or we assign this Note to
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security Number or other identifying number of
assignee
- --------------------------
and irrevocably appoint _______________ agent to transfer this Note on the books
of the Company. The agent may substitute another to act for him.
Dated: Signed:
----------- ---------------------------------
Signature Guaranteed by an
institution member of the
Signature Guaranty Medallion Program
----------------------------------------------------------------------
(Sign exactly as name appears on
the other side of this Note)
A-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.13 or Article XI of the Indenture, check the appropriate
box: /__/ Section 4.13 /__/ Article XI
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.13 or Article XI of the Indenture, as the case may
be, state the amount you want to be purchased: $____________
Date: Signature:
------------------ -------------------------
(Sign exactly as your
name appears on the
other side of this
Note)
A-13
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
Principal Signature of
Amount of Amount of Amount of this authorized
decrease in increase in Global Note officer of
Principal Principal following such Trustee or
Date of Amount of this Amount of this decrease (or Notes
Exchange Global Note Global Note increase) Custodian
- --------------------------------------------------------------------------------
- --------------------
(3)This schedule should only be added if the Note is issued in global
form.
A-14
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
NOTES(4)
Re: 10 1/2% SENIOR SUBORDINATED NOTES DUE 2006 OF ASTOR CORPORATION
This Certificate relates to $ principal amount of Notes held
in (check applicable space) book-entry or definitive form
by (the "Transferor").
The Transferor (check applicable box):
/ / has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depositary a Note or
Notes in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
/ / has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above-captioned Notes and as provided in Section 2.6 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:
/ / Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) of the Indenture).
/ / Such Note is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.6(b)(i) or Section 2.6(c) of the Indenture) or pursuant to an exemption from
registration in accordance with Regulation S under the Securities Act (in
satisfaction of Section 2.6(b)(i) or Section 2.6(c) of the Indenture).
/ / Such Note is being transformed to an institutional "accredited
investor" within the meaning of Rule 501(A)(1), (2), (3) or (7) under the
Securities Act that is acquiring the note for its own account, or for the
account of such an
- --------------------
(4)The following should be included only for Initial Securities.
A-15
<PAGE>
institutional "accredited investor", in each case in a minimum principal amount
of the Notes of $250,000, not with a view to or for offer or sale in connection
with any distribution in violation of the Securities Act.
/ / Such Note is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act.
/ / Such Note is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Securities Act, other
than as provided in the immediately preceding paragraph. An Opinion of Counsel
to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate.
----------------------------
[INSERT NAME OF TRANSFEROR]
By:
-------------------------
Date:
----------------------
A-16
<PAGE>
EXHIBIT B
FORM OF NOTE GUARANTEE
For value received, _______________, a _________ corporation, hereby
unconditionally guarantees to the Holder of the Note upon which this Note
Guarantee is endorsed the due and punctual payment, as set forth in the
Indenture pursuant to which such Note and this Note Guarantee were issued, of
the principal of, premium (if any), interest and Liquidated Damages (if any) on
such Note when and as the same shall become due and payable for any reason
according to the terms of such Note, Article XIII and Section 4.17 of the
Indenture. The Note Guarantee of the Note upon which this Note Guarantee is
endorsed will not become effective until the Trustee signs the certificate of
authentication on such Note.
----------------------------
By:
-------------------------
Attest:
---------------------
<PAGE>
10 1/2% SENIOR SUBORDINATED NOTES DUE 2006
REGISTRATION RIGHTS AGREEMENT
Dated as of October 8, 1996
by and among
ASTOR CORPORATION
ASTOR HOLDINGS II, INC.,
and
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
and
CHASE SECURITIES INC.
<PAGE>
10 1/2% SENIOR SUBORDINATED NOTES DUE 2006
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as of
October 8, 1996, by and among Astor Corporation, a Delaware corporation (the
"Company"), Astor Holdings II, Inc., as guarantor (the "Guarantor"), and
Donaldson, Lufkin & Jenrette Securities Corporation and Chase Securities Inc.,
as initial purchasers (the "Initial Purchasers"), of the $110,000,000 aggregate
principal amount of original 101/2% Senior Subordinated Notes due 2006 of the
Company and the guarantees relating thereto.
This Agreement is made pursuant to the Purchase Agreement, dated
October 2, 1996, among the Company, the Guarantor and the Initial Purchasers
(the "Purchase Agreement"). The execution and delivery of this Agreement is a
condition to the Initial Purchasers' purchases of the Notes as contemplated by
the Purchase Agreement and is made expressly for the benefit of holders of the
Notes as third party beneficiaries.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
ADVICE: As defined in the last paragraph of Section 6 hereof.
ACCEPTANCE DATE: As defined in Section 2(d) hereof.
AFFILIATE: Of any specified person shall mean any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"control," when used with respect to any person, means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise. The terms
"affiliated," "controlling" and "controlled" have meanings correlative to the
foregoing.
AGREEMENT: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.
<PAGE>
BUSINESS DAY: Any day except Saturday, Sunday and any day which shall
be a legal holiday or a day on which banking institutions in the state of New
York generally are authorized or required by law or other government actions to
close.
COMPANY: Astor Corporation, a Delaware corporation, and its
successors and assigns.
CONSUMMATE OR CONSUMMATE: When used to qualify the term "Exchange
Offer" shall mean to validly and lawfully issue and deliver the New Notes
pursuant to the Exchange Offer in exchange for all Registrable Notes tendered
pursuant thereto.
EXCHANGE DATE: The date on which the Exchange Offer is consummated
which shall in any event be on or before the 30th Business Day after the
Effective Date of the Exchange Offer Registration Statement.
EFFECTIVE PERIOD: As defined in Section 3 hereof.
EFFECTIVE DATE: the date on which the SEC declares the Registration
Statement to be effective.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
EXCHANGE OFFER: An offer to issue, in exchange for any and all of the
Registrable Notes, a like aggregate principal amount of New Notes, which offer
shall be made by the Company pursuant to Section 2 hereof.
EXCHANGE OFFER REGISTRATION STATEMENT: Any registration statement of
the Company and the Guarantor that covers the New Notes pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
FILING DATE: The date the Registration Statement is filed with the
SEC.
GUARANTOR: Astor Holdings II, Inc., a Delaware corporation, and its
successors and assigns.
INDEMNIFIED PARTY: As defined in Section 8(c) hereof.
INDEMNIFYING PARTY: As defined in Section 8(c) hereof.
2
<PAGE>
INDENTURE: The Indenture, dated the date hereof, among the Company,
the Guarantor and the Trustee thereunder pursuant to which the Notes are being
issued, as amended or supplemented from time to time in accordance with the
terms thereof.
INITIAL PURCHASERS: As defined in the preamble hereof.
LIQUIDATED DAMAGES: As defined in Section 4(a) hereof.
LOSSES: As defined in Section 8(a) hereof.
NEW NOTES: The 101/2% Senior Subordinated Notes due 2006 of the
Company, and the guarantees relating thereto, that are identical to the Notes in
all material respects, except that the offer and exchange thereof pursuant to
the Exchange Offer shall have been registered pursuant to an effective Exchange
Offer Registration Statement under the Securities Act and shall not bear any
restrictions on transfer.
NOTES: The $110,000,000 aggregate principal amount of original 101/2%
Senior Subordinated Notes due 2006 of the Company and the guarantees relating
thereto being issued pursuant to the Indenture.
PARTICIPATING BROKER-DEALER: As defined in Section 2(e) hereof.
PAYING AGENT: As defined in the Indenture.
PROCEEDING: An action, claim, suit or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Registrable Notes or the New
Notes covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
REGISTRABLE NOTE: Each Note, upon original issuance thereof and at
all times subsequent thereto, until, in the case of any such Note, (i) the date
on which it has been exchanged by a person other than a broker-dealer for a New
Note in the Exchange Offer, (ii) the date on which it has been effectively
registered pursuant to the Securities Act and disposed of in accordance with the
Shelf Registration Statement, (iii) it has been
3
<PAGE>
distributed to the public pursuant to Rule 144 under the Securities Act or (iv)
after the expiration date of the holding period applicable to sale of such Note
pursuant to Rule 144(k) (or any similar provisions then in effect).
REGISTRATION DEFAULT: As defined in Section 4(a) hereof.
REGISTRATION STATEMENT: Any Exchange Offering Registration Statement
and any Shelf Registration Statement.
RULE 144: Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
RULE 144A: Rule 144A promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
RULE 158: Rule 158 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
RULE 174: Rule 174 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
RULE 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
RULE 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
SHELF NOTICE: As defined in Section 2(c) hereof.
SHELF REGISTRATION: As defined in Section 3 hereof.
4
<PAGE>
SHELF REGISTRATION STATEMENT: Any registration statement of the
Company and the Guarantor that covers the Registrable Notes pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement, and is filed pursuant to Rule 415.
SPECIAL COUNSEL: Any special counsel as may be designated by the
holders of a majority in aggregate principal amount of Registrable Notes
outstanding.
TIA: The Trust Indenture Act of 1939, as amended.
TRUSTEE: State Street Bank and Trust Company, as trustee under the
Indenture.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
connection with which securities of the Company and/or the Guarantor are sold to
an underwriter for reoffering to the public pursuant to an effective
Registration Statement.
2. REGISTERED EXCHANGE OFFER
(a) Subject to paragraph (c) below, the Company and the Guarantor
shall file with the SEC on or prior to the 30th day after the date hereof an
Exchange Offer Registration Statement. The Company and the Guarantor will use
their best efforts to have the Exchange Offer Registration Statement declared
effective by the SEC on or prior to the 105th day after the date hereof. Unless
the Exchange Offer would not be permitted by applicable law or SEC policy, the
Company and the Guarantor will commence the Exchange Offer and use their best
efforts to issue New Notes on or prior to the 30th Business Day after the date
on which the Exchange Offer Registration Statement was declared effective by the
Commission. The offer and exchange of the New Notes pursuant to the Exchange
Offer shall be registered pursuant to the Securities Act on the appropriate form
and duly registered or qualified under applicable state securities or Blue Sky
laws and will comply with all applicable tender offer rules and regulations of
and pursuant to the Exchange Act and state securities or Blue Sky laws. The
Exchange Offer shall not be subject to any condition, other than that the
Exchange Offer does not violate any applicable law. No securities shall be
included in the Exchange Offer Registration Statement other than the New Notes.
(b) The Company and the Guarantor may require each holder of
Registrable Notes participating in the Exchange Offer to represent to the
Company and the Guarantor that at the time of the consummation of the Exchange
Offer (i) any New Notes received by such holder will be acquired in the ordinary
course of its business and
5
<PAGE>
(ii) such holder will have no arrangement or understanding with any person to
participate in the distribution of the New Notes within the meaning of the
Securities Act.
(c) If (i) the Company is not required to file the Exchange Offer
Registration Statement or is not permitted to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or SEC policy or
(ii) prior to the consummation of the Exchange Offer, any holder of Registrable
Notes notifies the Company that (A) it is prohibited by law or SEC policy from
participating in the Exchange Offer or (B) it may not resell the New Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales or (C) it is a
broker-dealer and owns Notes acquired directly from the Company or an Affiliate
of the Company, the Company and the Guarantor shall cease to be obligated under
paragraph (a) above with respect to the Exchange Offer and shall promptly
deliver to the holders of the Registrable Notes and the Trustee notice thereof
(the "Shelf Notice") and shall thereafter file a Shelf Registration Statement
pursuant to Section 3. Following the delivery of a valid Shelf Notice in
accordance with the provisions hereof, the Company and the Guarantor shall not
have any further obligation under this Section 2.
(d) The Company and the Guarantor shall commence the Exchange Offer
(within the time periods set forth herein) by mailing the related Prospectus and
appropriate accompanying documents to each holder of Registrable Notes
providing, in addition to such other disclosures as are required by applicable
law, that:
(i) the Exchange Offer is being made pursuant to this Agreement and
that all Registrable Notes validly tendered will be accepted for exchange;
(ii) the date of acceptance of Registrable Notes tendered for exchange
(the "Acceptance Date"); and
(iii) holders of Registrable Notes electing to have any such Note
exchanged pursuant to the Exchange Offer will be required to surrender such Note
in denominations of $1,000 or an integral multiple portion thereof, together
with the letters of transmittal enclosed therewith, to the institution and at
the address (located in the Borough of Manhattan, The City of New York)
specified in the notice prior to the close of business on the Exchange Date,
PROVIDED that best efforts shall be used by the Company to ensure that customary
guaranteed delivery procedures are available for the holders to elect to use.
On the Exchange Date, the Company or its agent shall accept for
exchange all Registrable Notes or portions thereof tendered and not validly
withdrawn pursuant to the Exchange Offer. As soon as practicable after the
Acceptance Date (but in no event later than the Exchange Date), the Company or
its agent shall deliver, or cause to be
6
<PAGE>
delivered, to the Trustee for cancellation all Registrable Notes or portions
thereof so accepted for exchange by the Company and issue, and cause the Trustee
to promptly authenticate under the Indenture and mail to each holder, a New Note
equal in principal amount to the aggregate principal amount of the Registrable
Notes surrendered by such holder.
(e) The Company has been informed that the Staff of the SEC has taken
the position that any broker-dealer that owns New Notes that were received by
such broker-dealer for its own account in the Exchange Offer (a "Participating
Broker-Dealer") may be deemed to be an "underwriter" within the meaning of the
Securities Act and must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes (other than a
resale of an unsold allotment resulting from the original placement of the
Registrable Notes).
The Company has also been informed that the Staff of the SEC has taken
the position that if the Prospectus contained in the Registration Statement
includes a plan of distribution containing a statement to the above effect and
the means by which Participating Broker-Dealers may resell the New Notes,
without naming the Participating Broker-Dealers or specifying the amount of New
Notes owned by them, such Prospectus may be delivered by Participating Broker-
Dealers to satisfy their prospectus delivery obligations under the Securities
Act in connection with the resales of New Notes for their own accounts, so long
as the Prospectus otherwise meets the requirements of the Securities Act.
In light of the above, notwithstanding the other provisions of this
Agreement, the Company agrees that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer to the
extent, and with such reasonable modifications thereto as may be, reasonably
requested by any Participating Broker-Dealer or the Company, in each case as
provided in clause (ii) below, in order to expedite or facilitate the
disposition of any New Notes by Participating Broker-Dealers consistent with the
positions of the Staff of the SEC recited in this Section 2(e); PROVIDED that:
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Registration Statement, as would otherwise be
contemplated by this Agreement, for a period exceeding 90 days after the
Exchange Date (as such period may be extended pursuant to the terms of this
Agreement relating to a Shelf Registration) and Participating
Broker-Dealers shall not be authorized by the Company to deliver and shall
not deliver such Prospectus after such period in connection with the
resales contemplated by this Section 2(e); and
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(ii) the application of the Shelf Registration procedures set forth in
this Section 2(e) of this Agreement to an Exchange Offer, to the extent not
otherwise required by the positions of the Staff of the SEC or the
Securities Act, will be in conformity with the reasonable request to the
Company by anyone who certified to the Company in writing a reasonable
period prior to the Filing Date that they anticipate that they may be a
Participating Broker-Dealer.
3. SHELF REGISTRATION
If a Shelf Notice is delivered (or should have been delivered) as
contemplated by Section 2(c), then the Company and the Guarantor shall use their
best efforts to prepare and file, as promptly as reasonably practicable
thereafter, with the SEC a Shelf Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Notes (the "Shelf Registration"). The Company and the Guarantor shall use their
best efforts to (i) file a Shelf Registration Statement with the SEC on or prior
to the 30th day after such filing obligation arises, (ii) cause the Shelf
Registration Statement to become effective under the Securities Act on or prior
to the 105th day after such obligation arises and (iii) keep the Shelf
Registration Statement continuously effective under the Securities Act for the
period (the "Effective Period") from the date of its effectiveness to the
earlier of: (A) the second anniversary of the Effective Date of the Shelf
Registration Statement (subject to the extension pursuant to Section 5(a) and
the last paragraph of Section 6 hereof) and (B) the next day following the date
that all Registrable Notes covered by the Shelf Registration Statement have been
sold pursuant thereto; PROVIDED that the Effective Period shall be extended to
the extent required to permit dealers to comply with the applicable prospectus
delivery requirements under Rule 174.
4. LIQUIDATED DAMAGES
(a) The parties hereto agree that the holders of Registrable Notes
will suffer damages if the Company and the Guarantor fail to fulfill their
obligations under Section 2 or Section 3, as applicable, and that it would not
be feasible to ascertain the extent of such damages. Accordingly, if
(i) neither (x) an Exchange Offer Registration Statement has been
filed with the SEC (and is then still on file) on or prior to the 30th day
after the date hereof nor (y) a Shelf Registration has been filed (and is
then still on file) with the SEC on or prior to the 30th day after such
obligation arises hereunder or
(ii) either (x) the Registration Statement has not been declared
effective by the SEC on or prior to the 105th day after the date hereof or
(y) the Shelf Registration has not been declared effective by the SEC on or
prior to the 105th day after such obligation arises, or
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(iii) the Exchange Offer has not been consummated, to the extent
required hereby, within 30 Business Days after the Effective Date of the
Exchange Offer Registration Statement, or
(iv) the Exchange Offer Registration Statement or the Shelf
Registration Statement, if required hereby, shall have been filed and
declared effective and shall thereafter cease to be effective or usable in
connection with resales of Registrable Notes prior to the Exchange Date or
the last day of the Effectiveness Period, respectively
(each such event referred to in clauses (i) through (iv) above being a
"Registration Default"), then the Company and the Guarantor agree jointly and
severally to pay, as liquidated damages and not as a penalty, to each holder of
a Registrable Note an additional amount (the "Liquidated Damages") equal to $.10
per week (or partial week) per $1,000 principal amount of Registrable Notes held
by such holder for the first 90-day period immediately following the occurrence
of a Registration Default. The amount of Liquidated Damages will increase by an
additional $.05 per week (or partial week) per $1,000 principal amount of
Registrable Notes held by such holder for each subsequent 60-day period (up to a
maximum amount (including amounts required to be paid pursuant to the
immediately preceding sentence) of Liquidated Damages of $.30 per week per
$1,000 principal amount of Registrable Notes (regardless of whether one or more
than one Registration Default is outstanding)). Following the cure of all
Registration Defaults, the accrual of Liquidated Damages will cease.
(b) The Company shall notify the Trustee and Paying Agent under the
Indenture immediately upon the happening of each Registration Default. The
Liquidated Damages due shall be payable on each interest payment date specified
by the Indenture to the record holder entitled to receive the interest payment
to be made on such date. The Company or the Guarantor will pay all accrued
Liquidated Damages by depositing with the Paying Agent, in trust, for the
benefit of the holders of the Registrable Notes, prior to 10:00 a.m. New York
City time on the next interest payment date specified by the Indenture and the
Notes, sums sufficient to pay the Liquidated Damages then due.
(c) The parties hereto agree that the Liquidated Damages provided for
in this Section 4 constitute a reasonable estimate of, and are intended to
constitute, the sole damages that will be suffered by holders of Registrable
Notes by reason of the failure of any Shelf Registration Statement to be filed
as required hereunder or to be declared effective, the Exchange Offer to be
consummated or any Shelf Registration Statement to remain effective to the
extent required by this Agreement.
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5. HOLD-BACK AGREEMENTS
The Company and the Guarantor agree, without the written consent of
the managing underwriters in an underwritten offering of Registrable Notes
covered by a Shelf Registration Statement, not to effect any public sale or
distribution of its debt securities, including a sale pursuant to Rule 144A
under the Securities Act, during the period beginning 10 days prior to, and
ending 90 days after, the closing date of each underwritten offering made
pursuant to such Shelf Registration Statement (PROVIDED that such period shall
be extended by the number of days from and including the date of the giving of
any notice pursuant to Section 6(c) hereof at and including the date when each
seller of Registrable Notes covered by such Registration Statement shall have
received the copies of the supplemented or amended Prospectus contemplated by
Section 6(k) hereof).
6. REGISTRATION PROCEDURES
In connection with the Company's and the Guarantor's registration
obligations hereunder, the Company and the Guarantor shall effect such
registrations on the appropriate form for the offer and sale of the Registrable
Notes or offer and exchange of the New Notes, as applicable, to (i) permit the
offer and sale of New Notes or (ii) permit the offer and exchange of the
Registrable Notes in accordance with the method or methods of disposition
thereof specified by the holders of a majority in aggregate principal amount of
Registrable Notes, and in furtherance thereof the Company and the Guarantor
shall:
(a) No fewer than five Business Days prior to the initial filing of
any Shelf Registration Statement or Prospectus with respect thereto and no fewer
than two Business Days prior to the filing of any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), furnish to the Initial Purchasers, the
holders of the Registrable Notes, their Special Counsel and the managing
underwriters, if any, copies of all such documents proposed to be filed, which
documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review of such holders, their Special Counsel
and such managing underwriters, if any, and cause the officers and directors of
the Company and the Guarantor, counsel to the Company and the Guarantor and
independent certified public accountants to the Company and the Guarantor to
respond to such inquiries as shall be necessary, in the opinion of respective
counsel to such holders and such managing underwriters, to conduct a reasonable
investigation within the meaning of the Securities Act; PROVIDED that the
Company shall not be deemed to have kept a Shelf Registration Statement
effective during the period required hereunder if it voluntarily takes any
action that results in holders of the Registrable Notes covered thereby not
being able to sell such Registrable Notes pursuant to Federal securities laws
during that period (and the time period during which such Shelf Registration
Statement is required to remain effective hereunder shall be extended by the
number of days during which such holders of
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Registrable Notes are not able to sell such Registrable Notes). Neither the
Company nor the Guarantor shall file any such Shelf Registration Statement or
Prospectus relating thereto or any amendments or supplements thereto to which
the holders of a majority of the Registrable Notes, their Special Counsel or the
managing underwriters, if any, shall reasonably object on a timely basis (within
three and one Business Days of receipt thereof, in the case of the initial
filing and the filing of any amendment or supplement, respectively);
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable time
period; cause the related Prospectus to be supplemented by any required
Prospectus supplement and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act; and comply
with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all securities covered by such Registration Statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement as so amended or in
such Prospectus as so supplemented;
(c) Notify the Initial Purchasers, the holders of Registrable Notes
to be sold or, in the case of an Exchange Offer, tendered for, their Special
Counsel and the managing underwriters, if any, promptly (and, in the case of
clause (i)(A) below, in no event less than two Business Days prior to such
filing) (i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment is being filed, and (B) with respect to a Registration Statement or
any post-effective amendment, when the same has become effective, (ii) in the
case of a Shelf Registration Statement, of any request by the SEC or any other
Federal or state governmental authority for amendments or supplements to such
Shelf Registration Statement or related Prospectus or for additional
information, (iii) of the issuance by the SEC, any state securities commission,
any other governmental agency or any court of any stop order, order or
injunction suspending or enjoining the use or the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iv) if at any time any of the representations and warranties of the Company or
the Guarantor contained in any agreement (including any underwriting agreement)
contemplated hereby cease to be true and correct in all material respects, (v)
of the receipt by the Company or the Guarantor of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Notes or New Notes for sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, and (vi) in the
case of a Shelf Registration Statement, of the happening of any event that makes
any statement made in such Shelf Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in
such Shelf Registration Statement, Prospectus or documents so that, in the case
of the Shelf Registration Statement, it will not contain any untrue statement of
a material fact or omit
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<PAGE>
to state any material fact required to be stated therein or necessary to make
the statements therein, not misleading, and so that, in the case of the related
Prospectus, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(d) Use their reasonable best efforts (i) to avoid the issuance of,
or, if issued, obtain the withdrawal of, any order enjoining or suspending the
use or effectiveness of a Registration Statement and (ii) to obtain the lifting
of any suspension of the qualification (or exemption from qualification) of any
of the Registrable Notes or New Notes for sale in any United States
jurisdiction, in each case at the earliest practicable moment;
(e) If a Shelf Registration Statement is filed pursuant to Section 3
and if requested by the managing underwriters, if any, or the holders of a
majority in aggregate principal amount of the Registrable Notes being registered
thereunder, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters, if any,
and the holders agree and reasonably propose should be included therein and (ii)
make all required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company and the Guarantor have
received notification of the matters reasonably proposed to be incorporated in
such Prospectus supplement or post-effective amendment; PROVIDED that the
Company and the Guarantor shall not be required to take any action pursuant to
this Section 6(e) that would, in the opinion of outside counsel for the Company
and the Guarantor, violate applicable law;
(f) Furnish to each Initial Purchaser, each holder of Registrable
Notes and New Notes, their Special Counsel and each managing underwriter, if
any, without charge, at least one conformed copy of each Registration Statement
and each amendment thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by reference, and
all exhibits to the extent requested by each holder (including those previously
furnished or incorporated by reference) as soon as practicable after the filing
of such documents with the SEC;
(g) Deliver to each Initial Purchaser, each holder of Registrable
Notes and New Notes, their Special Counsel and the underwriters, if any, without
charge as many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons reasonably
request; and the Company and the Guarantor hereby consent to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
holders of Registrable Notes and the underwriters, if any, in connection with
the offering and sale of the Registrable Notes covered by such Prospectus and
any amendment or supplement thereto as contemplated thereby;
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(h) Prior to any public offering of Registrable Notes and prior to
the consummation of the Exchange Offer, use their reasonable best efforts: (i)
to register or qualify or cooperate with the holders of Registrable Notes to be
sold or tendered for, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Notes or New Notes for offer
and sale under the securities or Blue Sky laws of such jurisdictions within the
United States as any holder or underwriter reasonably requests in writing and
(ii) to keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to be kept
effective and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Notes or New
Notes covered by the applicable Registration Statement; PROVIDED that neither
the Company nor the Guarantor shall be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company or the
Guarantor to any tax in any such jurisdiction where it is not then so subject;
(i) Cooperate with the holders and the managing underwriters, if any,
to facilitate the timely preparation and delivery of certificates representing
Registrable Notes or New Notes to be sold, which certificates shall not bear any
restrictive legends and shall be in a form eligible for deposit with The
Depository Trust Company and to enable such Registrable Notes or New Notes to be
in such denominations and registered in such names as the managing underwriters,
if any, or holders may request at least two Business Days prior to any sale of
Registrable Notes or New Notes;
(j) Use their reasonable best efforts to cause the Registrable Notes
and New Notes covered by the Registration Statement, and the offering thereof,
to be registered with or approved by such other governmental agencies or
authorities within the United States, except as may be required solely as a
consequence of the nature of such selling holder's business, in which case the
Company and the Guarantor will cooperate in all reasonable respects with the
filing of such Registration Statement and the granting of such approvals as may
be necessary to enable the seller or sellers thereof or the underwriters, if
any, to consummate the disposition of such Registrable Notes and New Notes;
PROVIDED that the Company and the Guarantor shall not be required to register
the Registrable Notes and New Notes in any jurisdiction that would subject it to
general service of process in any such jurisdiction where it is not then so
subject or subject the Company and the Guarantor to any tax in any such
jurisdiction where it is not then so subject or to require the Company or the
Guarantor to qualify to do business in any jurisdiction where it is not then so
qualified;
(k) Upon the occurrence of any event contemplated by paragraph
6(c)(vi), as promptly as practicable, prepare a supplement or amendment,
including a post-effective amendment, to each Registration Statement or a
supplement to the related
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Prospectus or any document incorporated or deemed to be incorporated therein by
reference, and file any other required document so that, as thereafter
delivered, such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading;
(l) Use their reasonable best efforts to cause the Registrable Notes
or the New Notes, as applicable, covered by a Registration Statement to be rated
with the appropriate rating agencies, if so requested by the holders of a
majority in aggregate principal amount of Registrable Notes relating to such
Registration Statement or the managing underwriters, if any;
(m) Prior to the Effective Date of the first Registration Statement
relating to the Registrable Notes or New Notes, as applicable, to provide a
CUSIP number for the Registrable Notes and New Notes, as applicable;
(n) Use their reasonable best efforts to cause all Registrable Notes
or the New Notes, as applicable, covered by such Registration Statement to be
listed on each securities exchange, if any, on which debt securities issued by
the Company or the Guarantor are then listed, if so requested by the holders of
a majority in aggregate principal amount of Registrable Notes relating to such
Registration Statement or the managing underwriters, if any;
(o) If a Shelf Registration Statement is filed pursuant to Section
3, enter into such agreements (including an underwriting agreement in form,
scope and substance as is customary in underwritten offerings of securities
such as the Registrable Notes) and take all such other reasonable actions in
connection therewith (including those reasonably requested by the managing
underwriters, if any, or the holders of a majority in aggregate principal
amount of the Registrable Notes being sold) in order to expedite or
facilitate the disposition of such Registrable Notes, and in such connection,
whether or not an underwriting agreement is entered into and whether or not
any offering thereunder is an underwritten offering, (i) make such
representations and warranties to the holders of such Registrable Notes and
the underwriters, if any, with respect to the business of the Company, the
Guarantor and their subsidiaries, and the Registration Statement, Prospectus
and documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, in form, substance and scope as are customarily made
by issuers to underwriters in underwritten offerings of securities such as
the Registrable Notes, and confirm the same if and when requested; (ii)
obtain opinions of counsel to the Company and the Guarantor and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and Special
Counsel to the holders of the Registrable Notes being sold), addressed to
each selling holder of Registrable Notes and each of the underwriters, if
any, covering the matters customarily covered in opinions requested in
underwritten offerings of securities
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<PAGE>
such as the Registrable Notes and such other matters as may be
reasonably requested by such Special Counsel and underwriters; (iii) unless not
permitted to be issued under an applicable Statement of Accounting Standards,
obtain "cold comfort" letters and updates thereof from the independent certified
public accountants of the Company and the Guarantor (and, if necessary, any
other independent certified public accountants of any subsidiary of the Company
or the Guarantor or of any business acquired by the Company or the Guarantor for
which financial statements and financial data is, or is required to be, included
in the Registration Statement), addressed to each selling holder of Registrable
Notes and each of the underwriters, if any, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
in connection with underwritten offerings of securities such as the Registrable
Notes; (iv) if an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable to the selling
holders and the underwriters, if any, than those set forth in Section 8 hereof
(or such other provisions and procedures acceptable to holders of a majority in
aggregate principal amount of the holders of Registrable Notes covered by such
Shelf Registration Statement and the managing underwriters); and (v) deliver
such documents and certificates as may be reasonably requested by the holders of
a majority in aggregate principal amount of the Registrable Notes being sold,
their Special Counsel and the managing underwriters, if any, to evidence the
continued validity of the representations and warranties made pursuant to clause
6(o)(i) above and to evidence compliance with any customary conditions contained
in the underwriting agreement or other agreement entered into by the Company or
the Guarantor;
(p) In the case of a Shelf Registration Statement, make available for
inspection by a representative of the holders of a majority in aggregate
principal amount of Registrable Notes being sold, any underwriter participating
in any such disposition of Registrable Notes and any attorney, consultant or
accountant retained by such selling holders or underwriter, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company, the
Guarantor and their subsidiaries, and cause the officers, directors, agents and
employees of the Company, the Guarantor and their subsidiaries to supply all
information in each case reasonably requested by any such representative,
underwriter, attorney, consultant or accountant in connection with such Shelf
Registration Statement; PROVIDED that any confidential records, documents and
other information designated by the Company as confidential shall be kept
confidential by such persons unless disclosure of any such record, document or
other information is required by law or by a court or administrative order, in
which case such record, document or information shall be disclosed only to the
extent required to comply with such law or order;
(q) Provide an indenture trustee for the Registrable Notes and the
New Notes, as the case may be, and cause the Indenture to be qualified under the
TIA not later than the Effective Date of the first Registration Statement
relating to the Registrable Notes or the New Notes, as applicable; and in
connection therewith, cooperate with the
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trustee under the Indenture and the holders of the Registrable Notes or the New
Notes, as the case may be, to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use its reasonable best efforts to cause such trustee
to execute, all customary documents as may be required to effect such changes,
and all other forms and documents required to be filed with the SEC to enable
the Indenture to be so qualified in a timely manner;
(r) Use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC; and make generally available to their security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act), no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable Notes
are sold to underwriters in a firm commitment or reasonable efforts underwritten
offering and (ii) if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of each of the Company and the
Guarantor after the effective date of a Registration Statement, which statement
shall cover said period, consistent with the requirements of Rule 158; and
(s) If an Exchange Offer is to be consummated, upon delivery of the
Registrable Notes by such holders to the Company and the Guarantor in exchange
for the New Notes, the Company and the Guarantor shall mark, or caused to be
marked, on such Registrable Notes that such Registrable Notes are being
cancelled in exchange for the New Notes; in no event shall such Registrable
Notes be marked as paid or otherwise satisfied.
The Company and the Guarantor may require each seller of Registrable
Notes as to which any registration is being effected to furnish to the Company
and the Guarantor such information regarding the distribution of such
Registrable Notes as is required by law to be disclosed in the applicable Shelf
Registration Statement and the Company and the Guarantor may exclude from such
registration the Registrable Notes of any seller who unreasonably fails to
furnish such information within a reasonable time after receiving such request.
If any such Shelf Registration Statement refers to any holder of
Registrable Notes by name or otherwise as the holder of any securities of the
Company, then such holder shall have the right to require (i) the insertion
therein of language, in form and substance reasonably satisfactory to such
holder, to the effect that the holding by such holder of such securities is not
to be construed as a recommendation by such holder of the investment quality of
the New Notes and that such holding does not imply that such holder will assist
in meeting any future financial requirements of the Company or (ii) in the event
that such reference to such holder by name or otherwise is not required by the
Securities Act or any similar Federal statute then in force, the deletion of the
reference to such holder
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in any amendment or supplement to the Registration Statement filed or prepared
subsequent to the time that such reference ceases to be required.
In the case of a Shelf Registration Statement, each holder of
Registrable Notes agrees by acquisition of such Registrable Notes that, upon
receipt of any notice from the Company and the Guarantor of the happening of any
event of the kind described in Section 6(c)(ii), 6(c)(iii), 6(c)(v) or 6(c)(vi)
hereof, such holder will forthwith discontinue disposition of such Registrable
Notes covered by such Shelf Registration Statement or related Prospectus until
such holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(k) hereof or until it is advised in writing (the
"Advice") by the Company and the Guarantor that the use of the applicable
Prospectus may be resumed and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus. If the Company and the Guarantor
shall give any such notice, the Effective Period shall be extended by the number
of days during such period from and including the date of the giving of such
notice to and including the date when each seller of Registrable Notes covered
by such Shelf Registration Statement shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 6(k) hereof or (y)
the Advice and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus.
7. REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company and the Guarantor shall be borne
jointly and severally by the Company and the Guarantor whether or not any
Registration Statement is filed or becomes effective and whether or not any
securities are offered and exchanged or sold pursuant to any Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (B) in
compliance with state securities or Blue Sky laws (including, without limitation
and in addition to that provided for in (b) below, fees and disbursements of
counsel for the underwriters or holders in connection with Blue Sky
qualifications of the Registrable Notes or New Notes and determination of the
eligibility of the Registrable Notes or New Notes for investment under the laws
of such jurisdictions as the managing underwriters, if any, or holders of a
majority in aggregate principal amount of Registrable Notes may designate)),
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Notes or New Notes in a form eligible for deposit
with The Depository Trust Company and of printing Prospectuses if the printing
of Prospectuses is requested by the managing underwriters, if any, or by the
holders of a majority in aggregate principal amount of the Registrable Notes or
New Notes covered by the Registration Statement), (iii) messenger,
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telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company and the Guarantor and Special Counsel for the holders (in accordance
with the provisions of Section 7(b) hereof), (v) fees and disbursements of all
independent certified public accountants referred to in Section 6(o)(iii) hereof
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) all fees and
disbursements relating to the qualification of the Indenture under applicable
securities laws, (vii) the reasonable fees and disbursements of the Trustee
(including the reasonable fees and disbursements of its counsel), (viii) rating
agency fees, (ix) Securities Act liability insurance, if the Company and the
Guarantor so desire such insurance, and (x) fees and expenses of all other
persons retained by the Company and the Guarantor. In addition, the Company and
the Guarantor shall pay their internal expenses (including, without limitation,
all salaries and expenses of their officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange on which debt securities issued by the Company and/or
the Guarantor are then listed, if it chooses, or is required, so to list (plus
any local counsel reasonably deemed appropriate by the holders of a majority in
aggregate principal amount of the Registrable Notes); and
(b) In connection with any Registration Statement hereunder, the
Company and the Guarantor shall reimburse the holders of the Registrable Notes
being registered or tendered for in such registration for the reasonable fees
and disbursements of not more than one firm of attorneys (in addition to any
local counsel) chosen by the holders of a majority in aggregate principal amount
of the Registrable Notes.
8. INDEMNIFICATION
(a) Each of the Company and the Guarantor jointly and severally
agrees to indemnify and hold harmless the Initial Purchasers and each holder of
Registrable Notes and each person, if any, who controls the Initial Purchasers
or any holder of Registrable Notes within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended and supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to the
Initial Purchasers or any holder of Registration Notes furnished in writing to
the Company expressly for use therein. The
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<PAGE>
The Company also agrees to indemnify any underwriters of the Registrable Notes,
their officers and directors and each Person who controls such underwriters on
substantially the same basis as that of the indemnification of the Initial
Purchasers and the holders of Registrable Notes provided in this Section 8.
(b) In connection with any Shelf Registration in which a holder of
Registrable Notes is participating, such holder of Registrable Notes shall
furnish to the Company and the Guarantor in writing such information as the
Company or the Guarantor reasonable request for use in such Registration
Statement, any preliminary prospectus, the Prospectus or any amendments or
supplements thereto, and each such holder of Registrable Notes agrees, severally
and not jointly, to indemnify and hold harmless the Initial Purchasers, the
Company, the Guarantor, the directors and the officers of the Company and the
Guarantor who sign a Registration Statement and each person, if any, who
controls the Initial Purchasers, the Company or the Guarantor within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only with
reference to such information relating to such holder of Registrable Notes,
furnished in writing by or on behalf of such holder of Registrable Notes,
expressly for use in such Registration Statement, any preliminary prospectus,
the Prospectus or any amendments or supplements thereto.
(c) The Initial Purchasers agree, severally and not jointly, to
indemnify and hold harmless the Company, the Guarantor, the holders of
Registrable Notes, the directors and the officers of the Company and the
Guarantor who sign the Registration Statement and each person, if any, who
controls the Company, the Guarantor or any holder of Registrable Notes within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or arising
out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to the
Initial Purchasers, furnished in writing by the Initial Purchasers to the
Company expressly
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<PAGE>
for use in such Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to any of the three preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party shall assume the defense thereof, including employment of
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and payment of all fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel (ii) the
indemnifying party shall have failed to assume the defense and employ counsel or
(iii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to the actual or
potential differing interest between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Initial
Purchasers and all persons, if any, who control the Initial Purchasers within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, (ii) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Company and the Guarantor, their
directors, their officers who sign the Registration Statement and each person,
if any, who controls the Company or the Guarantor within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act and (iii) the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all holders of Registrable Notes and all persons, if any, who
control any holders of Registrable Notes within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, and that all such fees
and expenses shall be reimbursed as they are incurred. In such case involving
the Initial Purchasers and such control persons of the Initial Purchasers, such
firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation. In such case involving the holders of Registrable Notes and such
controlling persons of holders of Registrable Notes, such firm shall be
designated in writing by holders of a majority in aggregate principal amount of
Registrable Notes. In all other cases, such firm shall be designated by the
Company. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
immediately preceding sentence, if in any case where the fees and expenses of
counsel are at the expense of the indemnifying party and an
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<PAGE>
indemnified party shall have requested the indemnifying party to reimburse the
indemnified party for such fees and expenses of counsel as incurred, such
indemnifying party agrees that it shall be liable for any settlement of any
action effected without its written consent if (i) such settlement is entered
into more than ten business days after the receipt by such indemnifying party of
the aforesaid request and (ii) such indemnifying party shall have failed to
reimburse the indemnified party in accordance with such request for
reimbursement prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(e) If the indemnification provided for in the first, second or third
paragraphs of this Section 8 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The holders' of Registrable
Notes respective obligations to contribute pursuant to this Section 8(e) are
several in proportion to the respective number of Registrable Notes of such
holder of Registrable Notes that were registered pursuant to a Registration
Statement.
(f) The parties hereto agree that it would not be just or equitable
if contribution pursuant to this Section 8 were determined by PRO RATA
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, an indemnifying party that is
a holder of Registrable Notes shall not be required to indemnify or contribute
any amount in excess of the amount by which the total price at which the
Registrable Notes sold by such indemnifying party and
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<PAGE>
distributed to the public were offered to the public exceeds the amount of any
damages that such indemnifying party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
remedies provided for in this Section 8 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any indemnified party
at law or in equity. The provisions of this Section 8 shall survive so long as
Registrable Notes remain outstanding, notwithstanding any transfer of the
Registrable Notes by any holder of Registrable Notes or any termination of this
Agreement.
(g) The indemnity and contribution provisions contained in this
Section 8 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of (A) the Initial Purchasers or any person controlling the Initial Purchasers,
(B) any holder of Registrable Notes or any person controlling the holder of
Registrable Notes, or (C) the Company or the Guarantor, their officers or
directors or any person controlling the Company or the Guarantor, and (iii) the
sale of any Registrable Notes by any holder of Registrable Notes.
9. RULES 144 AND 144A
The Company and the Guarantor shall use their best efforts to file the
reports required to be filed by them under the Securities Act and the Exchange
Act in a timely manner and, if at any time the Company or the Guarantor are not
required to file such reports, they will, upon the request of any holder of
Registrable Notes, make publicly available other information so long as
necessary to permit sales of the Registrable Notes pursuant to Rules 144 and
144A. The Company and the Guarantor each further covenant that it will take
such further action as any holder of Registrable Notes may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Notes without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including, without
limitation, the requirements of Rule 144A(d)(4)). Upon the request of any
holder of Registrable Notes, the Company and the Guarantor shall deliver to such
holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section shall be deemed to
require the Company and the Guarantor to register any of their securities
pursuant to the Exchange Act.
10. UNDERWRITTEN OFFERINGS
If any of the Registrable Notes covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the investment banker or
investment bankers and manager or managers that will administer the offering
will be selected by the holders of a majority in aggregate principal amount of
such Registrable Notes included in
22
<PAGE>
such offering, subject to the consent of the Company (which shall not be
unreasonably withheld or delayed).
No holder of Registrable Notes may participate in any underwritten
offering unless such holder (i) agrees to sell such holder's Registrable Notes
on the basis reasonably provided in any underwriting arrangements approved by
the holders entitled hereunder to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
11. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by the Company and the
Guarantor, or by a holder of Registrable Notes, of any of their obligations
under this Agreement, each holder of Registrable Notes or the Company and the
Guarantor, as the case may be, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and the
Guarantor, and each holder of Registrable Notes, agree that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby further agrees that,
in the event of any action for specific performance in respect of such breach,
it shall waive the defense that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Neither the Company nor the
Guarantor has entered into, nor shall the Company or the Guarantor, on or after
the date of this Agreement enter into, any agreement that is inconsistent with
the rights granted to the holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. Neither the Company nor the
Guarantor has previously entered into any agreement granting any registration
rights with respect to any of its debt securities to any person. Without
limiting the generality of the foregoing, without the written consent of the
holders of a majority in aggregate principal amount of the then outstanding
Registrable Notes, the Company and the Guarantor shall not grant to any person
the right to request the Company or the Guarantor to register any debt
securities of the Company or the Guarantor under the Securities Act unless the
rights so granted are subject in all respects to the prior rights of the holders
of Registrable Notes set forth herein, and are not otherwise in conflict or
inconsistent with the provisions of this Agreement.
(c) NO PIGGYBACK ON REGISTRATIONS. None of the Company, the
Guarantor nor any of their respective securityholders (other than the holders of
Registrable Notes in such capacity) shall have the right to include any
securities of the Company or the Guarantor in any Shelf Registration Statement
or Exchange Offer Registration Statement other than Registrable Notes.
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<PAGE>
(d) ADJUSTMENTS AFFECTING THE REGISTRABLE NOTES. Neither the Company
nor the Guarantor will take any action, or permit any change to occur, with
respect to the Registrable Notes which would (i) adversely affect the ability of
any of the holders of Registrable Notes to include such Registrable Notes in a
registration undertaken pursuant to this Agreement or (ii) adversely affect the
marketability of the Registrable Notes in any such registration.
(e) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company and the Guarantor have obtained the written
consent of the holders of a majority of the then outstanding aggregate principal
amount of Registrable Notes; PROVIDED that, for the purposes of this Agreement,
Registrable Notes that are owned, directly or indirectly, by the Company, the
Guarantor or an Affiliate of either of them are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
holders of Registrable Notes whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other holders of Registrable Notes may be given by holders of a
majority in aggregate principal amount of the Registrable Notes being sold by
such holders pursuant to such Registration Statement; PROVIDED that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(f) NOTICES. All notices and other communications provided for
herein shall be made in writing by hand-delivery, next-day air courier,
certified first-class mail, return receipt requested, telex or facsimile:
(i) if to the Initial Purchasers, the Company or the Guarantor,
as provided in the Purchase Agreement, or
(ii) if to any other person who is then the registered holder of
any Registrable Notes, to the address of such holder as it appears in the note
register of the Company and the Guarantor.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; one business day after being timely delivered to a
next-day air courier; five business days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when complete
transmission is confirmed by the sender's telecopier machine, if telecopied.
24
<PAGE>
(g) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each holder of Registrable Notes.
The Company and the Guarantor may not assign their rights or obligations
hereunder without the prior written consent of each holder of any Registrable
Notes. Notwithstanding the foregoing, no transferee shall have any of the
rights granted under this Agreement until such transferee shall acknowledge its
rights and obligations hereunder by a signed written statement of such
transferee's acceptance of such rights and obligations.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement.
(i) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
THE COMPANY AND THE GUARANTOR HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
EACH OF THE COMPANY AND THE GUARANTOR IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A
REGISTRABLE NOTE TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY AND THE GUARANTOR IN
ANY OTHER JURISDICTION.
(j) SEVERABILITY. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or
25
<PAGE>
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(k) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement unless expressly stated otherwise.
(l) ATTORNEYS' FEES. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, shall
be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
26
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
ASTOR CORPORATION
By: /s/ John F. Gottshall
------------------------------
Name:
Title:
ASTOR HOLDINGS II, INC.
By: /s/ John F. Gottshall
------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Sean Deson
------------------------------
Name:
Title:
CHASE SECURITIES INC.
By: /s/ David Fass
------------------------------
Name:
Title:
27
<PAGE>
GROUND WATER PROCESSING REMEDIATION AGREEMENT
This Agreement is made and entered into this 22nd day of April, 1994
by and between Petrowax Pa, Inc., a Delaware corporation, debtor and debtor-in-
possession ("Petrowax") and Quaker State Corporation, a Delaware corporation
("Quaker State").
BACKGROUND
Petrowax and Quaker State entered into an Asset Purchase and Sale
Agreement dated as of March 30, 1990 ("Asset Agreement"). The Asset Agreement,
among other things, transferred ownership from Quaker State to Petrowax of a
manufacturing facility known as the Emlenton Wax Plant located in Emlenton,
Pennsylvania (the "Emlenton Wax Plant") and a manufacturing plant known as the
McKean Plant located in Farmer's Valley, Pennsylvania (the "McKean Plant").
On September 20, 1990, Petrowax received ground water sampling results
which indicated the presence of petroleum in the ground water beneath the
Emlenton Wax Plant. These results were reported to the Pennsylvania Department
of Environmental Resources ("DER") in accordance with Pennsylvania law and to
Quaker State, pursuant to Sections 10.2(h)(iv) and 12.1 of the Asset Agreement.
Quaker State subsequently hired consultants to perform hydrogeologic
investigations at the Emlenton Wax Plant and McKean Plant. The consultants
prepared reports for submission to the DER, proposing a ground water recovery
and treatment project for the ground water beneath the Emlenton Plant and the
McKean Plant (collectively, the "Ground Water Project").
<PAGE>
Quaker State has proposed to Petrowax to use the Emlenton Wax Plant's
and the McKean Plant's on-site waste water treatment systems as part of the
Ground Water Project.
Petrowax and Quaker State wish to enter into an agreement regarding
the terms and conditions under which Quaker State may use the Emlenton Wax
Plant's and McKean Plant's on-site waste water treatment systems for the Ground
Water Project.
This Agreement is entered into pursuant to a certain Amendment,
Agreement and Joint Release dated April 22, 1994 between Petrowax and Quaker
State ("Amendment").
In consideration of the mutual covenants and agreements contained
herein, the parties agree as follows:
1. USE OF WASTE WATER TREATMENT SYSTEM. During the term of this
Agreement and subject to the terms and conditions hereof, Petrowax agrees that
Quaker State may utilize the waste water treatment systems at the Emlenton Wax
Plant and McKean Plant (collectively, the "Plants") to treat ground water
recovered as part of the Ground Water Project, provided such use is consistent
with the respective plants' National Pollutant Discharge and Elimination System
("NPDES") Permits and Pennsylvania Industrial Waste Water Permits and complies
with applicable federal and state laws, regulations, permits, orders and local
ordinances. Based on the foregoing and on the terms and conditions of this
Agreement, Petrowax agrees to process up to forty (40) gallons per minute of
contaminated ground water delivered to its waste water treatment system at the
Emlenton Wax Plant and up to eighty (80) gallons per minute of
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contaminated ground water delivered to its waste water treatment system at the
McKean Plant. Quaker State shall not be obligated to utilize waste water
treatment processing of Petrowax, but in that event shall receive no
consideration from Petrowax.
2. INSTALLATION OF A RECOVERY SYSTEM. Quaker State shall, at its
expense, install a ground water recovery system, including all associated
equipment necessary to operate such system and to deliver waste water for
treatment to the entry port at the Plants' waste water treatment systems. Quaker
State shall also install a meter or meters to monitor the flow of waste water
directly to the waste water treatment systems at the Plants. Quaker State will
be responsible for any permitting costs, and all electricity and other costs in
connection with pumping contaminated ground water up to the entry port at
Petrowax's waste water treatment facilities, including maintenance of equipment,
and should Petrowax pay for any of the foregoing, Quaker State agrees to
promptly reimburse Petrowax upon presentation of third party invoices or other
appropriate documentation. Quaker State shall retain liability for any Disposal
(as defined in the Asset Agreement) occurring up to the entry port.
3. INCREASED COSTS. Quaker State shall bear the Increased Costs of
treating ground water recovered as part of the Ground Water Project. "Increased
Costs" shall mean any additional capital costs over and above those that would
be incurred by Petrowax in its operation of the wastewater treatment plant
(whether required by present or future regulation or law, requirements of any
governmental authority, or otherwise,) to modify or upgrade the wastewater
treatment plant in order to process the
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<PAGE>
delivered ground water, or any increase in operating costs attributable to the
treatment of the ground water. If, because of the treatment of the ground water,
any sludge or solids from the wastewater treatment are rendered hazardous or
require treatment or disposal which results in increased costs to Petrowax,
those costs shall be paid by Quaker State upon written notice of the amount
thereof.
For increased capital costs, Quaker State shall have the option of
performing the work, or authorizing Petrowax to perform the work. All such
authorizations shall be in writing, except as provided in the following
paragraph. If Quaker State elects not to perform the work it shall pay the
invoices of Petrowax's contractor or supplier directly upon presentation of
invoice. For increased operating costs, Quaker State shall pay those costs
within thirty (30) days of invoicing by Petrowax.
Failure of Quaker State to respond to Petrowax in writing within
thirty (30) days after Petrowax gives Quaker State written notice of anticipated
Increased Costs in the nature of capital costs shall constitute authorization to
Petrowax to perform the work. Should Quaker State notify Petrowax in writing
within such thirty (30) day period that it disputes that increased capital costs
are Increased Costs hereunder, or notifies Petrowax within thirty (30) days of
invoice of operating costs claimed by Petrowax to be Increased Costs hereunder
that Quaker State disputes that such operating costs are Increased Costs, either
party may submit such dispute to binding arbitration by a neutral single
arbitrator satisfactory to the parties selected from the list of company
environmental attorneys maintained by the American Petroleum Institute ("API")
as possible third party
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<PAGE>
neutrals. Should the parties be unable to agree upon an arbitrator within 30
days after a party has requested arbitration, either party may request the API
to select the arbitrator. The arbitration shall be conducted under the rules of
the American Arbitration Association, with each side bearing its own costs
except the cost of the arbitrator, which shall be shared equally. Discovery
shall be controlled by the arbitrator and shall be permitted to the extent set
out in this Section. Each party may submit in writing to a party, and that party
shall so respond, to a maximum of any combination of thirty-five (35) (none of
which may have subparts) of the following: interrogatories, demands to produce
documents and requests for admission. Each party is also entitled to take the
oral deposition of one (1) individual of another party. Additional discovery may
be permitted upon mutual agreement of the parties. The arbitrator shall control
the scheduling so as to process the matter expeditiously. The parties may submit
written briefs. The arbitrator shall rule on the dispute by issuing a written
opinion within thirty (30) days after the close of hearings. The times specified
in this Section may be extended upon mutual agreement of the parties or by the
arbitrator upon a showing of good cause.
4. STORAGE AND DISPOSAL OF HYDROCARBON PRODUCT RECOVERED. Quaker State
shall be responsible at its sole cost for storing, treating, recycling and
disposing of all non-dissolved hydrocarbon product recovered during the Ground
Water Project in accordance with all applicable federal, state and local laws,
regulations, permits and approvals, including but not limited to the Spill
Prevention Control and Countermeasure Plan. Quaker State shall provide all
storage tanks required to store the
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<PAGE>
recovered hydrocarbon product. Quaker State shall provide for the timely removal
of all recovered hydrocarbon product from the Emlenton Wax Plant and the McKean
Plant. At Petrowax's request, Quaker State shall provide to Petrowax copies of
all shipping documents and/or disposal manifests relating thereto as required by
applicable law.
5. OPERATING FEES. (a) Except for Earned processing (as hereinafter
defined), Quaker State shall pay Petrowax the following for processing
furnished, plus any Increased Costs:
---------------------------------------------------------
---------------------------------------------------------
Period through 5/2/96 - 5/2/97 - 5/2/98 -
------ 5/1/96 5/1/97 5/1/98 and
thereafter
---------------------------------------------------------
Charge per $30.00 $25.00 $20.00 $10.00
1,000
gallons
---------------------------------------------------------
---------------------------------------------------------
All payments shall be due within ten (10) days after invoicing.
(b) Except for early termination as provided in Section 5(c),
processing shall be Earned for such number of years as is equal to (i) two times
the number of years (prorated for partial years) beginning May 1, 1995 that
Quaker State continues to supply Products to Petrowax or its permitted assignees
under the Slack Wax and Petrolatum Sales Agreement dated the date hereof and
executed pursuant to the Amendment ("1994 Slack Wax Agreement ") plus (ii) one
year for each year (prorated for partial years) after the end of the term of the
1994 Slack Wax Agreement that Quaker State continues to supply Petrowax or its
permitted assignees with Products at
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<PAGE>
the Wind-down Period prices. The terms "Products" and "wind-down Period" shall
have the meanings ascribed to them in the 1994 Slack Wax Agreement.
(c) Notwithstanding that processing cannot be Earned by Quaker State
except be supplying Products after May 1, 1995, Quaker State shall be entitled
to receive processing at no cost (other than Increased Costs) under this
Agreement beginning on the date the Amendment is approved by the Bankruptcy
Court, in anticipation of its supplying of Products after May 1, 1995 under the
1994 Slack Wax Agreement. If Quaker State ceases supply of Products under either
the Slack Wax and Petrolatum Agreement dated April 30, 1990 (the "1990 Slack Wax
Agreement") or the 1994 Slack Wax Agreement (collectively, the Slack Wax
Agreements) prior to the end of the Wind-down Period for more than thirty (30)
days for reasons other than default under this Agreement by Petrowax or either
of the Slack Wax Agreements by Petrowax or its permitted assignees or the
temporary existence of a Force Majeure Event (as defined in Section 7) of either
of the Slack Wax Agreements affecting Quaker State or Petrowax or its permitted
assignees, then the Earned period, if any, shall end, water treatment processing
provided under this Agreement for periods thereafter shall be subject to charge
as set forth in Section 5(a) above, and Quaker State shall pay Petrowax at the
rates set forth in Section 5(a) for processing previously furnished but not
Earned (as defined in Section 5(b) above). (For the purpose of clarity, it is
agreed that if Quaker State supplies Products to Petrowax or its permitted
assignees under the 1990 Slack Wax Agreement through its expiration and under
the 1994 Slack Wax Agreement through May 1, 1996, all processing hereunder
through May 1, 1996 shall have been Earned.)
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<PAGE>
6. TERM. The term of this Agreement shall begin on the date the
Amendment is approved by the Bankruptcy Court and shall continue for the period
for which processing is Earned and thereafter so long as Quaker State continues
to request and pay for processing in connection with the Ground Water Project,
provided, however, that in no event shall Petrowax be required to provide
processing under this Agreement after May 1, 2014.
7. FORCE MAJEURE. In no event shall Petrowax be liable to Quaker State
or be deemed in default or in breach of any of its obligations under this
Agreement for delay or failure to provide processing hereunder if such delay or
failure is due to war, fire, explosion, flood, accident, strike, riot, act of
governmental authority, act of God, labor interruption or strike, interruption
in power supply, or any other contingency beyond the reasonable control of
Petrowax ("Force Majeure Event"). In the event of the occurrence of a Force
Majeure Event, the performance of Petrowax under this Agreement shall be excused
for the period of the disability. Petrowax shall use reasonable efforts,
promptly after it has actual knowledge of the beginning of a Force Majeure
Event, to notify Quaker State of the delay, of the reason therefor, and of the
probable duration and the consequences thereof. Petrowax shall also use
reasonable efforts to eliminate the Force Majeure Event and to resume
performance with the least possible delay.
8. DEFAULT. (a) A party shall be in default hereunder (other than by
reason of a Force Majeure Event) in the event that such party shall default in
the
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<PAGE>
performance of any of its obligations hereunder, which default remains uncured
forty-five (45) days following receipt of notice specifying the nature of the
default from the non-defaulting party, unless the cure would require more than
45 days, in which case the party shall not be deemed in default if it has
promptly commenced diligent efforts to cure the default following notice and
continues such efforts until such default is cured. In the event of any such
default, the non-defaulting party may at its option terminate this Agreement by
written notice. Any termination by Petrowax by reason of Quaker State's default
hereunder shall not limit Petrowax's rights to payment of any fee due hereunder
for prior processing. Any termination by Quaker State by reason of Petrowax's
default hereunder shall entitle Quaker State to terminate delivery of Products
under the Slack Wax Agreements, but in the event of any such termination Quaker
State shall be entitled to any processing Earned but not utilized prior to
termination.
(b) In the event that (i) either or both of the Plants ceases to
operate for more than sixty (60) days (other than temporarily by reason of a
Force Majeure Event) and (ii) Petrowax or its assignees notify Quaker State in
writing that no further purchases of Products shall be made under the Slack Wax
Agreements, then provided that Quaker State continues to be given access to the
nonoperating Plant or Plants for the purpose of processing wastewater at Quaker
State's own cost, Quaker State shall have no claim for damages against Petrowax
under or arising out of this Agreement for the failure of Petrowax to furnish
waste water processing at that Plant or Plants. In the event that prior to the
confirmation of a plan of reorganization for Petrowax in its Chapter 11
proceeding Quaker State is neither furnished processing at a Plant by Petrowax
pursuant
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<PAGE>
to this Agreement nor is Quaker State provided access to the Plant for
performing processing itself, and provided that the reason for such
nonperformance and unavailability of access is other than a Force Majeure Event,
then Quaker State shall be entitled to damages for breach of this Agreement to
compensate it for processing Earned but not utilized, but such damages shall not
exceed an amount equal to the price per 1,000 gallons set forth in the table in
Section 5(a) hereof multiplied by the number of 1,000 gallons for which Quaker
State reasonably would have requested and been able to obtain processing at that
Plant for a time period equal to the remaining period for which processing has
been Earned but not utilized.
9. EFFECTS OF GROUND WATER PROJECT. If at any time Petrowax reasonably
determines that any work on the Ground Water Project is causing or threatening
to cause (1) any disruption, breakdown or malfunction of the on-site treatment
plant or (2) the violation of any federal, state or local law or the terms and
conditions of any applicable federal, state or local permits (including, without
limitation, the NPDES or Pennsylvania Industrial Waste Water Permits at the
Emlenton Wax Plant or the McKean Plant), Petrowax may shut down the delivery of
services hereunder. Any penalties assessed as a result of actions by Quaker
State shall be paid by Quaker State.
10. PRECONDITION TO EFFECTIVENESS. This Agreement shall not become
effective, and neither party shall incur any liabilities or obligations to the
other party in respect hereof, unless and until this Agreement is approved by
the U.S. Bankruptcy Court having jurisdiction over the chapter 11 proceeding of
Petrowax.
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<PAGE>
11. ASSIGNMENT. This Agreement may not be assigned or transferred by
either party without the prior written consent of the other party, except that
Petrowax may assign this Agreement to any owner of the Emlenton Wax Plant or the
McKean Plant, which assumes all of Petrowax' obligations under this Agreement.
12. MISCELLANEOUS. (a) This Agreement shall constitute the entire
agreement between the parties with respect to the subject matter hereof.
(b) This Agreement may be amended or supplemented only by written
agreement of the parties hereto.
13. GOVERNING LAW, PARTIES IN INTEREST. This Agreement shall be
governed by the laws of the Commonwealth of Pennsylvania and shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assignees. For the purpose of clarity, it is agreed
that this Agreement shall not be binding upon Sanwa Business Credit or any other
lender of Petrowax or upon any purchasers, assignees or other transferees of
such assets from or through such lenders or directly from Petrowax, unless a
party expressly assumes this Agreement in writing; provided that, if Sanwa
Business Credit or such other lender or any purchaser of such assets from or
through such lenders or directly from Petrowax shall not, within sixty (60) days
after a sale or foreclosure, permit Quaker State to process and continue
processing wastewater at the Plants, at a cost to Quaker State not exceeding
that provided for in this Agreement, then the Slack Wax Agreements shall
terminate. Petrowax and Quaker State agree that no obligations under this
Agreement, express or implied, shall be
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<PAGE>
imposed upon any such asset purchaser unless such asset purchaser agrees to
assume such obligations.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their respective names as of the date and year first above
written.
PETROWAX PA, INC., Debtor and
Debtor in Possession
By: /s/ Jerry L. Suave
---------------------------
Title: Sr. Vice President
-------------------------
QUAKER STATE CORPORATION
By: /s/ [ILLEGIBLE]
----------------------------
Title: Chairman and CEO
--------------------------
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<PAGE>
SLACK WAX AND
PETROLATUM SALES AGREEMENT
This Agreement is made this 22nd day of April, 1994, by and between Quaker
State Corporation, a Delaware corporation, hereinafter referred to as "Seller",
and Petrowax PA Inc., a Delaware corporation, debtor and debtor-in-possession,
hereinafter referred to as "Buyer".
WHEREAS, Petrowax and Quaker State entered into an Asset Purchase and Sale
Agreement dated as of March 30, 1990 ("Asset Agreement"). The Asset Agreement,
among other things, transferred ownership from Quaker State to Petrowax of a
manufacturing facility known as the Emlenton Wax Plant located in Emlenton,
Pennsylvania (the "Emlenton Wax Plant") and a manufacturing plant known as the
McKean Plant located in Farmer's Valley, Pennsylvania (the "McKean Plant").
WHEREAS, pursuant to the Asset Agreement, Petrowax and Quaker State entered
into a slack wax and petrolatum sales agreement dated April 30, 1990 (the "1990
Slack Wax Agreement") providing for the sale of Quaker State's entire output of
slack wax and petrolatum produced at Quaker State's Congo refinery at Newell,
West Virginia, through May 1, 1995.
WHEREAS, on February 25, 1992 (the "Petition Date"), Petrowax filed a
petition in the United States Bankruptcy Court for the District of Delaware (the
"Court") under Chapter 11 of Title 11 United States Code (the "Code") (case
number 92-210). Since the Petition Date, Petrowax has been operating as Debtor
in Possession pursuant to Section 1107.
<PAGE>
WHEREAS, pursuant to a certain Amendment, Agreement and Joint Release dated
April 22, 1994 ("Amendment"), the parties have agreed to execute this Agreement
in order to provide for Buyer's purchase and Seller's sale of Seller's entire
output of slack wax and petrolatum (the "Products") produced at Seller's Congo
Refinery at Newell, West Virginia (hereinafter called the "Facility") following
expiration of the 1990 Slack Wax Agreement, and provided that no event of
default as defined in the 1990 Slack Wax Agreement has occurred following the
date of the Amendment.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound hereby, the parties agree as follows:
1. TERM. Unless earlier terminated as provided herein, the primary term of
this Agreement ("Primary Term") shall be a period commencing on May 2, 1995 and
ending on May 1, 1999. On or before November 1, 1998, either party may provide
written notice requesting that negotiations for an extension of the Primary Term
take place, whereupon Buyer and Seller shall negotiate in good faith during the
six month period preceding the expiration date of the Primary term to negotiate
an extension satisfactory to each of the parties, provided that neither party
shall have any obligation to agree to any extension of the Primary Term. In the
event no extension of the Primary Term of the Agreement on the terms contained
therein is reached, Seller shall remain obligated to sell Products to Buyer for
an additional twelve months from the termination date of the Primary Term
("Wind-down Period") on all of the terms and conditions of the Agreement and at
the current pricing applicable to the Wind-down
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<PAGE>
Period under Section 5(a). As used in this Agreement, "term" shall mean both the
Primary Term (as it may be extended) and the Wind-down Period.
2. QUANTITY. During the term of this Agreement, Seller agrees to sell and
Buyer agrees to purchase the Products produced at the Facility.
Seller shall, at least thirty (30) days prior to the first day of each
month, provide to Buyer an estimate of Seller's output of Products for such
month and a proposed delivery schedule. Buyer shall within ten (10) days of
receipt of Seller's notification, confirm that the delivery schedule is
acceptable to Buyer or propose an alternate schedule. Seller shall reply within
ten (10) days of receipt of any alternate schedule proposed by Buyer whether
such schedule is acceptable to Seller. Failure by party to reply within the
above time periods shall be deemed acceptance of the other party's proposed
schedule.
Deliveries within each month shall be scheduled in approximately equal
weekly amounts. Should Buyer be unable to accept such quantities at any time,
Seller shall have the right to sell any quantities of Products not accepted by
Buyer to parties other than Buyer.
3. QUALITY. The Products sold hereunder shall meet the specifications set
forth on Exhibit A hereto. In the event Seller's source of crude oil to the
Facility should change, Seller and Buyer shall negotiate in good faith revised
specifications corresponding to the new crude oil source.
Upon receipt of Products, Buyer shall be responsible for any testing
deemed necessary by Buyer. Should Buyer believe that any Products delivered fail
to
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<PAGE>
meet the required specifications, Buyer shall make any claim in writing to
Seller together with a copy of the results of Buyer's testing. Any claim not
made to Seller by the earlier of (a) three (3) days after receipt of the Product
or (b) processing or mixing of the Product with other material, shall be
conclusively deemed to be waived.
4. DELIVERY. All Products sold by Seller to Buyer will be sold F.O.B. the
Facility. Title to the Products and risk of loss shall pass from Seller to Buyer
when loaded into the carriers provided by Buyer at the Facility. All carriers
for the Products sold hereunder shall be provided by the Buyer.
The amount of Products delivered to Buyer shall be determined by
Seller on the basis of Seller's measurement at the Facility at the time of
loading into the carriers provided by Buyer.
5. PRICE. Pricing for each Product sold under this Agreement in any month
shall be equal to the results of the following calculation, on a weighted
average price basis using applicable pricing data at the Facility for the month
of delivery:
a. The price for slack wax sold under this Agreement shall be
computed as follows:
Price per gallon = "S" Coefficient x (0.667 x Congo rack unleaded
gasoline posted price + 0.333 x Congo posted price for number 2
fuel oil - 0.024 per gallon)
b. The price for petrolatum sold under this Agreement shall be
computed as follows:
-4-
<PAGE>
Price per gallon = "P" Coefficient x (0.667 x Congo rack unleaded
gasoline posted price + 0.333 x Congo posted price for number 2
fuel oil - 0.024 per gallon)
The above pricing is based upon average oil content for slack wax
of 14.75 percent and for petrolatum of 18.89 percent, using 1993 ASTM test
procedure 3235, "Solvent Extractables in Petroleum Waxes."
The "S" Coefficient and "P" Coefficient under Paragraphs (a) and
(b) above shall be as follows (adjusted on May 1 of the designated year):
S P
----- -----
1995 .85 .90
1996 .90 .95
1997 .90 .95
1998 and beyond 1.25 1.95
References to "rack" prices of gasoline and number 2 fuel oil above
shall exclude taxes applicable to sales of gasoline and number 2 fuel oil
generally but Petrowax shall be responsible for payment of taxes specifically
levied on Products sold under this Agreement (which may be added to invoices for
Products sold).
c. Seller shall certify to Buyer prior to each delivery of the
Product that the the Product delivered meets the specifications therefor set
forth in Exhibit A hereto. Seller's certificates shall be based upon an up and
down representative sample, and sampling shall be performed only when the entire
content of the shipping tank is in a liquid state. All such samples shall be
tested by the ASTM method set forth in Exhibit A hereto. Seller shall deliver
test results to Buyer at the time of delivery of the Product. Should Buyer
dispute such results, Buyer shall so notify Seller within three (3)
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<PAGE>
business days of receipt of Seller's analysis and in any event prior to mixing
of such Product with other material, including with the notice the results of
Buyer's testing of its sample of such delivery. In the event Seller's and
Buyer's results differ by 5% or less, the average of Buyer's and Seller's
results shall be used to determine whether any premium or penalty pursuant to
paragraph 5(d) hereof applies. Should Buyer's and Seller's results differ by
more than 5%, a sample of such delivery shall be sent to a mutually agreed
independent laboratory, whose final testing results shall be conclusive for
purposes of this Agreement. The cost of any independent testing shall be borne
equally by Seller and Buyer.
Should Buyer not provide notice to Seller of a disputed test result
within the time provided above, the results of Seller's testing on such delivery
shall be deemed conclusive.
d. The above prices shall be subject to adjustment, upward or
downward, as follows:
i. As a quality premium, upward by $0.007 per gallon for each
1% below 18.89% oil content for petrolatum or below 14.75% oil content
for slack wax.
ii. As a quality penalty, downward by $0.007 per gallon for each
1% above 18.89% oil content for petrolatum or above 14.75% oil content
for slack wax. The maximum oil content for any products acceptable to
Buyer is 25% and Buyer shall not be obligated to purchase any Products
with oil content in excess of 25%.
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<PAGE>
iii. Penalties or premiums applicable to Products delivered in
any month shall be accumulated and netted at the end of such month.
Any net premium or penalty shall be paid by Buyer or Seller on or
before the 15th day of the month succeeding the month of delivery.
e. Seller shall receive a payment of 1% of Buyer's realized net
price for finished waxes derived from the respective Products. The term
"realized net price" shall mean Buyer's sales price less applicable commissions
for the respective finished waxes.
6. BILLING AND PAYMENT. Buyer shall remit payment to Seller for all
products sold hereunder on the 15th day of the month following the month in
which such products were delivered. Any amount not paid when due shall bear
interest at the rate of 1.25% per month until paid in full.
In no event shall Seller be obligated to extend more than $150,000 of
credit to Buyer (increased to $300,000 upon confirmation of Buyer's plan of
reorganization in its Chapter 11 bankruptcy proceeding). If Buyer exceeds the
applicable credit limit, Seller shall not be obligated to ship Products to Buyer
unless such shipments are paid for by wire transfer immediately prior to
shipment or amounts owing in excess of the credit limit have been paid in full.
In addition, Seller reserves the right to require payment in advance of
shipment, or other security satisfactory to Seller, in the event Buyer should
fail to make timely payment for Products delivered hereunder.
7. TAXES. Buyer shall reimburse Seller for any sales, use or excise taxes
imposed on Seller with respect to the sale to Buyer of the Products delivered
hereunder
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<PAGE>
by any local, state or federal governmental body, whether such tax is presently
in effect or is imposed after the execution of this Agreement.
8. WARRANTY. Seller warrants that it has and will have good and
marketable title to all Products delivered and sold hereunder and that the
Products will meet the specifications therefor set forth in Exhibit A hereto.
Other than the specifications set forth on Exhibit A, Seller makes no
representation or warranty whatsoever, express or implied with respect to the
Products and Seller specifically DISCLAIMS AND EXCLUDES FROM THIS AGREEMENT THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE.
9. REMEDY. Buyer's sole and exclusive remedy in the event of delivery of
Products that do not conform to oil content specifications set forth in Exhibit
A hereto shall be a price adjustment for such Products pursuant to paragraph
5(c); provided, however, that Buyer shall have the option to reject delivery of
Products the oil content of which exceeds 25% based upon the results of testing
by a mutually agreed independent laboratory as provided in paragraph 5(c)
hereof. Buyer's sole and exclusive remedy in the event of delivery of Products
that do not conform to the specifications, other than oil content, set forth on
Exhibit A or in the event oil content exceeds 25% based upon the results of
testing by a mutually agreed independent laboratory as provided in paragraph
5(c) hereof shall be a refund of the price paid and transportation costs
incurred by Buyer for such Products upon return thereof to Seller. Seller shall
have the right to sell Products rejected by Buyer to parties other than Buyer.
In the
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<PAGE>
event Buyer should wrongly reject any delivery of Products, Buyer shall be
responsible for all transportation costs incurred for such Products.
In no event shall Seller have any liability to Buyer for indirect,
incidental or consequential damages or for lost profits or business, even if
advised of the possibility that such damages may be incurred.
10. FORCE MAJEURE. Neither party shall be liable for any failure to
perform hereunder due to any cause beyond its reasonable control, including, but
not limited to, acts of God, fires, floods, wars, sabotage, accidents, strikes,
lockouts, or other labor disputes, shortages of labor, materials, or crude oil,
governmental law, ordinances, rules and regulations, whether valid or invalid
(including, but not limited to, priorities, requisitions, allocations and price
adjustment restrictions), inability to obtain material, equipment or
transportation, and any other circumstance or circumstances of a similar or
different nature. The party whose performance is prevented by any such
contingency shall have the right during the period of such contingency to
exclude such portion of the quantity deliverable during such period as is
prevented by such contingency from being delivered, whereupon the total quantity
deliverable under this Agreement shall be reduced by the quantity so excluded.
In the event a party's ability to perform hereunder is affected only in part by
force majeure as defined above, such party shall continue to perform its
obligations hereunder to the extent not affected by such force majeure.
A party affected by force majeure shall promptly notify the other
party of the existence thereof and the anticipated duration and effect upon its
ability to perform hereunder. Such party shall thereafter exercise its
reasonable best efforts to eliminate
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<PAGE>
the force majeure as quickly as possible; provided that, neither party shall be
required to resolve labor disputes or disputes with suppliers of raw materials
except in such party's sole discretion in accordance with its judgment as to its
best interest. The party declaring force majeure shall promptly notify the other
party when such force majeure no longer affects its ability to perform
hereunder.
11. NOTICES. Notices under this Agreement may be given by personal
delivery, mail or by fax. Any notice required or permitted to be given hereunder
shall be deemed received when received by U.S. mail, postage prepaid, registered
or certified; notices shall be deemed received when sent if sent by fax. All
notices shall be sent as follows:
To Seller, to:
Quaker State Corporation
255 Elm Street
Oil City, PA 16301
Attn: Vice President/Manufacturing
FAX: (814) 676-7030
To Buyer, to:
Petrowax PA Inc.
505 West Main Street
Smethport, PA 16749
FAX: (814) 887-7790
Attention: President, copy to
Tom Causer
12. DEFAULT. A party shall be in default hereunder in the event of the
occurrence of any of the following:
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<PAGE>
a. Such party should default in the performance of any of its
obligations hereunder, which default remains uncured thirty (30) days following
receipt of notice specifying the nature of the default from the non-defaulting
party; or
b. If any decree or order is entered by a court adjudicating such
party a bankrupt or insolvent or approving as properly filed a petition seeking
reorganization of such party under the federal Bankruptcy Code, or any other
similar federal or state law, and such decree or order shall have continued
undischarged or unstayed for a period of thirty (30) days; or a decree or order
of a court for the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of such party or a substantial part of its
property, or for the winding up or liquidation of its affairs shall have been
entered and such decree or order shall have remained in force undischarged or
unstayed for a period of thirty (30) days; or
c. Such party shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy petition
against it, or shall file a petition or answer or consent seeking reorganization
under the federal Bankruptcy Code or any other similar federal or state law, or
shall consent to the filing of any such petition, or shall consent to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or a substantial part of its assets, or shall make an
assignment for the benefit of creditors (other than as contemplated by this
Agreement), or shall admit in writing its inability to pay its debts generally
as they become due, or corporate action shall be taken by such party in
furtherance of any of the foregoing actions; or
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<PAGE>
d. Buyer shall be in default of its obligations under that certain
Ground Water Processing Remediation Agreement dated April 22, 1994 between Buyer
and Seller, after giving effect to the expiration of all cure periods contained
therein.
e. Buyer shall be in default of its obligations under that certain
Amendment, Agreement and Joint Release dated April 22, 1994 between Buyer and
Seller (the "Amendment").
In the event of any such default, the non-defaulting party may at its
option terminate this Agreement by written notice, without prejudice to any
other rights or remedies available to the non-defaulting party by reason of such
default.
13. PRECONDITION TO EFFECTIVENESS. This Agreement shall not become
effective, and neither party shall incur any liabilities or obligations to the
other party in respect hereof, if any event of default as defined in the 1990
Slack Wax Agreement has occurred after the date of the Amendment which results
in a termination of that Agreement.
14. GOVERNING LAW. This Agreement shall be deemed a contract under and
shall be construed and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania.
15. INTEGRATED AGREEMENT. This Agreement together with the Asset Agreement
as amended by the the Amendment, the Amendment and the other agreements
contemplated thereby constitute the complete and final agreement of the parties
related to the subject matter hereof, and no statements or agreements, oral or
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<PAGE>
written, made prior to or at the execution hereof shall vary or modify the
terms, conditions or provisions hereof.
16. NO WAIVER. No waiver by either party of one or more rights of
termination or defaults by the other party in the performance of this Agreement
shall operate or be construed as a waiver of any future or continuing rights,
options or defaults, whether of a like or different character.
17. ASSIGNMENT. This Agreement shall inure to and be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that neither Seller nor Buyer shall assign this Agreement or any interest herein
without the prior written consent of the other party. Prior to May 1, 1997,
notwithstanding the foregoing, Buyer shall have the right to assign this
Agreement as security to a lender, a group of lenders, or other persons or
entities which provide financing to Buyer, if such lenders so require and Seller
shall, following any foreclosure by such lenders, sell Products to such lenders
or their assignees in accordance with the terms hereof, provided that this
Agreement shall terminate if within sixty (60) days after a foreclosure, the
lenders (or their assignees pursuant to foreclosure) fail to permit or allow
Seller to process and continue processing waste water at the Emlenton Wax Plant
or McKean Plant or both such facilities at a cost to Seller not exceeding that
provided for in that certain Ground Water Processing Remediation Agreement dated
April 22, 1994 between Seller and Buyer ("Processing Agreement"). Buyer may also
assign this Agreement, at any time to any entity which is controlled by,
controls, or is under control with, Buyer and may also assign this Agreement at
any time to any one owner of one or both of the
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<PAGE>
Emlenton Wax Plant and McKean Plant so long as such assignee continues to
operate one or both of such facilities and the Products are being used as charge
stock to such facility or facilities and further provided that such assignee
assumes all of Buyer's obligations under the Asset Agreement and Buyer's
obligations to process waste water at such facility under the Processing
Agreement, and further provided that such assignee's credit worthiness has been
approved by Quaker State, which approval shall not be unreasonably withheld.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers the day and year first above set forth.
QUAKER STATE CORPORATION
By: /s/ illegible
-------------------------------------
Title: Chairman and CEO
----------------------------------
PETROWAX PA INC., debtor and
debtor-in-possession
By: /s/ illegible
-------------------------------------
Title: Sr. Vice President
----------------------------------
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<PAGE>
AMENDMENT, AGREEMENT AND JOINT RELEASE
This Amendment, Agreement and Joint Release ("Amendment") is made and
entered into this 22nd day of April, 1994 by and between PETROWAX PA, INC., a
Delaware corporation, debtor and debtor-in-possession ("Petrowax") and QUAKER
STATE CORPORATION, a Delaware corporation ("Quaker State").
BACKGROUND
Petrowax and Quaker State entered into an Asset Purchase and Sale
Agreement dated as of March 30, 1990 ("Asset Agreement"). The Asset Agreement,
among other things, transferred ownership from Quaker State to Petrowax of a
manufacturing facility known as the Emlenton Wax Plant located in Emlenton,
Pennsylvania (the "Emlenton Wax Plant") and a manufacturing plant known as the
McKean Plant located in Farmer's Valley, Pennsylvania (the "McKean Plant").
On September 20, 1990, Petrowax received ground water sampling results
which indicated the presence of petroleum in the ground water beneath the
Emlenton Wax Plant. These results were reported to the Pennsylvania Department
of Environmental Resources ("DER") in accordance with Pennsylvania law and to
Quaker State, pursuant to Sections 10.2(h)(iv) and 12.1 of the Asset Agreement.
Quaker State subsequently hired consultants to perform hydrogeologic
investigations at the Emlenton Wax Plant and at the McKean Plant. The
consultants prepared reports for submission to the DER, proposing a ground water
recovery and treatment project for the ground
<PAGE>
water beneath the Emlenton Wax Plant and the McKean Plant (collectively, the
"Ground Water Project").
Quaker State has proposed to Petrowax to use the Emlenton Wax Plant's
and the McKean Plant's on-site waste water treatment systems as part of the
Ground Water Project.
Pursuant to the Asset Agreement, Petrowax and Quaker State entered
into a slack wax and petrolatum sales agreement dated April 30, 1990 (the "1990
Slack Wax Agreement") providing for the sale of Quaker State's entire output of
slack wax and petrolatum produced at Quaker State's Congo refinery at Newell,
West Virginia, through May 1, 1995.
On February 25, 1992 (the "Petition Date"), Petrowax filed a petition
in the United States Bankruptcy Court for the District of Delaware (the "Court")
under Chapter 11 of Title 11 United States Code (the "Code") (case number
92-210). Since the Petition Date, Petrowax has been operating as Debtor in
Possession pursuant to Section 1107.
On December 16, 1992, Quaker State filed a proof of claim asserting
unsecured nonpriority claims of $698,978.50, an unsecured priority claim of
$83,123.81 and a contingent claim of $4,851,903.30 consisting of the following
(collectively the "Claims"):
"CLAIM A" $7,021.54 Amount of unpaid obligations arising from
sales by Quaker State to Petrowax under the
Gas Purchase Agreement dated April 30, 1990
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<PAGE>
"CLAIM B" $275,014.28 Amount of unpaid obligations arising from
sales by Quaker State to Petrowax under
the 1990 Slack Wax Agreement
"CLAIM C" $16,580.90 Unpaid commissions payable by Petrowax to
Quaker State under paragraph 5e. of the
1990 Slack Wax Agreement
"CLAIM D" $248,584.83 Amount of unpaid obligations arising from
sales by Quaker State to Petrowax under
Crude Oil Purchase and Sale Agreement
dated April 30, 1990
"CLAIM E" $86,803.97 Accrued and unpaid interest on balance
listed under Claim D above, from due date
through February 24, 1992
"CLAIM F" $64,972.98 Sums owed by Petrowax to Quaker State for
Petrowax's 50% share of environmental
remediation work at Petrowax's plants and
paid for by Quaker State prior to
February 25, 1992, pursuant to
environmental section of the Asset
Agreement dated as of March 30, 1990
"CLAIM G" $83,123.81 Sums owed by Petrowax to Quaker State for
Petrowax's 50% share of environmental
remediation work at Petrowax's plants and
paid for by Quaker State after
February 25, 1992
"CLAIM H" $4,841,903.30 Petrowax's remaining obligations under
the Asset Agreement between Petrowax and
Quaker State, under which Petrowax and
Quaker State agreed to share equally the
first $10 million of any cost of
environmental remediation at certain
plants sold by Quaker State to Petrowax
Petrowax has done substantial due diligence with respect to the
alleged Claims of Quaker State and asserts defenses, set-offs and/or
counterclaims to each of the above Claims.
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<PAGE>
Petrowax has not yet presented a motion to the Court for assumption of
the 1990 Slack Wax Agreement but Quaker State has been furnishing slack wax and
petrolatum to Petrowax on a prepaid basis.
Petrowax and Quaker State desire to (i) settle all claims between
themselves, (ii) modify the 1990 Slack Wax Agreement pursuant to Section 365(a)
of the Code and cause its assumption by Petrowax, as so modified, (iii) enter
into a new Slack Wax Agreement (the "1994 Slack Wax Agreement") providing for
commencement of supply by Quaker State to Petrowax upon the end of the term of
the 1990 Slack Wax Agreement, provided that no event of default as defined in
the 1990 Slack Wax Agreement has occurred after the date of this Amendment, and
continuing through at least May 1, 2000), (iv) enter into an agreement covering
processing by Petrowax of contaminated ground water at the McKean Plant and the
Emlenton Wax Plant, under the Ground Water Project, (iv) make certain amendments
to the Asset Agreement regarding sharing of certain costs and (v) exchange
mutual releases from certain potential claims.
Both parties have acted in good faith and dealt at arm's length in
negotiating the settlement of claims embodied in this Amendment.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
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<PAGE>
Article 1. 1990 SLACK WAX AGREEMENT ASSUMPTION.
(A) Pursuant to Section 365(a) of the Code, Petrowax shall assume the
1990 Slack Wax Agreement subject to the amendments set forth in Article 2 of
this Amendment. In order to cure the pre-petition defaults under the 1990 Slack
Wax Agreement as required by Code Section 365(b)(1), Petrowax shall cure and
Quaker State agrees to accept as complete and total cure of the defaults
evidenced by Claim B and Claim C the following: Petrowax shall pay Quaker State
$302,734.02 in nine equal consecutive monthly installments beginning fifteen
(15) days after the date of Effectiveness (as defined in Article 9 of this
Amendment) and on the corresponding day of each month thereafter, without
interest. $30,000 of the first payment may be made by offsetting Quaker State's
obligation to Petrowax in the same amount under Section 10.1(1) of the Asset
Agreement, as amended by this Amendment. Notwithstanding anything to the
contrary contained in the 1990 Slack Wax Agreement, Quaker State agrees to
supply slack wax and petrolatum to Petrowax in accordance with the credit terms
in Section 6 thereof (as amended by this Amendment) upon payment of $150,000 of
the $302,734.02 referred to above. Prior to payment of $150,000 of such amount,
Quaker State shall continue to supply Petrowax, so long as Buyer pays for all
Products by wire transfer in advance of shipment and Seller shall have no
obligation to extend credit to Buyer unless and until payment of $150,000 of
such cure amount.
Article 2. AMENDMENT TO 1990 SLACK WAX AGREEMENT.
Upon Effectiveness, the 1990 Slack Wax Agreement shall be deemed
amended as follows:
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<PAGE>
(A) Section 1 of the agreement is amended to delete the second
sentence thereof.
(B) Paragraph (b) of Section 5 of the agreement is amended to add a
final clause to read as follows:
"References to "rack" prices of gasoline and number 2 fuel oil
above shall exclude taxes applicable to sales of gasoline and number 2
fuel oil generally but Petrowax shall be responsible for payment of
taxes specifically levied on Products sold under the Agreement (which
may be added to invoices for Products sold)."
(C) Paragraph (c) of Section 5 of the agreement is amended to restate
the first sentence thereof to read as follows:
"Seller shall certify to Buyer prior to each delivery of the
Product that the Product delivered meets the specifications
therefor set forth in Exhibit A hereto."
(D) Billing and Payment. The second paragraph of Section 6 to the
agreement ("Billing and Payment") is amended to read as follows:
"In no event shall Seller be obligated to extend more than
$150,000 of credit to Buyer (increased to $300,000 upon confirmation
of Buyer's plan of reorganization in its Chapter 11 bankruptcy
proceeding). If Buyer exceeds the applicable credit limit, Seller
shall not be obligated to ship Products to Buyer unless such shipments
are paid for by wire transfer immediately prior to shipment or amounts
owing in excess of the credit limit have been paid in full. In
addition, Seller reserves the right to require payment in advance of
shipment, or other security satisfactory to Seller, in the event Buyer
should fail to make timely payment for Products delivered hereunder."
(E) Section 14 of the agreement is amended to read as follows:
"14. INTEGRATED AGREEMENT. This agreement together with
the Asset Purchase and Sale Agreement as amended by that certain
Amendment, Agreement and Joint Release dated April 22, 1994 between
Buyer and Seller ("Amendment"), the Amendment and the other agreements
contemplated thereby constitutes the complete and final agreement of
the parties related to the subject matter hereof, and no statements or
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<PAGE>
agreements, oral or written, made prior to or at the execution hereof
shall vary or modify the terms, conditions or provisions hereof.
(F) Assignment. Section 16 of the agreement is amended to read as
follows:
"16. ASSIGNMENT. This Agreement shall inure to and be binding
upon the parties hereto and their respective successors and assigns;
provided, however, that neither Seller nor Buyer shall assign this
Agreement or any interest herein without the prior written consent of
the other party. Notwithstanding the foregoing, Buyer shall have the
right to assign this Agreement as security to a lender, a group of
lenders, or other persons or entities which provide financing to
Buyer, if such lenders so require, but nothing herein shall affect the
rights or obligations of either Buyer or Sanwa Business Credit Corp.
under the security agreements in effect between them (Seller
acknowledges and consents to the existing perfected security interest
of Sanwa Business Credit Corp. in Buyer's rights in this Agreement).
Seller shall, following any foreclosure by such lenders, sell Products
to such lenders or their assignees in accordance with the terms
hereof, provided that this Agreement shall terminate if within sixty
(60) days after a foreclosure, the lenders (or their assignees
pursuant to foreclosure) fail to permit or allow Seller to process and
continue processing waste water at the Emlenton Wax Plant or McKean
Plant or both such facilities at a cost to Seller not exceeding that
provided for in that certain Ground Water Processing Remediation
Agreement dated April 22, 1994 between Seller and Buyer ("Processing
Agreement"). Buyer may also assign this Agreement, at any time to any
entity which is controlled by, controls, or is under control with,
Buyer and may also assign this Agreement at any time to any one owner
of one or both of the Emlenton Wax Plant and McKean Plant so long as
such assignee continues to operate one or both of such facilities and
the Products are being used as charge stock to such facility or
facilities and further provided that such assignee assumes all of
Buyer's obligations under the Asset Purchase and Sale Agreement and
Buyer's obligations to process waste water at such facility under the
Ground Water Processing Remediation Agreement dated April 22, 1994
between Seller and Buyer, and further provided that such assignee's
credit worthiness has been approved by Quaker State, which approval
shall not be unreasonably withheld."
(G) Default. New subsections D and E are added to Section 12
("Default") of the agreement, to read as follows:
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<PAGE>
"D) Buyer shall be in default of its obligations under that
certain Ground Water Processing Remediation Agreement dated April 22, 1994, 1994
between Buyer and Seller, after giving effect to the expiration of all cure
periods contained therein."
"E) Buyer shall be in default of its obligations under that
certain Amendment, Agreement and Joint Release dated April 22, 1994 between
Buyer and Seller."
(H) Exhibit A to the 1990 Slack Wax Agreement is hereby amended to be
and read as set forth in Exhibit A hereto.
Article 3. 1994 SLACK WAX AGREEMENT
Upon execution of this Agreement, Petrowax and Quaker State shall
enter into a new Slack Wax Agreement (the "1994 Slack Wax Agreement") in the
form of Exhibit B hereto, which shall be effective upon Effectiveness (with the
understanding that supply thereunder shall commence at the end of the term of
the 1990 Slack Wax Agreement; provided that no event of default as defined in
the 1990 Slack Wax Agreement resulting in termination thereof has occurred
following the date of this Amendment).
Article 4. GROUND WATER PROCESSING REMEDIATION AGREEMENT.
Upon execution of this Agreement, Petrowax and Quaker State shall
enter into a Ground Water Processing Remediation Agreement in the form of
Exhibit C hereto, which shall be effective upon Effectiveness.
Article 5. ASSET AGREEMENT AMENDMENTS.
As of Effectiveness, the Asset Agreement shall be deemed amended as
follows:
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<PAGE>
(A) DEFINITIONS.
(i) Section 1.2 (COMPLIANCE WORK) is amended by deleting the
final two sentences thereof and by substituting a final sentence to
read as follows:
"In no event shall replacement of or repair of the
Facilities' sewer systems be considered Compliance Work."
(ii) Section 1.13 (REMEDIAL WORK) is amended by inserting before
the final sentence thereof a new penultimate sentence to read as
follows:
"Remedial Work shall also include all Compliance Work,
except Compliance Work for which Compliance Costs are incurred or
paid by Buyer prior to Effectiveness (as defined in that certain
Amendment, Agreement and Joint Release dated April 22, 1994 (the
"Amendment") not to exceed $30,000."
(iii) Section 1.12 (REMEDIAL COSTS) is amended to add the
following as the final sentence:
"Remedial Costs includes all Compliance Costs, except
Compliance Costs incurred or paid by Buyer prior to
Effectiveness."
(iv) New Sections 1.14 and 1.15 are added to read as follows:
"1.14 Ground Water Costs: The term "Ground Water Costs"
shall mean any and all funds or payments reasonably expended by
the Buyer or the Seller in order to conduct Ground Water
Remediation.
1.15 Ground Water Remediation: The term "Ground Water
Remediation" shall mean all Remedial Work performed by the Buyer
or the Seller in order to investigate, evaluate, treat and/or
clean up any Hazardous Materials disposed, discharged or released
in the ground water at, adjacent to, or in connection with
operations at the Facilities and existing as of the Closing
Date."
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<PAGE>
(A) COVENANT OF SELLER REGARDING CERTAIN PAYMENTS.
Section 10.1 is amended to add a new (l) to read as follows:
"(l) Seller shall pay all Compliance Costs incurred or paid
by Buyer prior to Effectiveness, not to exceed $30,000."
(B) SELLER'S INDEMNIFICATION OBLIGATIONS.
Section 10.4(b)(i) is deleted in its entirety and a new Section
10.4(b)(i) is inserted to read as follows:
"(i) GROUND WATER COSTS. All Ground Water Costs."
(C) Section 10.4(b)(iii) is hereby amended to read as follows:
"(iii) REMEDIAL COSTS (EXCLUDING GROUND WATER COSTS).
[x] Fifty percent (50%) of the first $5,500,000 of
Remedial Costs (excluding Ground Water Costs) incurred,
and
[y] One hundred percent (100%) of all Remedial Costs
(excluding Ground Water Costs) incurred thereafter
prior to the twentieth anniversary of the Closing Date,
and
[z] Remedial Costs (excluding Ground Water Costs)
incurred subsequent to the twentieth anniversary of the
Closing Date shall be borne by the Buyer and the Seller
in a manner to be determined in accordance with the law
in effect at such time;
provided, however, that the Seller shall have no obligation with
respect to Remedial Costs (excluding Ground Water Costs) incurred
as a result of the negligent performance of Remedial Work
(excluding Ground Water Remediation) by or on behalf of the
Buyer; PROVIDED, FURTHER, that the Seller shall have no
obligation to indemnify the Buyer for reasonable disruptions or
interferences with the operations of the Buyer's business
reasonably incurred as a result of the performance of Remedial
Work (including Ground Water Remediation) by the Seller in
accordance with the provisions of this Agreement."
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<PAGE>
(D) BUYER'S INDEMNIFICATION. Section 10.4(c)(i) is hereby amended to
read as follows:
"(i) REMEDIAL COSTS (EXCLUDING GROUND WATER COSTS).
[x] Fifty percent (50%) of the first $5,500,000 of the
Remedial Costs (excluding Ground Water Costs) incurred
prior to the twentieth anniversary of the Closing Date
and
[y] Remedial Costs (excluding Ground Water Costs)
incurred subsequent to the twentieth anniversary of the
Closing Date shall be borne by the Buyer and the Seller
in a manner to be determined in accordance with the law
in effect at such time,
provided, however, that the Buyer shall have no obligation
with respect to Remedial Costs incurred as a result of the
negligent performance of Remedial Work by or on behalf of
the Seller. Buyer agrees to cooperate with Seller, including
executing and submitting one or more applications or other
documents, to request that the Pennsylvania Department of
Environmental Resources eliminate the requirement that
groundwater be monitored at the site of the former dump and
burn area at the McKean Plant."
(E) INDEMNIFICATION PROCEDURES. Sections 10.4(d)(ii), (iv) and (v) are
amended to read as follows:
"(ii) If the Seller initiates and completes Remedial Work
(excluding Ground Water Remediation) in compliance with the
requirements of Section 10.4(d)(i), Seller shall pay the full amount
thereof, but if the total cost of Remedial Work (excluding Ground
Water Remediation) has not yet exceeded $5,500,000, the Seller shall
notify the Buyer of the Buyer's obligation to indemnify the Seller for
Buyer's share of the Remedial Costs (excluding Ground Water Costs)
pursuant to Section 10.4(c)(i).
(iv) If the Seller defaults on its obligation under Section
10.4(d)(i) to initiate Remedial Work within the time period required
therein after being requested by Buyer to do so or subsequently
defaults in its obligation to cause such Remedial Work to be completed
with reasonable diligence, and Seller does not cure such failure
within 30 days after written notice from Buyer that Seller is in
default of such obligations, the Buyer shall have the right to perform
such Remedial Work. Seller shall promptly
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<PAGE>
pay the full Remedial Cost thereof. Buyer shall indemnify Seller for
Buyer's share of those Remedial Costs (excluding Ground Water Costs)
paid by Seller, pursuant to Section 10.4(c)(i) and 10.4(d)(iii).
Alternatively, at Buyer's option, Buyer may redeem any of the Buyer's
promissory notes held by the Seller at face value to the full extent
of Seller's obligations under this Section 10.4(d)(iv); PROVIDED,
HOWEVER, the Seller shall remain liable to the Buyer for any shortfall
between the Seller's obligations under this Section 10.4(d)(iv) and
the face value of such redeemed promissory notes, and Buyer shall
remain liable to indemnify Seller for Buyer's share of such Remedial
Costs paid by Seller as provided in Sections 10.4(c)(i) and
10.4(d)(iii). Any amounts advanced by Buyer under this Section
10.4(d)(iv) and not promptly paid to Buyer by Seller upon demand shall
bear interest from demand at a rate per annum equal to the rates at
which interest accrues or would accrue under any Environmental Notes.
(v) If the Buyer elects to perform Remedial Work without
requesting the Seller to do so and the Buyer initiates and completes
the Remedial Work, it shall notify the Seller of the Seller's
obligation to indemnify Buyer for the Seller's share of Remedial Costs
(excluding Ground Water Costs) as set forth in Section 10.4(b)(iii)."
(F) ENVIRONMENTAL NOTES.
Exhibit E to the Asset Agreement (form of Environmental Note) is
amended to read as set forth in Exhibit D to this Agreement.
Article 6. CERTAIN EXISTING ENVIRONMENTAL DEBT. On the date of
Effectiveness, Petrowax shall issue and deliver to Quaker State one
Environmental Note in the principal amount of $148,096.79, dated the date of
Effectiveness, in the form of Exhibit D in full and complete discharge of all
obligations of Petrowax pursuant to Section 10.4(c)(i) of the Asset Agreement
through the date of Effectiveness.
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<PAGE>
It is agreed that Petrowax's maximum liability of $2,750,000 for
Remedial Costs (excluding Ground Water Costs) includes its liability for the
principal amount of the Environmental Note described in the above paragraph.
Article 7. RELEASE OF PETROWAX.
As of Effectiveness, and upon issuance of the Environmental Note for
$148,096.79 described in Article 5, Quaker State does hereby release and forever
discharge Petrowax, its past and present officers, directors, employees,
shareholders, agents, successors and assigns ("Petrowax Released Parties") from
the Claims and from any and all other debts, demands, actions, causes of action,
suits, proceedings, agreements, contracts, judgments, damages, accounts,
executions, claims, obligations and liabilities, whatsoever of every name,
nature, and description whether known or unknown, whether foreseen or
unforeseen, whether or not well founded in fact or in law, whether accrued or
unaccrued, and whether in law or equity or otherwise, which Quaker State ever
had, now has or which Quaker State or its successors and assigns can, shall or
may have for or by reason of any matter, cause or thing whatsoever occurring
prior to the date hereof, provided that this Article 7 shall not operate to
release any obligations of Petrowax under this Amendment, the Asset Agreement,
as amended by this Amendment, or any agreements executed pursuant to either the
Asset Agreement or this Amendment.
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<PAGE>
The matters discharged and released herein are not limited to matters
which are known or disclosed, and Quaker State assumes the risk of all unknown
or unanticipated or misunderstood matters which are released and discharged
herein.
Quaker State has not assigned or transferred any claim, right,
obligation, liability, cause or cause of action released and discharged herein.
Quaker State further agrees that it will never institute any suit or
action at law or otherwise against the Petrowax Released Parties, or institute,
prosecute or in any way aid in the institution or prosecution of any claim,
demand, action or cause of action for, on or by reason of any matter, cause or
thing released and discharged above.
It is further understood and agreed that this Article 7 is part of the
settlement and compromise of a disputed matter, that the Petrowax Released
Parties have expressly denied all liability, and that settlement shall not be
construed as an admission of liability on the part of the Petrowax Released
Parties.
This Article 7 shall be binding upon Quaker State, its successors and
assigns. Quaker State shall withdraw its proof of claim, and Petrowax shall have
no further obligation with respect to the Claims except to embody the terms of
this Amendment in its plan of reorganization with respect to Claim H. Quaker
State agrees to support any plan of reorganization proposed by Petrowax which
embodies the terms of this Amendment.
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<PAGE>
Article 8. RELEASE OF QUAKER STATE.
As of Effectiveness, Petrowax does hereby release and forever
discharge Quaker State, its past and present officers, directors, employees,
shareholders, agents, successors and assigns (the "Quaker State Released
Parties"), of and from any and all debts, demands, actions, causes of action,
suits, proceedings, agreements, contracts, judgments, damages, accounts,
executions, claims, obligations and liabilities (including but not limited to
all actions that could be brought pursuant to Sections 510, 542, 544, 545, 547,
548, 549, 550 and 553 of the Bankruptcy Code, 11 U.S.C. Section 101 ET SEQ.)
whatsoever of every name, nature, and description whether known or unknown,
whether foreseen or unforeseen, whether or not well founded in fact or in law,
whether accrued or unaccrued, and whether in law or equity or otherwise, which
Petrowax ever had, now has or which Petrowax or its successors and assigns can,
shall or may have for or by reason of any matter, cause or thing whatsoever
occurring prior to the date hereof, provided that this Article 8 shall not
operate to impair or release any obligation of Quaker State under the Asset
Agreement, as amended by this Amendment, or any obligations arising after the
date of this Amendment under any agreements executed pursuant to either the
Asset Agreement or this Amendment.
The matters discharged and released herein are not limited to matters
which are known or disclosed, and Petrowax assumes the risk of all unknown or
unanticipated or misunderstood matters which are released and discharged herein.
Petrowax has not assigned or transferred any claim, right, obligation,
liability, cause or cause of action released and discharged herein.
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<PAGE>
Petrowax further agrees that it will never institute any suit or
action at law or otherwise against the Quaker State Released Parties, or
institute, prosecute or in any way aid in the institution or prosecution of any
claim, demand, action or cause of action for, on or by reason of any matter,
cause or thing released and discharged above.
It is further understood and agreed that this Article 8 is part of
the settlement and compromise of a disputed matter, that the Quaker State
Released Parties have expressly denied all liability, and that settlement shall
not be construed as an admission of liability on the part of the Quaker State
Released Parties.
This Article 8 shall be binding upon Petrowax, its successors and
assigns, its estate, any trustee that may be appointed hereafter for Petrowax or
its estate, and any and all other parties which may now or hereafter claim any
interest in Petrowax' estate or in any of its property.
To the extent this Agreement and the release provided in this Article
8 are deemed to constitute an agreement between a holder of a claim and the
debtor the consideration for which is based on a debt that is dischargeable, and
only in such event, Quaker State hereby informs Petrowax as follows:
THIS AGREEMENT MAY BE RESCINDED AT ANY TIME PRIOR TO THE
DISCHARGE OF PETROWAX IN ITS CHAPTER 11 PROCEEDINGS OR
WITHIN SIXTY DAYS AFTER THIS AGREEMENT IS FILED WITH THE
UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
FOR APPROVAL, WHICHEVER IS LATER, BY PETROWAX GIVING NOTICE
OF SUCH RESCISSION TO QUAKER STATE.
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Article 9. COURT APPROVAL, EFFECTIVENESS AND CLOSING.
Petrowax shall promptly prepare and file a motion with the Court
seeking an order (the "Court Order") approving this Amendment and all of the
agreements, amendments and transactions contemplated hereby. Petrowax shall use
its best efforts to cause a hearing on the proposed motion to be held no later
than forty-five (45) days from the date hereof. "Effectiveness" shall be deemed
to occur at 12:01 a m. on the eleventh day following the date of entry of the
Court Order (if not a business day, then on the next business day), provided
that the Court Order has not been appealed, or if appealed, no stay pending
appeal is in effect. This Amendment shall not be effective until Effectiveness
and may be terminated by either party if Effectiveness has not occurred by six
(6) months from the date hereof.
Notwithstanding the foregoing or anything contained herein to the
contrary, should Petrowax rescind any part of this Amendment for any reason,
this Amendment and all agreements executed pursuant hereto shall be deemed null
and void in its entirety and the parties hereto will be placed in the same
position they were immediately prior to Effectiveness.
Article 10. This Amendment and Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except for the
amendments to the Slack Wax Agreement, which shall be governed by the laws of
the jurisdiction specified therein.
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Article 11. EFFECTIVE AMENDMENTS. Except as modified by this Amendment
and Agreement, all of the provisions of the Asset Agreement and the Slack Wax
Agreement shall remain in full force and effect in accordance with their
respective terms and the obligations of Petrowax thereunder shall not be
discharged by confirmation of any plan of reorganization in its Chapter 11
proceeding.
IN WITNESS WHEREOF, the parties have executed this Amendment and
Agreement on the day and year first above written by their respective duly
authorized officers.
PETROWAX PA, INC., Debtor and Debtor in
Possession
By: /s/illegible
----------------------------------
Title: Sr. Vice President
--------------------------------
QUAKER STATE CORPORATION
By: /s/illegible
----------------------------------
Title: Chairman and CEO
--------------------------------
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EXHIBITS
A - Revised Exhibit A to 1990 Slack Wax Agreement
B - 1994 Slack Wax Agreement
C - Ground Water Processing Remediation Agreement
D - Revised form of Environmental Note
<PAGE>
EXHIBIT A
SLACK WAX (TYPICAL SPECIFICATIONS)
Melting Point, AMP DEGREES F 120 min.
Flash Point, COC, DEGREES F 400 min.
Solvent Extractables, D3235 See Part 5, paragraph d
subparagraphs i and ii.
IP PETROLATUM
Melting Point DEGREES F, 148 145 MIN
Flash Point DEGREES F, 460 min.
Color Typical 4
Solvent Extractables, D3235 See Part 5, paragraph d,
subparagraph i and ii.
<PAGE>
EXHIBIT B
SLACK WAX AND
PETROLATUM SALES AGREEMENT
This Agreement is made this 22nd day of April, 1994, by and between Quaker
State Corporation, a Delaware corporation, hereinafter referred to as "Seller",
and Petrowax PA Inc., a Delaware corporation, debtor and debtor-in-possession,
hereinafter referred to as "Buyer".
WHEREAS, Petrowax and Quaker State entered into an Asset Purchase and Sale
Agreement dated as of March 30, 1990 ("Asset Agreement"). The Asset Agreement,
among other things, transferred ownership from Quaker State to Petrowax of a
manufacturing facility known as the Emlenton Wax Plant located in Emlenton,
Pennsylvania (the "Emlenton Wax Plant") and a manufacturing plant known as the
McKean Plant located in Farmer's Valley, Pennsylvania (the "McKean Plant").
WHEREAS, pursuant to the Asset Agreement, Petrowax and Quaker State entered
into a slack wax and petrolatum sales agreement dated April 30, 1990 (the "1990
Slack Wax Agreement") providing for the sale of Quaker State's entire output of
slack wax and petrolatum produced at Quaker State's Congo refinery at Newell,
West Virginia, through May 1, 1995.
WHEREAS, on February 25, 1992 (the "Petition Date"), Petrowax filed a
petition in the United States Bankruptcy Court for the District of Delaware (the
"Court") under Chapter 11 of Title 11 United States Code (the "Code") (case
number 92-210). Since the Petition Date, Petrowax has been operating as Debtor
in Possession pursuant to Section 1107.
<PAGE>
WHEREAS, pursuant to a certain Amendment, Agreement and Joint Release dated
April 22, 1994 ("Amendment"), the parties have agreed to execute this Agreement
in order to provide for Buyer's purchase and Seller's sale of Seller's entire
output of slack wax and petrolatum (the "Products") produced at Seller's Congo
Refinery at Newell, West Virginia (hereinafter called the "Facility") following
expiration of the 1990 Slack Wax Agreement, and provided that no event of
default as defined in the 1990 Slack Wax Agreement has occurred following the
date of the Amendment.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and intending to be legally bound hereby, the parties agree as follows:
1. TERM. Unless earlier terminated as provided herein, the primary term of
this Agreement ("Primary Term") shall be a period commencing on May 2, 1995 and
ending on May 1, 1999. On or before November 1, 1998, either party may provide
written notice requesting that negotiations for an extension of the Primary Term
take place, whereupon Buyer and Seller shall negotiate in good faith during the
six month period preceding the expiration date of the Primary term to negotiate
an extension satisfactory to each of the parties, provided that neither party
shall have any obligation to agree to any extension of the Primary Term. In the
event no extension of the Primary Term of the Agreement on the terms contained
therein is reached, Seller shall remain obligated to sell Products to Buyer for
an additional twelve months from the termination date of the Primary Term
("Wind-down Period") on all of the terms and conditions of the Agreement and at
the current pricing applicable to the Wind-down
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<PAGE>
Period under Section 5(a). As used in this Agreement, "term" shall mean both the
Primary Term (as it may be extended) and the Wind-down Period.
2. QUANTITY. During the term of this Agreement, Seller agrees to sell and
Buyer agrees to purchase the Products produced at the Facility.
Seller shall, at least thirty (30) days prior to the first day of each
month, provide to Buyer an estimate of Seller's output of Products for such
month and a proposed delivery schedule. Buyer shall within ten (10) days of
receipt of Seller's notification, confirm that the delivery schedule is
acceptable to Buyer or propose an alternate schedule. Seller shall reply within
ten (10) days of receipt of any alternate schedule proposed by Buyer whether
such schedule is acceptable to Seller. Failure by party to reply within the
above time periods shall be deemed acceptance of the other party's proposed
schedule.
Deliveries within each month shall be scheduled in approximately equal
weekly amounts. Should Buyer be unable to accept such quantities at any time,
Seller shall have the right to sell any quantities of Products not accepted by
Buyer to parties other than Buyer.
3. QUALITY. The Products sold hereunder shall meet the specifications set
forth on Exhibit A hereto. In the event Seller's source of crude oil to the
Facility should change, Seller and Buyer shall negotiate in good faith revised
specifications corresponding to the new crude oil source.
Upon receipt of Products, Buyer shall be responsible for any testing
deemed necessary by Buyer. Should Buyer believe that any Products delivered fail
to
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<PAGE>
meet the required specifications, Buyer shall make any claim in writing to
Seller together with a copy of the results of Buyer's testing. Any claim not
made to Seller by the earlier of (a) three (3) days after receipt of the Product
or (b) processing or mixing of the Product with other material, shall be
conclusively deemed to be waived.
4. DELIVERY. All Products sold by Seller to Buyer will be sold F.O.B. the
Facility. Title to the Products and risk of loss shall pass from Seller to Buyer
when loaded into the carriers provided by Buyer at the Facility. All carriers
for the Products sold hereunder shall be provided by the Buyer.
The amount of Products delivered to Buyer shall be determined by
Seller on the basis of Seller's measurement at the Facility at the time of
loading into the carriers provided by Buyer.
5. PRICE. Pricing for each Product sold under this Agreement in any month
shall be equal to the results of the following calculation, on a weighted
average price basis using applicable pricing data at the Facility for the month
of delivery:
a. The price for slack wax sold under this Agreement shall be
computed as follows:
Price per gallon = "S" Coefficient x (0.667 x Congo rack unleaded
gasoline posted price + 0.333 x Congo posted price for number 2
fuel oil - 0.024 per gallon)
b. The price for petrolatum sold under this Agreement shall be
computed as follows:
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<PAGE>
Price per gallon = "P" Coefficient x (0.667 x Congo rack unleaded
gasoline posted price + 0.333 x Congo posted price for number 2
fuel oil - 0.024 per gallon)
The above pricing is based upon average oil content for slack wax
of 14.75 percent and for petrolatum of 18.89 percent, using 1993 ASTM test
procedure 3235, "Solvent Extractables in Petroleum Waxes."
The "S" Coefficient and "P" Coefficient under Paragraphs (a) and
(b) above shall be as follows (adjusted on May 1 of the designated year):
S P
---- ----
1995 .85 .90
1996 .90 .95
1997 .90 .95
1998 and beyond 1.25 1.95
References to "rack" prices of gasoline and number 2 fuel oil above
shall exclude taxes applicable to sales of gasoline and number 2 fuel oil
generally but Petrowax shall be responsible for payment of taxes specifically
levied on Products sold under this Agreement (which may be added to invoices for
Products sold).
c. Seller shall certify to Buyer prior to each delivery of the Product
that the Product delivered meets the specifications therefor set forth in
Exhibit A hereto. Seller's certificates shall be based upon an up and down
representative sample, and sampling shall be performed only when the entire
content of the shipping tank is in a liquid state. All such samples shall be
tested by the ASTM method set forth in Exhibit A hereto. Seller shall deliver
test results to Buyer at the time of delivery of the Product. Should Buyer
dispute such results, Buyer shall so notify Seller within three (3)
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<PAGE>
business days of receipt of Seller's analysis and in any event prior to mixing
of such Product with other material, including with the notice the results of
Buyer's testing of its sample of such delivery. In the event Seller's and
Buyer's results differ by 5% or less, the average of Buyer's and Seller's
results shall be used to determine whether any premium or penalty pursuant to
paragraph 5(d) hereof applies. Should Buyer's and Seller's results differ by
more than 5%, a sample of such delivery shall be sent to a mutually agreed
independent laboratory, whose final testing results shall be conclusive for
purposes of this Agreement. The cost of any independent testing shall be borne
equally by Seller and Buyer.
Should Buyer not provide notice to Seller of a disputed test result
within the time provided above, the results of Seller's testing on such delivery
shall be deemed conclusive.
d. The above prices shall be subject to adjustment, upward or
downward, as follows:
i. As a quality premium, upward by $0.007 per gallon for each
1% below 18.89% oil content for petrolatum or below 14.75% oil content
for slack wax.
ii. As a quality penalty, downward by $0.007 per gallon for each
1% above 18.89% oil content for petrolatum or above 14.75% oil content
for slack wax. The maximum oil content for any products acceptable to
Buyer is 25% and Buyer shall not be obligated to purchase any Products
with oil content in excess of 25%.
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<PAGE>
iii. Penalties or premiums applicable to Products delivered in
any month shall be accumulated and netted at the end of such month.
Any net premium or penalty shall be paid by Buyer or Seller on or
before the 15th day of the month succeeding the month of delivery.
e. Seller shall receive a payment of 1% of Buyer's realized net
price for finished waxes derived from the respective Products. The term
"realized net price" shall mean Buyer's sales price less applicable commissions
for the respective finished waxes.
6. BILLING AND PAYMENT. Buyer shall remit payment to Seller for all
products sold hereunder on the 15th day of the month following the month in
which such products were delivered. Any amount not paid when due shall bear
interest at the rate of 1.25% per month until paid in full.
In no event shall Seller be obligated to extend more than $150,000 of
credit to Buyer (increased to $300,000 upon confirmation of Buyer's plan of
reorganization in its Chapter 11 bankruptcy proceeding). If Buyer exceeds the
applicable credit limit, Seller shall not be obligated to ship Products to Buyer
unless such shipments are paid for by wire transfer immediately prior to
shipment or amounts owing in excess of the credit limit have been paid in full.
In addition, Seller reserves the right to require payment in advance of
shipment, or other security satisfactory to Seller, in the event Buyer should
fail to make timely payment for Products delivered hereunder.
7. TAXES. Buyer shall reimburse Seller for any sales, use or excise taxes
imposed on Seller with respect to the sale to Buyer of the Products delivered
hereunder
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<PAGE>
by any local, state or federal governmental body, whether such tax is presently
in effect or is imposed after the execution of this Agreement.
8. WARRANTY. Seller warrants that it has and will have good and marketable
title to all Products delivered and sold hereunder and that the Products will
meet the specifications therefor set forth in Exhibit A hereto. Other than the
specifications set forth on Exhibit A, Seller makes no representation or
warranty whatsoever, express or implied with respect to the Products and Seller
specifically DISCLAIMS AND EXCLUDES FROM THIS AGREEMENT THE IMPLIED WARRANTIES
OF MERC ABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE.
9. REMEDY. Buyer's sole and exclusive remedy in the event of delivery of
Products that do not conform to oil content specifications set forth in Exhibit
A hereto shall be a price adjustment for such Products pursuant to paragraph
5(c); provided, however, that Buyer shall have the option to reject delivery of
Products the oil content of which exceeds 25% based upon the results of testing
by a mutually agreed independent laboratory as provided in paragraph 5(c)
hereof. Buyer's sole and exclusive remedy in the event of delivery of Products
that do not conform to the specifications, other than oil content, set forth on
Exhibit A or in the event oil content exceeds 25% based upon the results of
testing by a mutually agreed independent laboratory as provided in paragraph
5(C) hereof. Buyer's sole and exclusive remedy in the event of delivery of
Products that do not conform to the specifications, other than oil content, set
forth on Exhibit A or in the event oil content exceeds 25% based upon the
results of testing by a mutually agreed independent laboratory as provided in
paragraph 5(C) hereof shall be a refund of the price paid and transportation
costs incurred by Buyer for such Products upon return thereof to Seller. Seller
shall have the right to sell Products rejected by Buyer to parties other than
Buyer. In the
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<PAGE>
event Buyer should wrongly reject any delivery of Products, Buyer shall be
responsible for all transportation costs incurred for such Products.
In no event shall Seller have any liability to Buyer for indirect,
incidental or consequential damages or for lost profits or business, even if
advised of the possibility that such damages may be incurred.
10. FORCE MAJEURE. Neither party shall be liable for any failure to
perform hereunder due to any cause beyond its reasonable control, including, but
not limited to, acts of God, fires, floods, wars, sabotage, accidents, strikes,
lockouts, or other labor disputes, shortages of labor, materials, or crude oil,
governmental law, ordinances, rules and regulations, whether valid or invalid
(including, but not limited to, priorities, requisitions, allocations and price
adjustment restrictions), inability to obtain material, equipment or
transportation, and any other circumstance or circumstances of a similar or
different nature. The party whose performance is prevented by any such
contingency shall have the right during the period of such contingency to
exclude such portion of the quantity deliverable during such period as is
prevented by such contingency from being delivered, whereupon the total quantity
deliverable under this Agreement shall be reduced by the quantity so excluded.
In the event a party's ability to perform hereunder is affected only in part by
force majeure as defined above, such party shall continue to perform its
obligations hereunder to the extent not affected by such force majeure.
A party affected by force majeure shall promptly notify the other
party of the existence thereof and the anticipated duration and effect upon its
ability to perform hereunder. Such party shall thereafter exercise its
reasonable best efforts to eliminate
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<PAGE>
the force majeure as quickly as possible; provided that, neither party shall be
required to resolve labor disputes or disputes with suppliers of raw materials
except in such party's sole discretion in accordance with its judgment as to its
best interest. The party declaring force majeure shall promptly notify the other
party when such force majeure no longer affects its ability to perform
hereunder.
11. NOTICES. Notices under this Agreement may be given by personal
delivery, mail or by fax. Any notice required or permitted to be given hereunder
shall be deemed received when received by U.S. mail, postage prepaid, registered
or certified; notices shall be deemed received when sent if sent by fax. All
notices shall be sent as follows:
To Seller, to:
Quaker State Corporation
255 Elm Street
Oil City, PA 16301
Attn: Vice President/Manufacturing
FAX: (814) 676-7030
To Buyer, to:
Petrowax PA Inc.
505 West Main Street
Smethport, PA 16749
FAX: (814) 887-7790
Attention: President, copy to
Tom Causer
12. DEFAULT. A party shall be in default hereunder in the event of the
occurrence of any of the following:
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<PAGE>
a. Such party should default in the performance of any of its
obligations hereunder, which default remains uncured thirty (30) days following
receipt of notice specifying the nature of the default from the non-defaulting
party; or
b. If any decree or order is entered by a court adjudicating such
party a bankrupt or insolvent or approving as properly filed a petition seeking
reorganization of such party under the federal Bankruptcy Code, or any other
similar federal or state law, and such decree or order shall have continued
undischarged or unstayed for a period of thirty (30) days; or a decree or order
of a court for the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of such party or a substantial part of its
property, or for the winding up or liquidation of its affairs shall have been
entered and such decree or order shall have remained in force undischarged
or unstayed for a period of thirty (30) days; or
c. Such party shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy petition
against it, or shall file a petition or answer or consent seeking reorganization
under the federal Bankruptcy Code or any other similar federal or state law, or
shall consent to the filing of any such petition, or shall consent to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or a substantial part of its assets, or shall make an
assignment for the benefit of creditors (other than as contemplated by this
Agreement), or shall admit in writing its inability to pay its debts generally
as they become due, or corporate action shall be taken by such party in
furtherance of any of the foregoing actions; or
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<PAGE>
d. Buyer shall be in default of its obligations under that certain
Ground Water Processing Remediation Agreement dated April 22, 1994 between Buyer
and Seller, after giving effect to the expiration of all cure periods contained
therein.
e. Buyer shall be in default of its obligations under that certain
Amendment, Agreement and Joint Release dated April 22, 1994 between Buyer and
Seller (the "Amendment").
In the event of any such default, the non-defaulting party may at its
option terminate this Agreement by written notice, without prejudice to any
other rights or remedies available to the non-defaulting party by reason of such
default.
13. PRECONDITION TO EFFECTIVENESS. This Agreement shall not become
effective, and neither party shall incur any liabilities or obligations to the
other party in respect hereof, if any event of default as defined in the 1990
Slack Wax Agreement has occurred after the date of the Amendment which results
in a termination of that Agreement.
14. GOVERNING LAW. This Agreement shall be deemed a contract under and
shall be construed and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania.
15. INTEGRATED AGREEMENT. This Agreement together with the Asset
Agreement as amended by the Amendment, the Amendment and the other agreements
contemplated thereby constitute the complete and final agreement of the parties
related to the subject matter hereof, and no statements or agreements, oral or
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<PAGE>
written, made prior to or at the execution hereof shall vary or modify the
terms, conditions or provisions hereof.
16. NO WAIVER. No waiver by either party of one or more rights of
termination or defaults by the other party in the performance of this Agreement
shall operate or be construed as a waiver of any future or continuing rights,
options or defaults, whether of a like or different character.
17. ASSIGNMENT. This Agreement shall inure to and be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that neither Seller nor Buyer shall assign this Agreement or any interest herein
without the prior written consent of the other party. Prior to May 1, 1997,
notwithstanding the foregoing, Buyer shall have the right to assign this
Agreement as security to a lender, a group of lenders, or other persons or
entities which provide financing to Buyer, if such lenders so require and Seller
shall, following any foreclosure by such lenders, sell Products to such lenders
or their assignees in accordance with the terms hereof, provided that this
Agreement shall terminate if within sixty (60) days after a foreclosure, the
lenders (or their assignees pursuant to foreclosure) fail to permit or allow
Seller to process and continue processing waste water at the Emlenton Wax Plant
or McKean Plant or both such facilities at a cost to Seller not exceeding that
provided for in that certain Ground Water Processing Remediation Agreement dated
April 22, 1994 between Seller and Buyer ("Processing Agreement"). Buyer may also
assign this Agreement, at any time to any entity which is controlled by,
controls, or is under control with, Buyer and may also assign this Agreement at
any time to any one owner of one or both of the
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<PAGE>
Emlenton Wax Plant and McKean Plant so long as such assignee continues to
operate one or both of such facilities and the Products are being used as charge
stock to such facility or facilities and further provided that such assignee
assumes all of Buyer's obligations under the Asset Agreement and Buyer's
obligations to process waste water at such facility under the Processing
Agreement, and further provided that such assignee's credit worthiness has been
approved by Quaker State, which approval shall not be unreasonably withheld.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers the day and year first above set forth.
QUAKER STATE CORPORATION
By:
---------------------------------
Title:
------------------------------
PETROWAX PA INC., debtor and debtor-in-
possession
By:
---------------------------------
Title:
------------------------------
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<PAGE>
EXHIBIT C
GROUND WATER PROCESSING REMEDIATION AGREEMENT
This Agreement is made and entered into this 22nd day of April, 1994
by and between Petrowax Pa, Inc., a Delaware corporation, debtor and
debtor-in-possession ("Petrowax") and Quaker State Corporation, a Delaware
corporation ("Quaker State").
BACKGROUND
Petrowax and Quaker State entered into an Asset Purchase and Sale
Agreement dated as of March 30, 1990 ("Asset Agreement"). The Asset Agreement,
among other things, transferred ownership from Quaker State to Petrowax of a
manufacturing facility known as the Emlenton Wax Plant located in Emlenton,
Pennsylvania (the "Emlenton Wax Plant") and a manufacturing plant known as the
McKean Plant located in Farmer's Valley, Pennsylvania (the "McKean Plant").
On September 20, 1990, Petrowax received ground water sampling results
which indicated the presence of petroleum in the ground water beneath the
Emlenton Wax Plant. These results were reported to the Pennsylvania Department
of Environmental Resources ("DER") in accordance with Pennsylvania law and to
Quaker State, pursuant to Sections 10.2(h)(iv) and 12.1 of the Asset Agreement.
Quaker State subsequently hired consultants to perform hydrogeologic
investigations at the Emlenton Wax Plant and McKean Plant. The consultants
prepared reports for submission to the DER, proposing a ground water recovery
and treatment project for the ground water beneath the Emlenton Plant and the
McKean Plant (collectively, the "Ground Water Project").
<PAGE>
Quaker State has proposed to Petrowax to use the Emlenton Wax Plant's
and the McKean Plant's on-site waste water treatment systems as part of the
Ground Water Project.
Petrowax and Quaker State wish to enter into an agreement regarding
the terms and conditions under which Quaker State may use the Emlenton Wax
Plant's and McKean Plant's on-site waste water treatment systems for the Ground
Water Project.
This Agreement is entered into pursuant to a certain Amendment,
Agreement and Joint Release dated April 22, 1994 between Petrowax and Quaker
State ("Amendment").
In consideration of the mutual covenants and agreements contained
herein, the parties agree as follows:
1. USE OF WASTE WATER TREATMENT SYSTEM. During the term of this
Agreement and subject to the terms and conditions hereof, Petrowax agrees that
Quaker State may utilize the waste water treatment systems at the Emlenton Wax
Plant and McKean Plant (collectively, the "Plants") to treat ground water
recovered as part of the Ground Water Project, provided such use is consistent
with the respective plants' National Pollutant Discharge and Elimination System
("NPDES") Permits and Pennsylvania Industrial Waste Water Permits and complies
with applicable federal and state laws, regulations, permits, orders and local
ordinances. Based on the foregoing and on the terms and conditions of this
Agreement, Petrowax agrees to process up to forty (40) gallons per minute of
contaminated ground water delivered to its waste water treatment system at the
Emlenton Wax Plant and up to eighty (80) gallons per minute of
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<PAGE>
contaminated ground water delivered to its waste water treatment system at the
McKean Plant. Quaker State shall not be obligated to utilize waste water
treatment processing of Petrowax, but in that event shall receive no
consideration from Petrowax.
2. INSTALLATION OF A RECOVERY SYSTEM. Quaker State shall, at its
expense, install a ground water recovery system, including all associated
equipment necessary to operate such system and to deliver waste water for
treatment to the entry port at the Plants' waste water treatment systems. Quaker
State shall also install a meter or meters to monitor the flow of waste water
directly to the waste water treatment systems at the Plants. Quaker State will
be responsible for any permitting costs, and all electricity and other costs in
connection with pumping contaminated ground water up to the entry port at
Petrowax's waste water treatment facilities, including maintenance of equipment,
and should Petrowax pay for any of the foregoing, Quaker State agrees to
promptly reimburse Petrowax upon presentation of third party invoices or other
appropriate documentation. Quaker State shall retain liability for any Disposal
(as defined in the Asset Agreement) occurring up to the entry port.
3. INCREASED COSTS. Quaker State shall bear the Increased Costs of
treating ground water recovered as part of the Ground Water Project. "Increased
Costs" shall mean any additional capital costs over and above those that would
be incurred by Petrowax in its operation of the wastewater treatment plant
(whether required by present or future regulation or law, requirements of any
governmental authority, or otherwise,) to modify or upgrade the wastewater
treatment plant in order to process the
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<PAGE>
delivered ground water, or any increase in operating costs attributable to the
treatment of the ground water. If, because of the treatment of the ground water,
any sludge or solids from the wastewater treatment are rendered hazardous or
require treatment or disposal which results in increased costs to Petrowax,
those costs shall be paid by Quaker State upon written notice of the amount
thereof.
For increased capital costs, Quaker State shall have the option of
performing the work, or authorizing Petrowax to perform the work. All such
authorizations shall be in writing, except as provided in the following
paragraph. If Quaker State elects not to perform the work it shall pay the
invoices of Petrowax's contractor or supplier directly upon presentation of
invoice. For increased operating costs, Quaker State shall pay those costs
within thirty (30) days of invoicing by Petrowax.
Failure of Quaker State to respond to Petrowax in writing within thirty
(30) days after Petrowax gives Quaker State written notice of anticipated
Increased Costs in the nature of capital costs shall constitute authorization to
Petrowax to perform the work. Should Quaker State notify Petrowax in writing
within such thirty (30) day period that it disputes that increased capital costs
are Increased Costs hereunder, or notifies Petrowax within thirty (30) days of
invoice of operating costs claimed by Petrowax to be Increased Costs hereunder
that Quaker State disputes that such operating costs are Increased Costs, either
party may submit such dispute to binding arbitration by a neutral single
arbitrator satisfactory to the parties selected from the list of company
environmental attorneys maintained by the American Petroleum Institute ("API")
as possible third party
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<PAGE>
neutrals. Should the parties be unable to agree upon an arbitrator within 30
days after a party has requested arbitration, either party may request the API
to select the arbitrator. The arbitration shall be conducted under the rules of
the American Arbitration Association, with each side bearing its own costs
except the cost of the arbitrator, which shall be shared equally. Discovery
shall be controlled by the arbitrator and shall be permitted to the extent set
out in this Section. Each party may submit in writing to a party, and that party
shall so respond, to a maximum of any combination of thirty-five (35) (none of
which may have subparts) of the following: interrogatories, demands to produce
documents and requests for admission. Each party is also entitled to take the
oral deposition of one (1) individual of another party. Additional discovery may
be permitted upon mutual agreement of the parties. The arbitrator shall control
the scheduling so as to process the matter expeditiously. The parties may submit
written briefs. The arbitrator shall rule on the dispute by issuing a written
opinion within thirty (30) days after the close of hearings. The times specified
in this Section may be extended upon mutual agreement of the parties or by the
arbitrator upon a showing of good cause.
4. STORAGE AND DISPOSAL OF HYDROCARBON PRODUCT RECOVERED. Quaker State
shall be responsible at its sole cost for storing, treating, recycling and
disposing of all non-dissolved hydrocarbon product recovered during the Ground
Water Project in accordance with all applicable federal, state and local laws,
regulations, permits and approvals, including but not limited to the Spill
Prevention Control and Countermeasure Plan. Quaker State shall provide all
storage tanks required to store the
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<PAGE>
recovered hydrocarbon product. Quaker State shall provide for the timely removal
of all recovered hydrocarbon product from the Emlenton Wax Plant and the McKean
Plant. At Petrowax's request, Quaker State shall provide to Petrowax copies of
all shipping documents and/or disposal manifests relating thereto as required by
applicable
law.
5. OPERATING FEES. (a) Except for Earned processing (as hereinafter
defined), Quaker State shall pay Petrowax the following for processing
furnished, plus any Increased Costs:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Period through 5/2/96- 5/2/97- 5/2/98-
------ 5/1/96 5/1/97 5/1/98 and
thereafter
---------------------------------------------------------------------------
Charge per $30.00 $25.00 $20.00 $10.00
1,000
gallons
---------------------------------------------------------------------------
---------------------------------------------------------------------------
All payments shall be due within ten (10) days after invoicing.
(b) Except for early termination as provided in Section 5(c),
processing shall be Earned for such number of years as is equal to (i) two times
the number of years (prorated for partial years) beginning May 1, 1995 that
Quaker State continues to supply Products to Petrowax or its permitted assignees
under the Slack Wax and Petrolatum Sales Agreement dated the date hereof and
executed pursuant to the Amendment ("1994 Slack Wax Agreement ") plus (ii) one
year for each year (prorated for partial years) after the end of the term of the
1994 Slack Wax Agreement that Quaker State continues to supply Petrowax or its
permitted assignees with Products at
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<PAGE>
the Wind-down Period prices. The terms "Products" and "Wind-down Period" shall
have the meanings ascribed to them in the 1994 Slack Wax Agreement.
(c) Notwithstanding that processing cannot be Earned by Quaker State
except be supplying Products after May 1, 1995, Quaker State shall be entitled
to receive processing at no cost (other than Increased Costs) under this
Agreement beginning on the date the Amendment is approved by the Bankruptcy
Court, in anticipation of its supplying of Products after May 1, 1995 under the
1994 Slack Wax Agreement. If Quaker State ceases supply of Products under either
the Slack Wax and Petrolatum Agreement dated April 30, 1990 (the "1990 Slack Wax
Agreement") or the 1994 Slack Wax Agreement (collectively, the Slack Wax
Agreements) prior to the end of the Wind-down Period for more than thirty (30)
days for reasons other than default under this Agreement by Petrowax or either
of the Slack Wax Agreements by Petrowax or its permitted assignees or the
temporary existence of a Force Majeure Event (as defined in Section 7) of either
of the Slack Wax Agreements affecting Quaker State or Petrowax or its permitted
assignees, then the Earned period, if any, shall end, water treatment processing
provided under this Agreement for periods thereafter shall be subject to charge
as set forth in Section 5(a) above, and Quaker State shall pay Petrowax at the
rates set forth in Section 5(a) for processing previously furnished but not
Earned (as defined in Section 5(b) above). (For the purpose of clarity, it is
agreed that if Quaker State supplies Products to Petrowax or its permitted
assignees under the 1990 Slack Wax Agreement through its expiration and under
the 1994 Slack Wax Agreement through May 1, 1996, all processing hereunder
through May 1, 1996 shall have been Earned.)
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<PAGE>
6. TERM. The term of this Agreement shall begin on the date the
Amendment is approved by the Bankruptcy Court and shall continue for the period
for which processing is Earned and thereafter so long as Quaker State continues
to request and pay for processing in connection with the Ground Water Project,
provided, however, that in no event shall Petrowax be required to provide
processing under this Agreement after May 1, 2014.
7. FORCE MAJEURE. In no event shall Petrowax be liable to Quaker State
or be deemed in default or in breach of any of its obligations under this
Agreement for delay or failure to provide processing hereunder if such delay or
failure is due to war, fire, explosion, flood, accident, strike, riot, act of
governmental authority, act of God, labor interruption or strike, interruption
in power supply, or any other contingency beyond the reasonable control of
Petrowax ("Force Majeure Event"). In the event of the occurrence of a Force
Majeure Event, the performance of Petrowax under this Agreement shall be excused
for the period of the disability. Petrowax shall use reasonable efforts,
promptly after it has actual knowledge of the beginning of a Force Majeure
Event, to notify Quaker State of the delay, of the reason therefor, and of the
probable duration and the consequences thereof. Petrowax shall also use
reasonable efforts to eliminate the Force Majeure Event and to resume
performance with the least possible delay.
8. DEFAULT. (a) A party shall be in default hereunder (other than by
reason of a Force Majeure Event) in the event that such party shall default in
the
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<PAGE>
performance of any of its obligations hereunder, which default remains uncured
forty-five (45) days following receipt of notice specifying the nature of the
default from the non-defaulting party, unless the cure would require more than
45 days, in which case the party shall not be deemed in default if it has
promptly commenced diligent efforts to cure the default following notice and
continues such efforts until such default is cured. In the event of any such
default, the non-defaulting party may at its option terminate this Agreement by
written notice. Any termination by Petrowax by reason of Quaker State's default
hereunder shall not limit Petrowax's rights to payment of any fee due hereunder
for prior processing. Any termination by Quaker State by reason of Petrowax's
default hereunder shall entitle Quaker State to terminate delivery of Products
under the Slack Wax Agreements, but in the event of any such termination Quaker
State shall be entitled to any processing Earned but not utilized prior to
termination.
(b) In the event that (i) either or both of the Plants ceases to operate
for more than sixty (60) days (other than temporarily by reason of a Force
Majeure Event) and (ii) Petrowax or its assignees notify Quaker State in writing
that no further purchases of Products shall be made under the Slack Wax
Agreements, then provided that Quaker State continues to be given access to the
nonoperating Plant or Plants for the purpose of processing wastewater at Quaker
State's own cost, Quaker State shall have no claim for damages against Petrowax
under or arising out of this Agreement for the failure of Petrowax to furnish
waste water processing at that Plant or Plants. In the event that prior to the
confirmation of a plan of reorganization for Petrowax in its Chapter 11
proceeding Quaker State is neither furnished processing at a Plant by Petrowax
pursuant
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<PAGE>
to this Agreement nor is Quaker State provided access to the Plant for
performing processing itself, and provided that the reason for such
nonperformance and unavailability of access is other than a Force Majeure Event,
then Quaker State shall be entitled to damages for breach of this Agreement to
compensate it for processing Earned but not utilized, but such damages shall not
exceed an amount equal to the price per 1,000 gallons set forth in the table in
Section 5(a) hereof multiplied by the number of 1,000 gallons for which Quaker
State reasonably would have requested and been able to obtain processing at that
Plant for a time period equal to the remaining period for which processing has
been Earned but not utilized.
9. EFFECTS OF GROUND WATER PROJECT. If at any time Petrowax reasonably
determines that any work on the Ground Water Project is causing or threatening
to cause (1) any disruption, breakdown or malfunction of the on-site treatment
plant or (2) the violation of any federal, state or local law or the terms and
conditions of any applicable federal, state or local permits (including, without
limitation, the NPDES or Pennsylvania Industrial Waste Water Permits at the
Emlenton Wax Plant or the McKean Plant), Petrowax may shut down the delivery of
services hereunder. Any penalties assessed as a result of actions by Quaker
State shall be paid by Quaker State.
10. PRECONDITION TO EFFECTIVENESS. This Agreement shall not become
effective, and neither party shall incur any liabilities or obligations to the
other party in respect hereof, unless and until this Agreement is approved by
the U.S. Bankruptcy Court having jurisdiction over the chapter 11 proceeding of
Petrowax.
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<PAGE>
11. ASSIGNMENT. This Agreement may not be assigned or transferred by
either party without the prior written consent of the other party, except that
Petrowax may assign this Agreement to any owner of the Emlenton Wax Plant or the
McKean Plant, which assumes all of Petrowax' obligations under this Agreement.
12. MISCELLANEOUS. (a) This Agreement shall constitute the entire
agreement between the parties with respect to the subject matter hereof.
(b) This Agreement may be amended or supplemented only by written
agreement of the parties hereto.
13. GOVERNING LAW, PARTIES IN INTEREST. This Agreement shall be
governed by the laws of the Commonwealth of Pennsylvania and shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assignees. For the purpose of clarity, it is agreed
that this Agreement shall not be binding upon Sanwa Business Credit or any other
lender of Petrowax or upon any purchasers, assignees or other transferees of
such assets from or through such lenders or directly from Petrowax, unless a
party expressly assumes this Agreement in writing; provided that, if Sanwa
Business Credit or such other lender or any purchaser of such assets from or
through such lenders or directly from Petrowax shall not, within sixty (60) days
after a sale or foreclosure, permit Quaker State to process and continue
processing wastewater at the Plants, at a cost to Quaker State not exceeding
that provided for in this Agreement, then the Slack Wax Agreements shall
terminate. Petrowax and Quaker State agree that no obligations under this
Agreement, express or implied, shall be
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<PAGE>
imposed upon any such asset purchaser unless such asset purchaser agrees to
assume such obligations.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their respective names as of the date and year first above
written.
PETROWAX PA, INC., Debtor and
Debtor in Possession
By:
-------------------------------------
Title:
----------------------------------
QUAKER STATE CORPORATION
By:
-------------------------------------
Title:
----------------------------------
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<PAGE>
EXHIBIT D
REVISED FORM OF ENVIRONMENTAL NOTE
$ Date:
--------------- ---------------
FOR VALUE RECEIVED, Petrowax PA Inc., a Delaware corporation
(hereinafter called "PPI"), hereby promises to pay, in lawful money of the
United States of America, Quaker State Corporation, a Delaware corporation
(hereinafter called "Quaker State"), at Quaker State's offices at Oil City,
Pennsylvania, or at such other place as Quaker State shall designate in writing,
the principal sum of _______________ ($_______________), together with interest
thereon from the date hereof until paid at the rate of 9% per annum. Interest
shall be calculated on a year of 360 days of 12, 30-day months.
Commencing on the date hereof and until all principal and interest has
been paid in full, accrued and unpaid interest under this Environmental Note
shall be due and payable quarterly on January 1, April 1, July 1 and October 1
in each year.
During the Repayment Period (as defined below), principal under this
Environmental Note shall be due and payable in equal quarterly installments. The
amount of each quarterly installment of principal shall be calculated by
dividing the total amount of the principal sum as of the date of this
Environmental Note by the number of quarters within the Repayment Period. The
Repayment Period shall be the period commencing on the earlier of (i) the date
on which all Superior Debt (as defined below) has been paid in full and (ii)
July 1, 1999, and ending on December 31, 2008; PROVIDED, that if the date hereof
is after the date on which the Repayment Period would otherwise have commenced,
the Repayment Period shall commence on the date hereof. All unpaid principal and
interest shall be due and payable on December 31, 2008. PPI shall, subject to
the provisions of this Environmental Note set forth below, have the right to
prepay in whole or in part the amount owing to Quaker State hereunder, at any
time and without penalty.
The occurrence of any of the following shall constitute an Event of
Default under this Environmental Note:
1. PPI fails to make any payment to Quaker State of interest on this
Environmental Note when the same shall have become due and payable, and such
failure is not cured within ten (10) days after receipt of written notice of
such nonpayment;
2. PPI fails to make any payment to Quaker State of principal under
this Environmental Note, when the same shall have become due and payable, and
such failure is not cured within ten (10) days after receipt of written notice
of such nonpayment;
<PAGE>
3. PPI is in material default in the due and punctual payment of any
other obligation owed by the undersigned to Quaker State and such default is not
cured within ten (10) days after receipt of written notice of such default; or
4. Sanwa Business Credit Corporation shall have declared the full
principal amount of the Sanwa Note (as defined below) to be immediately due and
payable following the occurrence of an event of default thereunder, or the
holder of any Superior Debt (other than the Sanwa Note) shall have foreclosed on
any collateral pursuant to the terms of any agreement governing such Superior
Debt; or
5. PPI is adjudicated a bankrupt, or an order is made approving a
petition seeking reorganization or readjustment of PPI under the federal
bankruptcy laws or other similar law or statute of the United States of America
or of any state, or a trustee or receiver is appointed of all or substantially
all of the property of PPI (other than the preexisting proceeding for
reorganization under Chapter 11 of the United States Bankruptcy Code identified
as Case No. 92-210);
6. PPI admits in writing its inability to pay its debts as they
become due, files a petition in bankruptcy or makes a general assignment for the
benefit of creditors or consents to the appointment of a receiver or trustee of
all or any part of its property (other than the preexisting proceeding for
reorganization under Chapter 11 of the United States Bankruptcy Code identified
as Case No. 92-210); or
7. Final judgment or judgments for the payment of money is or are
rendered against PPI, which judgment or judgments individually or in the
aggregate exceed $1,000,000 and remain undischarged for a period of thirty (30)
days during which execution shall not be effectively stayed.
Upon the occurrence and continuation of an Event of Default, and
subject to the provisions of this Environmental Note set forth below, Quaker
State may, by notice in writing delivered to PPI, declare the entire principal
amount and accrued interest, if any, on this Environmental Note immediately due
and payable, and such principal and interest shall thereupon become and be
immediately due and payable.
This Environmental Note is being executed by PPI and delivered to
Quaker State pursuant to the terms of that certain Asset Purchase and Sale
Agreement (the "Agreement") dated as of March 30, 1990 as amended by Amendment,
Agreement and Release dated April 22, 1994, by and between PPI and Quaker State
and represents PPI's apportioned share of certain Remedial Costs, excluding
Ground Water Costs (each as defined in the Agreement), as more fully described
therein. Pursuant to Section 10.4(b) of the Agreement, Quaker State has agreed
to indemnify PPI against certain claims as more fully described therein. Quaker
State hereby agrees that PPI, in accordance with Section 10.4(d) of the
Agreement, has the full and absolute right, but not the obligation, to set-off
against any amount due or which, with the passage of time, will become due
hereunder (including both principal and interest), any amounts which Quaker
State may from time to
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<PAGE>
time owe PPI pursuant to Section 10.4(b) of the Agreement. Such right of set-off
is in addition to any other remedies PPI may have under the Agreement or
otherwise and shall be deemed exercised only upon PPI giving Quaker State
written notice of PPI's election to set-off.
Subordination Provisions
The indebtedness ("Environmental Debt") evidenced by this
Environmental Note is subordinated and junior in right of payment to all
Superior Debt (as defined herein).
For the purpose of this Environmental Note the term "Superior Debt"
shall mean any and all principal, interest, penalties, expenses and other
amounts at any time payable under or with respect to (i) the Promissory
Note of PPI executed or to be executed payable to Sanwa Business Credit
Corporation in the original principal amount of $6,750,000 (the "Sanwa
Note"), (ii) any revolving credit agreement entered into by PPI, (iii) any
equipment acquisition facility entered into by PPI, (iv) any agreements
refinancing any of the foregoing, and (v) any other indebtedness permitted
by any of the foregoing, unless such other indebtedness is by its terms
expressly subordinated to any of the foregoing. The Superior Debt shall
continue to be Superior Debt and be entitled to the benefits of these
subordination provisions irrespective of any amendment, modification or
waiver of any term of the Superior Debt or extension or renewal of the
Superior Debt or any increase in the principal amount thereunder.
No direct or indirect payment (in cash, property or securities or by
set-off or otherwise) shall be made or agreed to be made on account of the
principal of, or premium, if any, or interest on any Environmental Debt, or
in respect of any redemption, retirement, purchase or other acquisition of
any of the Environmental Debt so long as any amounts shall remain due or
payable under the Superior Debt; PROVIDED, HOWEVER, that PPI may make
payments on the Environmental Debt pursuant to the terms hereof if and to
the extent that such payments do not contravene any of the provisions set
forth herein under the heading "Subordination Provisions".
Notwithstanding any provisions to the contrary, upon the occurrence of
any condition or event which would constitute any default or event of
default with respect to any Superior Debt, or in any instrument under which
the same is outstanding, which permits the holder or holders of any of the
Superior Debt to accelerate the maturity thereof then, unless and until
such condition or event shall have been cured or waived or shall have
ceased to exist, no direct or indirect payment (in cash, property or
securities or by set-off or otherwise) shall be made or agreed or attempted
to be made on account of the principal of, or premium, if any, or interest
or otherwise on any Environmental Debt, or as a sinking fund for the
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<PAGE>
Environmental Debt, or in respect of any redemption, retirement, purchase or
other acquisition of any of the Environmental Debt.
In the event of:
(i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to PPI or its property,
(ii) any proceeding, voluntary or involuntary, for the liquidation,
dissolution or other winding-up of PPI, whether or not involving insolvency or
bankruptcy proceedings,
(iii) any general assignment, other than as security, for the benefit of
creditors by PPI, or
(iv) any other marshalling of the assets of PPI,
then all Superior Debt (including any interest thereon accruing at the legal
rate after the commencement of any such proceedings and any additional interest
that would have accrued thereon but for the commencement of such proceedings)
shall first be paid in full before any payment or distribution, whether in cash,
securities or other property, shall be made to Quaker State. Any payment or
distribution, whether in cash, securities or other property, which would
otherwise (but for these subordination provisions) be payable or deliverable in
respect of Environmental Debt shall be paid or delivered directly to the holders
of the Superior Debt and then in accordance with the priorities then existing
among such holders until all Superior Debt (including any interest thereon
accruing at the legal rate after the commencement of any such proceedings and
any additional interest that would have accrued thereon but for the commencement
of such proceedings) shall have been paid in full.
The Environmental Debt shall not be declared in default or due and payable
as the result of the occurrence of any event in respect thereof and no payment
shall be made in respect of any Environmental Debt (except as otherwise
expressly provided herein) unless and until all Superior Debt shall have been
paid in full.
If any payment or distribution, whether in cash, securities, or other
property, shall be received by Quaker State in contravention of any of the terms
hereof, such payment or distribution shall be received in trust for the benefit
of, and shall be paid over or delivered and transferred to, the holders of the
Superior Debt at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all such debt
remaining unpaid, to the extent necessary to pay all such debt in full. In the
event of the failure of Quaker State to endorse or assign any such payment or
distribution, each holder of Superior Debt is hereby irrevocably authorized to
endorse or assign the same.
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<PAGE>
No present or future holder of any Superior Debt shall be prejudiced
in the right to enforce subordination of Environmental Debt by any act or
failure to act on the part of PPI. The foregoing provisions as to
subordination are solely for the purpose of defining the relative rights of
the holders of the Superior Debt, on the one hand, and Quaker State, on the
other hand. Nothing contained herein shall impair, as between PPI and
Quaker State, the obligation of PPI, which is unconditional and absolute,
to pay to Quaker State the principal hereof and interest hereon as and when
the same shall become due and payable in accordance with the terms hereof,
or prevent Quaker State from exercising all rights, powers and remedies
otherwise permitted by applicable law or hereunder upon the occurrence of
any condition or event which constitutes a default or event of default
hereunder, all subject to the rights of the holders of the Superior Debt to
receive cash, securities or other property otherwise payable or deliverable
to Quaker State.
When the aggregate amount received by the holders of the Superior Debt
equals all amounts owed to the holders of the Superior Debt, Quaker State
shall be subrogated to all rights of any holders of such Superior Debt to
receive any further payments or distributions applicable to the Superior
Debt until the Environmental Debt shall have been paid in full, to the
extent that distributions otherwise payable with respect the Environmental
Debt have been applied to the payment of Superior Debt. Any payments or
distributions received by Quaker State by reason of such subrogation,
whether in cash, securities or other property which otherwise would be paid
or distributed to the holders of Superior Debt, shall, as between PPI and
its creditors other than the holders of other Superior Debt, on the one
hand, and Quaker State on the other hand, be deemed to be a payment by PPI
on account of Superior Debt and not on account of Environmental Debt.
Nothing contained in the foregoing shall reduce the amounts owed by PPI to
Quaker State hereunder and PPI agrees, subject to the terms of this
Environmental Note, that it is obligated to make payment in full to Quaker
State hereunder.
Quaker State will take such action (including, without limitation, the
delivery of this instrument to an agent for the holders of Superior Debt or
the filing of a financing statement with respect thereto) as may, in the
opinion of counsel designated by the holders of any of the Superior Debt at
the time outstanding, be necessary or appropriate to assure the
effectiveness of the subordination effected by these provisions.
No failure or delay on the part of any holder hereof to exercise any
of the rights hereunder shall be deemed a waiver of any of such rights or of any
default hereunder.
PPI hereby waives demand, presentment for payment, notice of dishonor,
protest, notice of protest and notice of non-payment of this Environmental Note.
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<PAGE>
This Environmental Note may be sold, assigned or transferred by Quaker
State to any other party, upon written notice to PPI, provided that such
purchaser, assignee or transferee shall have assumed the payment obligations of
Quaker State under Section 10.1(l) of the Agreement and the indemnification
obligations of Quaker State under Section 10.4(b) of the Agreement. This
Environmental Note may not otherwise be sold, assigned or transferred to any
other party without the express written consent of PPI. This Environmental Note
shall be binding not only upon PPI and Quaker State, but also upon their
permitted successors and/or assigns.
In the event any legal proceedings to enforce this Environmental Note
are commenced, the prevailing party shall be entitled to recover from the other
party all reasonable attorneys' fees and costs incurred in such proceedings,
including appeals and postjudgment execution.
This Environmental Note shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, PPI has caused this Environmental Note to be
executed by its duly authorized officer as of the date first above written.
PETROWAX PA INC.
By:
-------------------------------------
Title:
----------------------------------
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<PAGE>
AGREEMENT
This Agreement (hereinafter the "Agreement") is made as of this 1st day of
October, 1996 by and between Lube & Wax Ventures, L.L.C. (hereinafter "L&W"), a
Delaware limited liability company and Astor Corporation (hereinafter "Astor"),
a Delaware corporation.
WHEREAS, L&W, and L&W's affiliates, including Big West Oil Company and
Coastal Refining and Marketing, Inc., the member companies of L&W, desire L&W to
sell to Astor certain petroleum wax streams constituting heavy vacuum gas oil
and vacuum tower bottoms which meet the standards set forth herein (the
"Products"); and
WHEREAS, Astor and its affiliates desire Astor to purchase the Products
from L&W; and
WHEREAS, L&W and Astor wish to enter into an agreement pursuant to which
L&W shall sell the Products to Astor.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Except as otherwise provided herein, capitalized terms used herein
shall have the following meanings:
"Daily Average Volume Per Month" with respect to any Product shall mean the
average number of barrels of such Product purchased by Astor per day over such
calendar month.
"Koch" shall mean the average for the calendar month of the daily posted
price per barrel for Koch Oil Company's West Texas Intermediate crude oil,
posted under the designation West Texas/New Mexico Intermediate; provided,
however, that if Koch Oil Company ceases to post prices for West Texas
Intermediate crude oil, then the term "Koch" shall refer to the replacement
index chosen by the parties hereto pursuant to the provisions of this Agreement.
"Producers Price Index" shall mean the index of producers prices that the
Bureau of Labor Statistics of the U.S. Department of Labor publishes monthly;
provided, however, that if the Producers Price Index ceases to be published the
term "Producers Price Index" shall refer to the replacement index chosen by the
parties hereto pursuant to the provisions of this Agreement.
ARTICLE II
TERM
2.1 The term of this Agreement shall be ten years commencing October 1,
1996 and ending October 1, 2006.
<PAGE>
ARTICLE III
PRODUCTS
3.1 L&W shall make available for sale to Astor heavy vacuum gas oil
("HVGO") and vacuum tower bottoms ("VTB") refined at the Big West refinery in
Salt Lake City, Utah meeting the standards agreed upon in writing by both
parties hereto.
3.2 The Products shall be derived from yellow wax crude oil from the
Altmont, Blue Bell, Natural Buttes and Cedar Rim fields in North East Utah.
3.3 The Products shall meet the distillation parameters set forth in
Exhibit A attached hereto.
3.4 The parties hereto shall agree in writing to the level of asphaltines
permitted to be contained in the Products and to the sampling, analysis and
testing procedures that shall apply to the Products.
3.5 Astor shall have the option to reject any Products not meeting the
specifications agreed upon in writing or set forth in this Agreement or to
accept any such Products at an adjusted price to be negotiated by the parties
hereto.
ARTICLE IV
QUANTITIES AND PRICING
4.1 (a) Astor shall purchase from L&W and L&W shall make available to
Astor HVGO and VTB at the prices and in the minimum quantities set forth below:
PRODUCT MINIMUM DAILY AVERAGE PRICE F.O.B. FLYING J
- ------- VOLUME PER MONTH REFINERY
---------------- --------
HVGO 1800 barrels Koch plus a premium of
$7.85 per barrel
VTB for deliveries to Astor's 200 barrels Koch plus a premium of
plants and to $5.00 per barrel
customers East of the
Mississippi River
VTB for sale to firelog 400 barrels Koch plus a premium of
manufacturers or other $7.00 per barrel
customers West of the
Mississippi River
2
<PAGE>
(b) If Koch Oil Company ceases to post prices for West Texas Intermediate
crude oil, the parties hereto shall use their best efforts to agree to an
acceptable replacement index as soon as is reasonably practicable.
(c) If, in addition to the minimum Daily Average Volume Per Month set
forth in Section 4.1(a), Astor lifts an amount constituting up to and including
10% of the Daily Average Volume Per Month of any Product, the price set forth in
Section 4.1(a) shall apply to such purchase. If, in addition to the minimum
Daily Average Volume Per Month set forth in Section 4.1(a), Astor lifts an
amount constituting more than 10% of the Daily Average Volume Per Month of any
Product, the price to apply to such purchase shall be negotiated by Astor and
L&W.
(d) If Astor lifts less than the minimum Daily Average Volume Per Month of
any Product and such shortfall exceeds 10% of such minimum Daily Average Volume
Per Month, with the exception of shortfalls attributed to railroad or refining
operations, Astor shall pay an additional $1.00 per barrel constituting such
shortfall.
(e) If L&W provides less than the minimum Daily Average Volume Per Month
of any Product and such shortfall exceeds 10% of such minimum Daily Average
Volume Per Month, with the exception of shortfalls attributed to railroad or
refining operations, L&W shall pay to Astor $1.00 per barrel constituting such
shortfall.
4.2 Either party may request a renegotiation of minimum Daily Average
Volume Per Month and/or price 90 days prior to each October 1, commencing
October 1, 1997, until the termination date of this Agreement. Should the
parties be unable to reach agreement on the renegotiation price or minimum Daily
Average Volume Per Month within 90 days, the then existing prices and minimum
Daily Average Volumes Per Month set forth in the then current Agreement shall
continue to be in effect until the next succeeding October 1, at which time the
Agreement shall terminate. Any changes to minimum Daily Average Volume Per
Month or prices agreed upon by the parties hereto shall be manifested in the
form of a written amendment to this Agreement as provided in Section 8.5.
4.3 Beginning November 1, 1997, any premium payment required to be made by
Astor pursuant to this Article IV shall reflect an annual adjustment for
inflation as described in this Section 4.3. After such date, the premium amount
specified in Section 4.1 shall be multiplied by the fraction represented by the
Producers Price Index for the September immediately preceding the date of such
payment divided by the Producers Price Index for September 1996. If the
Producers Price Index ceases to be published, the parties hereto shall use their
best efforts to agree to an acceptable replacement index to be used as described
in this Section 4.3 as soon as is reasonably practicable.
4.4 All prices referred to herein are F.O.B. the Big West refinery in Salt
Lake City, Utah.
4.5 Upon the lifting by Astor of any Product pursuant to this Agreement,
L&W shall have and is hereby granted a purchase money security interest in such
Product and the proceeds therefrom to secure the payment of the purchase price
as provided herein for such Product.
3
<PAGE>
4.6 Astor shall deliver to L&W an irrevocable letter of credit in the
amount of One Hundred Seventy-Five Thousand Dollars ($175,000) (the "Default
Letter of Credit") containing terms and conditions to be negotiated by Astor and
L&W. In the event that Astor fails to pay the purchase price of any Product
when due as provided in this Agreement, L&W may immediately draw on the Default
Letter of Credit.
ARTICLE V
SCHEDULING
5.1 The parties hereto agree to work together to provide for the most
efficient manufacturing and delivery system for the Products in order to
facilitate rateable production and lifting of the Products.
5.2 Each party shall use its best efforts to advise the other party
concerning the scheduling of refinery unit turnarounds, modifications, or other
events which may have an impact on operations.
5.3 On or before the 20th day of each calendar month Astor shall provide
L&W with a forecast of its lifting requirements and schedule relating to the
Products for the next succeeding three calendar months. Astor shall communicate
to L&W any changes scheduled in volume of Products to be lifted constituting an
increase or decrease of more than 10% of scheduled volume. On or before the
30th day of each calendar month, L&W shall provide Astor with a forecast of the
quantities of the Products available for the next succeeding three calendar
months.
ARTICLE VI
MEASUREMENTS; TITLE; TAXES
6.1 The quantities of HVGO and VTB sold hereunder to Astor shall be
determined by metering or measuring quantities of such Products as such Products
enter rail cars, trucks or storage tanks provided by Astor at the Big West
refinery in Salt Lake City, Utah.
6.2 Title to and risk of loss for Products sold hereunder shall pass from
L&W to Astor as the Products pass the flange at the point of loading into rail
cars, trucks, or storage tanks provided by Astor at the Big West refinery in
Salt Lake City, Utah.
6.3 All references to quantities hereunder shall include adjustment of
volumes to 60DEG. F.
6.4 L&W warrants that federal, state, and local excise taxes on the
Products sold and delivered hereunder which accrue or have accrued on sales
under this Agreement have been paid or shall be paid by L&W.
4
<PAGE>
ARTICLE VII
PAYMENTS
7.1 L&W shall invoice Astor for amounts due hereunder by the third day of
each calendar month following the month of delivery. Invoices are to be
telefaxed and mailed to:
Fred Schrantz
Astor Corporation
Petrowax Refining Division
Intersection of Routes 46 & 446
P.O. Box 3367
Farmers Valley, PA 16749
Phone: 814-887-5501
Telefax: 814-887-2356
7.2 Payments shall be due hereunder on the seventh day of the calendar
month as provided in Section 7.5; provided, however, that any delay in the
telefaxing and mailing of invoices as provided in Section 7.1 hereof shall cause
the due date for the payment relating to such invoice to be extended by an equal
number of days.
7.3 Invoiced payments due hereunder which are not timely made by Astor as
provided herein shall be subject to interest charges at the rate of 12% per
annum from the payment due date.
7.4 If a payment due date falls on a Saturday, Sunday, or a banking
holiday in the State of New York, payment shall be due on the next business day.
7.5 All payments to L&W shall be made by wire transfer in immediately
available funds in accordance with written instructions provided by L&W to
Astor.
5
<PAGE>
ARTICLE VIII
GENERAL TERMS
8.1 Force Majeure
(a) Except in respect of the obligation to pay money due with respect to
Products previously delivered, neither party shall be responsible to the other
for any failure to fulfill any term of this Agreement caused by circumstances
beyond the reasonable control of the party failing to fulfill such term,
including, but not limited to, acts of God or the public enemy, declared or
undeclared war, embargoes, sabotages, strikes, lock-outs or stoppages or other
restraints of labor, explosion, or fire, storms, floods, lightning or other
severe adverse weather conditions, accident, breakdown or other failure of
plant, machinery, facilities, roadways, or railroads and acts under cover of
governmental authority. Upon the occurrence of any event of Force Majeure that
prevents L&W from supplying some or all of Astor's requirements of the Products
under the terms hereof, Astor shall have the right to purchase that portion of
its requirements from any available alternate source and shall not be liable to
L&W for payments on such portion purchased from such alternate source. If L&W
is unable to deliver orders from Astor for at least 45 consecutive days due to
an event of Force Majeure, Astor may terminate this Agreement by delivery to L&W
of written notice to such effect. If Astor is unable to perform its obligations
under this Agreement for at least 45 consecutive days due to an event of Force
Majeure, L&W may terminate this Agreement by delivery to Astor of written notice
to such effect. In the event of any such termination of this Agreement, neither
party shall be liable for any damages to the other party resulting from such
non-delivery or termination. Capacity constraints caused by orders from other
customers of L&W shall not constitute an event of Force Majeure excusing L&W's
delay or failure to perform hereunder.
(b) At any time when a party's obligations hereunder have been excused by
reason of force majeure, such party shall give prompt notice thereof to the
other party. The parties agree to work together to mitigate the adverse impact
of, and the delay caused by, a force majeure event.
8.2 Jurisdiction
This Agreement shall be governed and construed in accordance with the laws
of the State of Utah, without reference to any conflict of law rules.
8.3 Assignment
(a) This Agreement shall not be assignable by either party without the
prior written consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that no such written consent shall be
required for assignments of this Agreement to a party's subsidiary, parent or
other affiliate. The party assigning this Agreement with the written consent of
the other party shall remain as guarantor of its obligations hereunder;
provided, however, that if L&W so assigns this Agreement, Big West Oil Company
and Coastal Refining and Marketing, Inc. shall also remain guarantors of its
obligations hereunder as defined in Section 4.1(e) hereof.
6
<PAGE>
(b) Nothwithstanding the foregoing, L&W hereby consents to the assignment
of this Agreement by Astor to The Chase Manhattan Bank.
(c) The Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto.
8.4 Notices
Except as otherwise provided herein, all notices, consents, requests,
instructions, approvals and other communications provided for herein shall be
given in writing by telefax followed by hand or prepaid overnight delivery to
the following addresses:
If to L&W:
Lube & Wax Ventures, L.L.C.
P.O. Box 678
Brigham City, Utah 84302
Attn: R. E. Germer
Tel.: 801-734-6420
Fax: 801-734-6543
If to Astor Corporation:
Astor Corporation
8521 Six Forks Road, Suite 105
Raleigh, North Carolina 27615
Attn: Joseph L. Sauve
Tel.: 919-846-8011
Fax: 919-846-8283
or to such other address as either party hereto shall designate to the other
party in writing as hereinabove provided. Notices hereunder shall be deemed to
be received at the date of receipt of a written confirmation of the transmittal
of the telefax.
8.5 Amendment
(a) The provisions of this Agreement may be modified or amended only by a
written document signed on behalf of each of the parties hereto.
(b) The parties agree that in the event a new facility is constructed by
L&W or its affiliates for the deoiling, dewaxing, or deasphalting of the
Products (the "Facility"), this Agreement may be amended to provide for the
purchase by Astor under negotiated terms of petroleum wax products produced at
such Facility by L&W.
7
<PAGE>
8.6 New Facility
The parties hereto agree that in the event the Facility is constructed,
Astor shall be offered an equity participation interest in such Facility at an
unpromoted basis.
8.7 Entire Understanding
This Agreement contains the entire understanding between the parties with
respect to the transactions contemplated hereby.
8.8 Other Documents
Each party agrees to execute and deliver all documents and to do all other
things reasonably necessary to effectuate the purposes of this Agreement in the
most expeditious manner.
8.9 Counterparts
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed to be an original.
8.10 Headings
The article, section and other headings in this Agreement are for
convenience only and shall not be interpreted in any way to limit or change the
subject matter of this Agreement.
8.11 Waiver; Severability
(a) No waiver by either party of any breach of the terms and conditions of
this Agreement shall be construed as a waiver of any subsequent breach of the
same or any other terms and conditions.
(b) The provisions of this Agreement are severable and, in the event that
any arbitration panel or court of competent jurisdiction shall determine that
any one or more of the provisions or part of a provision contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement. This Agreement
shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of a provision, had never been contained herein, and such
provisions or part reformed so that it would be valid, legal and enforceable to
the maximum extent possible.
8
<PAGE>
8.12 Default
(a) In the event either party hereto should fail to keep and perform any
agreement contained herein, the non-defaulting party may give written notice of
such default to the defaulting party and, in the event such default is not cured
by the defaulting party within 10 days after receipt of such notice, the non-
defaulting party may, at its option and without further notice, declare this
Agreement canceled and terminated. Any such action on the part of a non-
defaulting party shall in no way diminish any other legal or equitable right
which the non-defaulting party may have against the defaulting party for such
breach of contract.
(b) In the event either party becomes insolvent, or goes into bankruptcy,
voluntarily or involuntarily, or is placed in the hands of a receiver, or makes
an assignment for the benefit of its creditors, then the other party shall have
the right, at its option, to terminate this Agreement.
(c) As provided herein, in the event that L&W fails to supply all or a
portion of the Products to Astor pursuant to the terms of this Agreement, Astor
shall not be required to lift or to pay L&W for any such Products not so
supplied, and Astor's failure to so lift or pay shall not constitute a default
or event of default hereunder.
8.13 Remedies
Enforcement of any provisions of this Agreement shall not be affected by
any previous waiver or course of dealings, and election of any particular remedy
shall not be exclusive of any other. The rights granted herein shall be in
addition to any rights each party may have against the other on account of a
material breach or default by the other party.
8.14 Arbitration
(a) Subject to subsection (b) of this Section 8.14, in the event a dispute
arises that concerns this Agreement, the party prevailing in such dispute shall
be entitled to recover all of its reasonable fees and expenses, including,
without limitation, reasonable attorneys' fees and expenses, incurred in
connection therewith, whether or not such dispute is litigated to a final
judgment.
9
<PAGE>
(b) Any and all disputes arising between the parties in any way, manner or
respect, out of or from or related to this Agreement, including the negotiation,
interpretation, performance, breach or termination hereof shall be settled
through amicable discussion between the parties. If amicable settlement cannot
be reached, the matters in dispute shall be resolved exclusively by binding
arbitration pursuant to the Rules of the American Arbitration Association. Any
arbitration shall be conducted by a panel of three arbitrators, one of such
arbitrators to be chosen by each of Astor and L&W and the third arbitrator to be
chosen by the first two arbitrators, and shall be held in the City of New York,
State of New York or such other location as may be mutually agreeable. The
parties agree to exclude any right of application or appeal to any court in
connection with any question of law arising in the course of the arbitration
except for purposes of enforcing this arbitral agreement or the award and except
that either party may apply to any court of competent jurisdiction for
injunctive relief or other interim measures in support of arbitration. Any such
application shall not be deemed incompatible with this Agreement or as a waiver
of this Agreement. The arbitrators shall have the right to assess the costs of
arbitration, including the legal fees and other costs incurred by any party,
against the losing party or in such other manner as they deem just. The award
of the arbitrators shall be final and binding and may be entered and enforced by
any court of competent jurisdiction. The parties agree to submit to the
jurisdiction of any such court for purposes of enforcement of any award, order
or judgment. Any arbitration proceeding hereunder shall be conducted on a
confidential basis.
10
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
LUBE & WAX VENTURES, L.L.C. ASTOR CORPORATION
By: /s/ Illegible By: /s/ Joseph L. Sauve
----------------------------- -----------------------------
Name: R. E. Illegible Name: Joseph L. Sauve
----------------------------- -----------------------------
Title: Title: Vice President
--------------------------- ---------------------------
By: /s/ K.O. Johnson
--------------------------------
Name: K.O. Johnson
--------------------------------
Title: Executive Committee
-------------------------------
11
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
- -------------------------------------------------------------------------------------------------------------------
HVGO VTB
- -------------------------------------------------------------------------------------------------------------------
Parameter Method Minimum Typical Maximum Minimum Typical Maximum
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Distillation D 1160
- -------------------------------------------------------------------------------------------------------------------
5% 725 1015 1017 ---
- -------------------------------------------------------------------------------------------------------------------
95% --- 1052 1090 --- --- ---
- -------------------------------------------------------------------------------------------------------------------
Viscosity @ D 2161 --- --- --- 155 158 170
210 DEG. F.
SUS
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
A-1
<PAGE>
MSC HOLDINGS, INC.
1995 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as
of the Date of Grant indicated below by and between MSC Holdings, Inc., a
Delaware corporation (the "Company"), and the person named below as Employee.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER THAT ACT AND UNDER APPLICABLE STATE SECURITIES LAW
OR MSC HOLDINGS, INC. (THE "COMPANY") SHALL HAVE RECEIVED AN OPINION OF ITS
COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THAT ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. THE SALE,
TRANSFER OR OTHER DISPOSITION OF THE SECURITIES IS ALSO SUBJECT TO
COMPLIANCE WITH THE TERMS AND CONDITIONS OF THAT CERTAIN STOCKHOLDERS
AGREEMENT, DATED AS OF JUNE 27, 1995, AS SUPPLEMENTED, MODIFIED AND AMENDED
FROM TIME TO TIME, AMONG THE COMPANY AND THE STOCKHOLDERS, OPTIONHOLDERS
AND WARRANTHOLDERS SIGNATORY THERETO, A COPY OF WHICH AGREEMENT IS
AVAILABLE FOR INSPECTION DURING REGULAR BUSINESS HOURS AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY.
WHEREAS, Employee is an employee of the Company and/or one or more of
its subsidiaries; and
WHEREAS, pursuant to the Company's 1995 Stock Option Plan (the
"Plan"), the committee of the Board of Directors of the Company administering
the Plan (the "Committee") has approved the grant to Employee of an option to
purchase shares of the Class D Common Stock (as defined below), on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. GRANT OF OPTION; CERTAIN TERMS and Conditions. The Company hereby
grants to Employee, and Employee hereby accepts, as of the Date of Grant, an
option to purchase the number of shares of Class D Common Stock indicated below
(the "Option Shares") at the
<PAGE>
Exercise Price per share indicated below, which option shall expire at 5:00
o'clock p.m., California time, on the Expiration Date indicated below and shall
be subject to all of the terms and conditions set forth in this Agreement (the
"Option"). On each of the first, second, third, fourth and fifth anniversaries
of June 28, 1995 (each a "Vesting Date"), the Option shall become exercisable to
purchase, and shall vest with respect to, that number of Option Shares (rounded
to the nearest whole share) equal to the total number of Option Shares
multiplied by the Vesting Rate indicated below (the "Options Subject to
Vesting"), PROVIDED, HOWEVER, that no Option shall vest upon a Vesting Date
unless:
(a) the Company's EBITDA (as defined in the Facility Agreement, dated
as of June 16, 1995, among Petrowax PA, Inc., a Delaware corporation, and ABI
Acquisition 2 Plc, a corporation organized under the laws of England, as initial
borrowers, the Company, MSC Holdings II, Inc., a Delaware corporation, and other
entities named therein, as initial guarantors, Union Bank of Switzerland, as
arranger, facility agent and security trustee, and others) shall be equal to or
greater than ninety percent (90%) of the Target EBITDA (as defined in Exhibit A
hereto) for the fiscal year immediately preceding such Vesting Date (the "EBITDA
Condition"); or
(b) the Committee, in its sole discretion, elects, notwithstanding
the non-satisfaction of the EBITDA Condition for a particular Vesting Date, to
cause the vesting of all or any portion of the Options Subject to Vesting for
such Vesting Date (the "Committee Vesting Condition").
Accordingly, if both the EBITDA Condition and the Committee Vesting Condition
are not satisfied on any given Vesting Date in a particular year (each, a
"Nonvesting Year"), the Options Subject to Vesting for such Vesting Date will
not vest (the "Unvested Options"). Notwithstanding the foregoing, Unvested
Options (i) shall automatically vest upon the next succeeding Vesting Date upon
which the EBITDA Condition is satisfied, and (ii) may vest, in the discretion of
the Committee, upon any future Vesting Date.
Employee: David E. Hawkins
Date of Grant: October 30, 1995
Number of shares purchasable: 6,818
Exercise Price per share: $10.00
Expiration Date: June 28, 2005
Vesting Rate: 20%
The Option is not intended to qualify as an incentive stock option
under Section 422 of the Internal Revenue Code.
2
<PAGE>
2. ACCELERATION AND TERMINATION OF OPTION.
(a) CHANGE IN CONTROL AND OTHER EVENTS CAUSING ACCELERATION OF
OPTION. All Options shall become fully exercisable immediately prior to a
Change in Control. In addition, the Committee, in its sole discretion, may
accelerate the exercisability of the Option at any time and for any reason.
(b) Termination of Employment.
(i) TERMINATION WITHIN ONE YEAR AFTER CHANGE OF CONTROL. In
the event that Employee shall cease to be an employee of the Company or any
of its subsidiaries (such event shall be referred to herein as the
"Termination" of Employee's "Employment") for any reason, or for no reason,
within one year after a Change of Control (as hereinafter defined), then
the Option shall terminate upon the earlier of the Expiration Date or the
first anniversary of the date of such Termination of Employment.
(ii) RETIREMENT. If Employee's Employment is Terminated by
reason of Employee's retirement in accordance with the Company's
then-current retirement policy ("Retirement"), and a Change of Control
shall not have occurred within one year prior thereto, then (A) the portion
of the Option that has not vested on or prior to the date of such
Retirement shall terminate on such date and (B) the remaining vested
portion of the Option shall terminate upon the Expiration Date.
(iii) DEATH OR PERMANENT DISABILITY. If Employee's Employment is
Terminated by reason of the death or Permanent Disability (as hereinafter
defined) of Employee, and a Change of Control shall not have occurred
within one year prior thereto, then (A) the portion of the Option that has
not vested on or prior to the date of such Termination of Employment shall
terminate on such date and (B) the remaining vested portion of the Option
shall terminate upon the Expiration Date. "Permanent Disability" shall mean
the inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be
expected to result in death or that has lasted or can be expected to last
for a continuous period of not less than 12 months. Employee shall not be
deemed to have a Permanent Disability until proof of the existence thereof
shall have been furnished to the Board in such form and manner, and at such
times, as the Board may require. Any determination by the Board that
Employee does or does not have a Permanent Disability shall be final and
binding upon the Company and Employee.
(iv) OTHER TERMINATION. If Employee's Employment is Terminated
for no reason, or for any reason other than Retirement, death or Permanent
Disability, and a Change of Control shall not have occurred within one year
prior thereto, then (A) the portion of the Option that has not vested on or
prior to the date of such Termination of Employment shall terminate on such
date and (B) the remaining vested portion of the Option shall terminate on
the date that is 30 days after the date of such Termination of Employment.
3
<PAGE>
(c) DEATH FOLLOWING TERMINATION OF EMPLOYMENT. Notwithstanding
anything to the contrary in this Agreement, if Employee shall die at any
time after the Termination of his or her Employment and prior to the
Expiration Date, then (i) the portion of the Option that has not vested on
or prior to the date of such death shall terminate on such date and (ii)
the remaining vested portion of the Option shall terminate on the earlier
of the Expiration Date or the first anniversary of the date of such death.
(d) OTHER EVENTS CAUSING TERMINATION OF OPTION. Notwithstanding
anything to the contrary in this Agreement, the Option shall terminate upon
the consummation of any of the following events, or, if later, the
thirtieth day following the first date upon which such event shall have
been approved by both the Board and the stockholders of the Company:
(i) the dissolution or liquidation of the Company;
(ii) a sale of substantially all of the property and assets
of the Company, unless the terms of such sale shall provide otherwise; or
(iii) a Change of Control, if the Committee elects to
terminate the Option in connection therewith.
3. ADJUSTMENTS. In the event that the outstanding securities of the
class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property and/or a different number or kind of securities,
or cash, property and/or securities are distributed in respect of such
outstanding securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or in the event that substantially all of the property
and assets of the Company are sold, then, unless (i) such event shall cause the
Option to terminate pursuant to Section 2(d) hereof, or (ii) the terms of such
transaction provide otherwise, the Committee shall make appropriate and
proportionate adjustments in the number and type of shares or other securities
or cash or other property that may thereafter be acquired upon the exercise of
the Option; PROVIDED, HOWEVER, that any such adjustments in the Option shall be
made without changing the aggregate Exercise Price of the then unexercised
portion of the Option.
4. EXERCISE. The Option shall be exercisable during Employee's
lifetime only by Employee or by his or her guardian or legal representative, and
after Employee's death only by the person or entity entitled to do so under
Employee's last will and testament or applicable intestate law. The Option may
only be exercised by the delivery to the Company of a written notice of such
exercise, which notice shall specify the number of Option Shares to be purchased
(the "Purchased Shares") and the aggregate Exercise Price for such shares (the
"Exercise Notice"), together with payment in full of such aggregate Exercise
Price in cash or by check payable to the Company; PROVIDED, HOWEVER, that
payment of such aggregate Exercise Price may instead be made, in whole or in
part, by (i) the delivery to the Company of a certificate or certificates
representing shares of Class D Common Stock, duly endorsed or accompanied by a
duly executed stock powers, which delivery electively transfers to the Company
good and valid
4
<PAGE>
title to such shares, free and clear of any pledge, commitment, lien, claim or
other encumbrance (such shares to be valued on the basis of the aggregate Fair
Market Value (as defined in the Plan) thereof on the date of such exercise), or
(ii) by a reduction in the amount of Purchased Shares or other property
otherwise issuable pursuant to such Option (such reduction to be valued on the
basis of the aggregate Fair Market Value, on the date of Exercise, of the
additional Purchased Shares that would have been delivered to the Employee upon
Exercise of the Option), provided that the Company is not then prohibited from
purchasing or acquiring such shares of Class D Common Stock.
5. STOCKHOLDERS AGREEMENT. Upon the Date of Grant, the Employee
shall execute and agree to be bound by the terms of that certain Stockholders
Agreement among the Company and certain of its stockholders, optionholders and
warrantholders, dated June 27, 1995.
6. PAYMENT OF WITHHOLDING TAXES. If the Company becomes obligated to
withhold an amount on account of any tax imposed as a result of the exercise of
the Option, including, without limitation, any federal, state, local or other
income tax, or any F.I.C.A., state disability insurance tax or other employment
tax, then Employee shall, on the first day upon which the Company becomes
obligated to pay such amount to the appropriate taxing authority, pay such
amount to the Company in cash or by check payable to the Company.
7. NOTICES. All notices and other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed given if delivered personally or five days after mailing by certified
or registered mail, postage prepaid, return receipt requested, to the Company at
1800 Century Park East, Suite 1000, Los Angeles, California 90067, Attention:
Richard K. Roeder, or to Employee at the address set forth beneath his or her
signature on the signature page hereto, or at such other addresses as they may
designate by written notice in the manner aforesaid.
8. STOCK EXCHANGE REQUIREMENTS; APPLICABLE LAWS. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if (a) such shares have not been admitted
to listing upon official notice of issuance on each stock exchange upon which
shares of that class are then listed or (b) in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
requirement of any stock exchange listing agreement to which the Company is a
party, or any other requirement of law or of any administrative or regulatory
body having jurisdiction over the Company
9. NONTRANSFERABILITY. Neither the Option nor any interest therein
may be Transferred in any manner other than by will or the laws of descent and
distribution.
10. PLAN. The Option is granted pursuant to the Plan, as in effect on
the Date of Grant, and is subject to all the terms and conditions of the Plan,
as the same may be amended from time to time; PROVIDED, HOWEVER, that no such
amendment shall deprive Employee, without his or her consent, of the Option or
of any of Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and
5
<PAGE>
such rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon Employee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
Employee or any other person or entity then entitled to exercise the Option.
11. STOCKHOLDER RIGHTS. No person or entity shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.
12. EMPLOYMENT RIGHTS. No provision of this Agreement or of the
Option granted hereunder shall (a) confer upon Employee any right to continue in
the employ of the Company or any of its subsidiaries, (b) affect the right of
the Company and each of its subsidiaries to terminate the employment of
Employee, with or without cause, or (c) confer upon Employee any right to
participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. EMPLOYEE HEREBY
ACKNOWLEDGES AND AGREES THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY
TERMINATE THE EMPLOYMENT OF EMPLOYEE AT ANY TIME AND FOR ANY REASON, OR FOR NO
REASON, UNLESS EMPLOYEE AND THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO A
WRITTEN EMPLOYMENT AGREEMENT THAT EXPRESSLY PROVIDES OTHERWISE.
13. GOVERNING LAW. This Agreement and the Option granted hereunder
shall be governed by and construed and enforced in accordance with the laws of
the State of New York without reference to choice or conflict of law principles.
14. DEFINITIONS.
"CAPITAL STOCK" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"CHANGE OF CONTROL" means with respect to the Company (i) any sale,
transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of the Company, on a consolidated basis, in one
transaction or a series of related transactions, (ii) any transaction as a
result of which any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, whether or not
applicable) (other than an Excluded Person) is or becomes the beneficial owner,
directly or indirectly, of 50% or more of the total voting power in the
aggregate of all classes of Capital Stock of the Company then outstanding
normally entitled to vote in elections of directors, or (iii) during any period
of twelve consecutive months after the Initial Date individuals who at the
beginning of any such twelve-month period constituted the Board of Directors of
the Company (together with any new directors whose election by such Board or
whose nomination for election by the shareholders of the Company was approved by
a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was
6
<PAGE>
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office.
"CLASS A COMMON STOCK" means the Company's common stock designated as
Class A common stock, par value $.01 per share, any stock into which such common
stock shall have been changed or any stock resulting from any reclassification
of such common stock.
"CLASS B COMMON STOCK" means the Company's common stock designated as
Class B common stock, par value $.01 per share, any stock into which such common
stock shall have been changed or any stock resulting from any reclassification
of such common stock.
"CLASS C COMMON STOCK" means the Company's common stock designated as
Class C common stock, par value $.01 per share, any stock into which such common
stock shall have been changed or any stock resulting from any reclassification
of such common stock.
"CLASS D COMMON STOCK" means the Company's common stock designated as
Class D common stock, par value $.01 per share, any stock into which such common
stock shall have been changed or any stock resulting from any reclassification
of such common stock.
"COMMON STOCK" means the Class A Common Stock, the Class B Common
Stock, the Class C Common Stock, the Class D Common Stock, and all other stock
of any class or classes (however designated) of the Company the holders of which
have the right, without limitation as to amount, either to all or to a share of
the balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference.
"EXCLUDED PERSON" means (i) the Company, (ii) any employee benefit
plan of the Company or any trustee or similar fiduciary holding Capital Stock of
the Company for or pursuant to the terms of any such plan, (iii) the holders of
any Capital Stock of the Company on the Initial Date and, as to any partnership
which is a holder of the Capital Stock of the Company on the Initial Date, any
Person who holds, directly or indirectly, any beneficial interest in any such
partnership on the Initial Date, and (iv) all Related Persons of any Person
described in the foregoing clause (iii) of this paragraph.
"INITIAL DATE" means June 28, 1995.
"OPTION" means any options now or hereafter issued by the Company to
purchase Class D Common Stock.
"PERSON" means a company, a corporation, an association, a
partnership, a limited liability company, an organization, a joint venture, a
trust or other legal entity, an individual, a government or political
subdivision thereof or a governmental agency.
"PREFERRED STOCK" means the Series A Preferred Stock, the Series B
Preferred Stock and any other preferred stock of the Company issued after the
date hereof.
7
<PAGE>
"RELATED PERSON" means, with respect to any Excluded Person (i) any
Person who, directly or indirectly, controls, is controlled by or under common
control with such Excluded Person; PROVIDED, HOWEVER, that for purposes of this
definition "control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise,
and shall be deemed to include the beneficial ownership of more than 10% of the
total voting power of a Person normally entitled to vote in the election of
directors, managers or trustees, as applicable, of a Person and (ii) as to any
natural person, (A) such person's spouse, parents and descendants (whether by
blood or adoption and including stepchildren) and the spouses of any of such
natural persons and (B) any corporation, partnership, trust or other Person in
which no one has any interest (directly or indirectly) except for any of such
natural person, such spouse, parents and descendants (whether by blood or
adoption, and including stepchildren) and the spouses of any of such natural
persons.
"SHARES" means the shares of Common Stock and Preferred Stock, the
Options and the Warrants now or hereafter issued to or otherwise acquired by the
Stockholders (including acquisitions of such securities concurrently with the
execution of this Agreement and acquisitions of any such securities after the
date hereof whether or not pursuant to the terms hereof and including issuances
of any such securities pursuant to any Option or Warrant existing on the date
hereof or issued subsequent to the date hereof) and all shares of Capital Stock
or other securities (including convertible securities and the securities into
which such convertible securities convert) of the Company or any successor of
the Company issued or issuable in respect thereof as a result of any stock
dividend on, or stock split or reclassification or conversion of, or in exchange
for, any such Common Stock and Preferred Stock or issued or issuable with
respect to such Common Stock, Preferred Stock, Options or Warrants in connection
with any merger or reorganization or similar transaction involving the Company.
"TRANSFER" means any sale, exchange, assignment, transfer, pledge,
mortgage, hypothecation, gift, grant, encumbrance or other disposition of any
kind, whether voluntary, involuntary or by operation of law and whether direct
or indirect by transfer of any interest in the subject property or otherwise.
"WARRANTS" means the warrants now or hereafter issued by the Company
entitling the holders thereof to purchase shares of the Class C Common Stock.
8
<PAGE>
IN WITNESS WHEREOF, the Company and Employee have duly executed this
Agreement as of the Date of Grant.
MSC HOLDINGS, INC., a Delaware corporation
By
---------------------------------------
Title:
------------------------------------------
Signature
------------------------------------------
Street Address
------------------------------------------
City, State and Zip Code
------------------------------------------
Social Security Number
9
<PAGE>
EXHIBIT A
----------------------------------------------------------------------------
FISCAL YEAR ENDED TARGET 90% OF TARGET
MARCH 31 EBITDA EBITDA
----------------------------------------------------------------------------
1996 $19,500,000 $17,550 000
----------------------------------------------------------------------------
1997 $23,100,000 $20,790,000
----------------------------------------------------------------------------
1998 $27,000,000 $24,300,000
----------------------------------------------------------------------------
1999 $26,300,000 $23,670,000
----------------------------------------------------------------------------
2000 $27,700,000 $24,930,000
----------------------------------------------------------------------------
10
<PAGE>
ASTOR CORPORATION
MANAGEMENT BONUS PROGRAM FY 1997
The management bonus program is established as a performance incentive for
selected management of Astor Corporation. The achievement of FY 1997
performance, especially the budgeted $21.0 million EBITDA, is the key
responsibility of management. Their individual and collective leadership is
required to meet the stated goals. Those selected to participate in the bonus
program are those judged to have the greatest impact on the year's results.
BONUS POOL
The year end EBITDA result will dictate the size of the management bonus pool
available for management awards. No bonus pool will exist for performance below
$20.0, but graduated increments of EBITDA achievement will earn increasing
percentages of an individual's target bonus.
EBITDA % of Target
------ -----------
$23.0 140%
22.5 130%
22.0 120%
21.5 110%
21.0 100%
20.5 50%
20.0 25%
LESS THAN 20.0 0
BONUS % TARGETS
Individual's participating in the program have been assigned a percentage of
their base salary as their bonus target for FY 1997 It is a target only and is
not indicative of assured compensation. One's specific bonus award is dependent
on both 1.) the company's final EBITDA (size of the pool), and 2.) the given
individual's performance contribution to the year's result.
Example: A manager with a 20% target and SUPERIOR performance in FY 1997
with an EBITDA of $20.5 million will yield 10% bonus of base
salary.
20% bonus target at 50% of bonus pool x 100% performance = 10%
bonus. Final bonus contingent on individual performance
evaluation as a percentage.
ADMINISTRATION
Once the FY 1997 EBITDA has been finalized, the proposed management bonus awards
will be complied and presented to the CEO. The Compensation Committee will give
the final approval with cash payment to be made in June, 1997.
<PAGE>
ASTOR CORPORATION
FY 1997 INCENTIVE BONUS PROGRAM
Astor Corporation has established an incentive bonus program for salaried
employees to reward achievement of the 1997 performance objectives. Individual
and collective performance is required for the company to reach the $21 million
EBITDA worldwide goal. It is recognized that each salaried employee will
contribute to the company's financial growth, and will therefore be eligible for
a year end bonus.
BONUS % TARGETS
The year end EBITDA result will determine the bonus percentage. A target bonus
level of 4% of the April 1996 base salary has been set if the planned $21.0
million EBITDA is achieved. EBITDA results of $19.5 million or more will trigger
the bonus program in accordance with the following graduated schedule. The
intent is to reward performance that significantly exceeds the $18.0 million of
FY 1996.
EBITDA % Bonus
------ -------
$19.5 1%
20.0 2%
20.5 3%
21.0 4%
OUTSTANDING ACHIEVEMENT
Management believes that higher EBITDA levels are within reach, and will provide
for continuation of the bonus awards for exceeding the stated plan of $21.0
million. The company will increase bonus awards up to $25.0 million EBITDA
according to the following schedule.
EBITDA % Bonus
------ -------
$22.0 4.5%
23.0 5.0%
24.0 5.5%
25.0 6.0%
BONUS AWARDS
The Operating Board will consider all awards and issue approved cash payments
during June 1997. Individual employee bonus award calculations will be based
upon:
1) Actual year end EBITDA as of March 31, 1997
2) EBITDA graduated schedule (prorated between increments if necessary)
3) Individual's satisfactory performance
<PAGE>
AGREEMENT BETWEEN
ASTOR CORPORATION
PETROWAX REFINING DIVISION
EMLENTON PLANT
AND
OIL, CHEMICAL AND ATOMIC WORKERS
INTERNATIONAL UNION
AND
LOCAL 8-481
FEBRUARY 1, 1996 - JANUARY 31, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
----
Article I. - RECOGNITION. . . . . . . . . . . . . . . . . . . . . . . . .1
Article II. - HOURS OF WORK AND OVERTIME . . . . . . . . . . . . . . . . .2
Article III. - VACATION . . . . . . . . . . . . . . . . . . . . . . . . . .9
Article IV. - SICK AND ACCIDENT BENEFITS . . . . . . . . . . . . . . . . 12
Article V. - FUNERAL BENEFITS . . . . . . . . . . . . . . . . . . . . . 13
Article VI. - WORKERS' REPRESENTATION AND METHOD OF SETTLING
DISPUTES. . . . . . . . . . . . . . . . . . . . . . . . 13
Article VII. - ARBITRATION. . . . . . . . . . . . . . . . . . . . . . . . 16
Article VIII. - SENIORITY. . . . . . . . . . . . . . . . . . . . . . . . . 17
Article IX. - COLLECTION OF DUES . . . . . . . . . . . . . . . . . . . . 22
Article X. - BULLETIN BOARDS. . . . . . . . . . . . . . . . . . . . . . 23
Article XI. - SAFETY AND HEALTH. . . . . . . . . . . . . . . . . . . . . 23
Article XII. - MILITARY AND JURY SERVICE. . . . . . . . . . . . . . . . . 26
Article XIII. - PHYSICAL EXAMINATIONS. . . . . . . . . . . . . . . . . . . 27
Article XIV. - EMPLOYEES NOT INCLUDED . . . . . . . . . . . . . . . . . . 27
Article XV. - NONDISCRIMINATION. . . . . . . . . . . . . . . . . . . . . 28
Article XVI. - SAVINGS CLAUSE . . . . . . . . . . . . . . . . . . . . . . 28
Article XVII. - PLANT CLOSURE. . . . . . . . . . . . . . . . . . . . . . . 28
Article XVIII. - RATE RETENTION . . . . . . . . . . . . . . . . . . . . . . 29
Article XIX. - WAGE RATES . . . . . . . . . . . . . . . . . . . . . . . . 29
Article XX. - 401K PLAN. . . . . . . . . . . . . . . . . . . . . . . . . 29
Article XXI. - INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . 29
Article XXII. - MANAGEMENT RIGHTS. . . . . . . . . . . . . . . . . . . . . 30
Article XXIII. - ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 31
Article XXIV. - DURATION AND EFFECTIVE DATE OF AGREEMENT . . . . . . . . . 31
ADDENDUM - BASE WAGE RATE - SHIFT EMPLOYEES . . . . . . . . . . . . . 33
ADDENDUM - BASE WAGE RATE - DAY EMPLOYEES - MAINTENANCE
DEPARTMENT . . . . . . . . . . . . . . . . . . . . . . 34
ADDENDUM - BASE WAGE RATE - DAY EMPLOYEES - MISCELLANEOUS . . . . . . 35
ADDENDUM - BASE WAGE RATE - DAY EMPLOYEES - LABORER
CLASSIFICATION. . . . . . . . . . . . . . . . . . . . . 36
ADDENDUM B - PROGRESSION SCHEDULES . . . . . . . . . . . . . . . . . . 37
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
APPENDIX B - LIGHT/RESTRICTED DUTY PROGRAM. . . . . . . . . . . . . . . 41
<PAGE>
AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of February, 1996
between ASTOR CORPORATION, EMLENTON PLANT (hereinafter referred to as the
"Company"), and OIL, CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION, and LOCAL
NO. 8-481 (hereinafter referred to as the "Union").
WITNESSETH
WHEREAS, the majority of the production and maintenance employees of
the Company's refinery located at Emlenton, Pennsylvania, have heretofore
organized themselves into said Union as the exclusive bargaining agency for all
said production and maintenance employees as to their rates of pay, wages, hours
of work, and other conditions of employment at said refinery.
NOW, THEREFORE, the parties to this Agreement after conference for the
purpose of continuing and improving the relations between the Company and said
employees with respect to pay, wages, hours of work, and other conditions of
employment agree as follows:
Article I. - RECOGNITION
A. The Company will not interfere with the rights of its employees
to become members of the Union, and agrees that there shall be no
discrimination, interference, restraint, or coercion by it or any of its agents
against any employee because of membership or lawful activity in the Union.
B. It is agreed that the officers, agents, and members of the Union
shall not intimidate or coerce nonmembers, solicit membership, or conduct Union
business during working hours.
<PAGE>
C. It shall be a condition of continued employment that all
employees of the Company covered by this Agreement who are members of the Union
in good standing on the effective date of this Agreement shall remain members in
good standing and those who are not members on the effective date shall, within
one hundred and twenty one (121) days of the effective date of this Agreement,
become and remain members in good standing in the Union. It shall also be a
condition of continued employment that all employees covered by this Agreement
hired on or after its effective date shall, not later than the one hundred and
twenty first (121st) day following the beginning of such employment, become and
remain members in good standing in the Union.
D. The Company will, within three (3) working days after receipt of
notice from the Union, discharge any employee who is not in good standing in the
Union as required by the preceding paragraph.
E. The Union shall indemnify and save the Company harmless against
any and all claims, demands, suits or other forms of liability in any manner
arising out of or by reason of action taken or not taken by the Company for the
purpose of complying with any of the provisions of this Article.
Article II. - HOURS OF WORK AND OVERTIME
A. The normal work week shall be from 12:00 midnight Sunday to 12:00
midnight the following Sunday, and the pay period shall cover two (2)
consecutive weeks. The method of pay shall be bi-monthly and pay day shall be
every other Friday.
2
<PAGE>
The Company reserves the right to modify the work week for legitimate
business reasons.
B. All work performed by employees covered under the terms of the
Agreement shall be done by employees termed "shift" employees and 'day"
employees. The term "shift' employees as used herein shall be deemed to mean
employees who are regularly employed for a specified shift in the course of a
continuous twenty-four (24) hours per day operation, seven (7) days per week.
All other employees shall be deemed "day" employees.
C. 1. Eight (8) hours shall constitute a workday. Forty (40)
hours shall constitute a workweek; all time over eight (8) hours in any one day
or over forty (40) hours in any one week shall be overtime and will be paid for
at one and one-half (1 1/2) times the rate of pay. In computing the workday and
workweek for overtime purposes, all hours worked at premium rates of pay as
defined by Wage-Hour regulations shall be excluded; except, on the weekly basis,
hours worked on the holidays enumerated elsewhere in this Article. In addition,
if an employee works his or her eight (8) hour straight time shift, any hours
worked consecutively by that employee continuing beyond the end of the eight (8)
hour straight time shift shall be paid at 1 1/2 times their applicable rate,
whether or not the total continuous hours of work fall into the same workday or
workweek.
2. The Union recognizes that some overtime work is necessary in
the conduct of the Company's business and that the employees must accept such
overtime work when it is assigned to them unless the employees present good and
legitimate reasons that excessive personal hardship will be involved in such
overtime work. It is agreed and understood that employees may refuse overtime
work when the
3
<PAGE>
rate for such overtime is lower than that they normally received in their own
classification.
D. l. Overtime will be distributed equally as practical within a
classification and posted and revised every thirty (30) days. If an employee,
otherwise entitled to overtime is not offered it, there will be no pay for the
lost overtime opportunity, however, the situation will be rectified by offering
the employee the next available overtime. If the next available overtime is not
offered, the employee will be paid for the lost time.
2. Shift breakers' overtime earned in the yard will be carried
into the units. Overtime earned in the units will be carried back into the yard.
In the future, total overtime, regardless of where earned, will be considered
for overtime assignment for shift breakers only.
E. When maintenance employees are called out for duty at a time
other than their regular schedule and with less than seven (7) hours notice,
they will be paid for the time actually worked on call at one and one-half
(1 1/2) times their regular rate plus a bonus for each call equivalent to two
(2) hours at their regular rate, except for time actually worked on call during
the holidays specified in the Agreement, they will be paid two and one-half
(2 1/2) times their regular rate._
F. When telephone communication is available, should the Company
fail to notify employees regularly employed not to report for work at their
regular time, and such employees, in the absence of such notice, report for
work, they shall receive or be paid for four (4) hours work.
G. Shift workers shall be permitted to change shifts or days off
under certain conditions, such as funerals or other important personal reasons,
that are not
4
<PAGE>
likely to be recurring. Such shift employees may substitute work schedules among
themselves, within any given twenty-four (24) hour period from midnight to
midnight, under the following conditions: (1) approval of the superintendent or
delegated assistant is secured; (2) the time cards must show the hours worked;
(3) provided such changes do not work any overtime penalty to the Company.
H. 1. When shift employees are required to fill the place of other
shift employees, they shall receive the rate of pay that applies to that
particular job. When a Department or a Unit in a Department is shut down for
repair, cleanout, or inspection, the regular employees in the Department or on
the Unit involved shall be used to assist in doing the aforesaid work at their
regular rate of pay before bringing in employees from other Departments. When
shift employees are assigned to work elsewhere because of a temporary shutdown
of a refining operation, they will receive their regular rate of pay.
2. Any day workers engaged in maintenance and construction work
when temporarily assigned to a higher rate job, shall receive the higher rate,
and will return to their former rate at the conclusion of the temporary
assignment.
3. Employees are expected to perform any duties to which they
may be assigned, provided that it does not conflict with the provisions of this
Agreement.
4. As a normal practice, regular day workers will have two
consecutive scheduled days off per week. However, it is understood that this
does not limit a day worker to five working days per week if additional work
time is required for the efficient operation of the plant. It is further
understood that shift breakers and extra breakers are excluded from this
provision.
5
<PAGE>
5. The Company agrees to post work schedules uniformly in all
plants as nearly as possible. Both plants are now posting schedules for shift
departments only, and these are being posted by Wednesday afternoon of each
week. It has not been the practice to post day workers' schedules unless there
is a turnaround or some other unusual maintenance work.
6. Any maintenance employee working his lunch hour will be paid
overtime and given time to eat later without reduction in pay.
I. 1. Two and one-half (2 1/2) times the rate of pay will be paid
for all time worked on the following holidays:
New Year's Day Thanksgiving Day
Good Friday (eff. 2/1/98) First Day Buck Season
Memorial Day Veterans Day
Fourth of July Day before Christmas
Labor Day Christmas Day
Any holiday that falls on Saturday shall be observed on Friday by all
"day employees"; any holiday that falls on Sunday shall be observed on Monday by
all "day employees"; and said employees shall be paid for the holiday on the day
which they are off. All "shift employees" shall observe all holidays on the days
on which they fall and be paid for said holidays on the observed days.
If Christmas falls on a Saturday, the holiday will be observed on
Friday and the day before Christmas will be observed on Thursday. If the day
before Christmas falls on Sunday, it will be observed on the previous Friday.
2. Employees covered by this Agreement who have completed 120
calendar days of continuous active employment shall be paid at their regular
straight time rate for the holidays enumerated above when not required to work
on such holidays.
6
<PAGE>
3. Employees shall receive no holiday pay in accordance with
this article if:
(a) They have failed to work their last regularly scheduled
work day preceding the holiday and the next scheduled work day following the
holiday unless they are ill and present a doctor's certificate certifying to
their illness, or are absent because of the death of a member of their immediate
family or are absent because of jury duty. In any of these cases, they will be
eligible for pay for the holiday if they have worked three days of the seven
calendar days immediately preceding the holiday and three days of the seven
calendar days immediately following the holiday. Employees will be eligible for
pay for a holiday which occurs within the first thirty (30) days from the date
of illness upon presenting a doctor's certificate certifying to their illness.
In no event will holiday pay, funeral benefits, jury pay, or overtime be
duplicated or pyramided.
(b) A holiday falls during their leave of absence, absence
for disability, or layoff
(c) They refuse to work on a holiday.
4. Holidays paid for but not worked shall be used in computing
overtime for the week in which the holiday is observed for day workers only.
J. 1. All shift employees covered under the terms of this
Agreement shall be paid, when working the 4:00 P.M. to 12:00 Midnight shift, a
premium of fifty (50) cents per hour and, when working the 12:00 Midnight to
8:00 A.M. shift, a premium of $1.00 per hour.
7
<PAGE>
2. The parties agree that the shift differential will be paid
at the appropriate rate for all hours worked between 4:00 P.M. and 8:00 A.M. on
previously scheduled shifts for day workers. It is agreed that this will not
apply to the period of 7:00 A.M. to 8:00 A.M. for normal day workers' starting
time.
3. The above listed shift differentials will be included in the
base rates of pay when computing overtime.
K. 1. The matter of job security for the Company's present
refinery employees was discussed during contract negotiations. The Company
stated to the Union Committee, the Company's desire to provide job security for
the Company's present employees consistent with the needs of the business and
the efficient operation of the refinery. In order to provide job security
consistent with these principles during the term of the contract agreement:
(a) The Company will use emphasis in placing primary
reliance on its present employees in the performance of work in the plant that
they regularly and consistently perform.
(b) The Company hereby assures the Union that it desires to
accomplish future technological improvement and installation of new units and
equipment without layoff of present personnel of the Bargaining Unit. It shall
be the intent of the Company to only use outside contractors to supplement the
basic work force for legitimate business reasons. When employees are on layoff,
before subcontracting, the Company will meet with the Union to discuss the
potential use of the laid off employees. The Company shall give at least sixty
(60) days written notice prior to layoff. Thereafter, either party may request a
meeting with the other to
8
<PAGE>
discuss ways and means of avoiding the layoff or lessening the effect on the
employees involved.
L. 1. Should employees be required to work (2) hours or more
immediately preceding or following their scheduled hours of work, the Company
will provide a suitable lunch allowance to buy lunch if the employee so desires.
However it is understood that employees will not qualify for such a lunch
allowance until they have been on the job ten (10) hours or more and they will
not be paid for their time while eating lunch. A limit of $7.50 cost per lunch
is hereby established based on $7.50 supplying a suitable lunch. Meal tickets,
when issued, must be utilized within seven (7) calendar days or such tickets
shall be void.
2. Should employees be required to continue their overtime
through a second normal meal period of more than six (6) hours, they shall be
provided with a second lunch allowance to buy lunch if so desired. They will not
be paid for time while eating lunch. In cases where the Company is unable to
provide an employee with a lunch or lunches, such employee shall be paid the
same amount as is required to furnish a suitable lunch in lieu of said lunch up
to a maximum of $5.00.
Article III. - VACATION
A. All employees covered by this Agreement with less than one (1)
year of service prior to January 1st, will have their vacation prorated for that
period only. Thereafter, the present vacation qualification date of January 1st
will apply. However, the employees qualifying for prorated vacation under this
provision must complete 120 calendar days of continuous active employment with
the Company before they may exercise this vacation right.
9
<PAGE>
B. All employees covered by this Agreement who have been in the
continuous employ of the Company for one (1) year prior to January 1st in any
year will receive two (2) weeks' vacation with pay. All employees covered by
this Agreement who have been in the continuous employ of the Company five (5)
years or more prior to January 1st in any year will receive three (3) weeks'
vacation with pay. All employees covered by this Agreement who have been in the
continuous employ of the Company ten (10) years or more prior to January 1st in
any year will receive four (4) weeks' vacation with pay. All employees covered
by this Agreement who have been in the continuous employee of the Company Twenty
(20) years or more prior to January 1st in any year will receive five (5) weeks'
vacation with pay. Vacations must be taken between January 1 of the qualifying
year and December 31. Vacations shall be compulsory.
An employee who has achieved vacation eligibility for four (4) or more
weeks of vacation may elect to take one (1) scheduled week of annual vacation
one (1) day at a time or in any combination of days. This provision is subject
to the following conditions:
1. The absence must be for a full day or days on which the
employee is scheduled to work.
2. Approvals for this "split week" vacation shall be made on a
"first come" basis. Split week vacation days cannot be
scheduled during the vacation posting period.
3. All requests for split week vacation days must be scheduled
by twelve noon of the Tuesday prior to the contract work
10
<PAGE>
week. Any exception to this shall be made at the Company's
sole discretion.
4. All other provisions of the vacation policy shall apply to
these split vacation days.
C. For the purpose of establishing the initial vacation requirement
of one continuous year, no deductions shall be made for any layoffs of less than
thirty-one (31) days.
D. Vacation compensation will be based upon the hourly rate which
employees are receiving at the time of taking their vacation based on a forty
(40) hour workweek.
E. New employees qualifying for prorated vacation will receive pay
in lieu of time off for any fraction of a full day to which they may be
entitled.
F. Employees not required to take their full vacation during the
general plant shutdown shall take it at a time mutually agreeable between the
employee and the Company in line with departmental seniority. Employees must
signify their choice of additional vacation time within thirty (30) days after
"Choice of Vacation" Forms have been distributed, or have their vacation time
scheduled by the Company. "Choice of Vacation" Forms must be posted by September
1 for the vacation period starting the following January. Vacation schedules
will be posted in all departments.
G. Vacation eligibility requirement is: Absences of 45 cumulative
calendar days or less - no deduction; 46 to 90 day cumulative days --deduct
1/12 (of vacation); for every 45 day period of absence thereafter, deduct 1
additional 1/1 2 (of vacation). To reinstate eligibility for consideration
under the initial 45 calendar day
11
<PAGE>
period, the employee must complete one month of scheduled work. This requirement
will not apply to absences for on-the-job injuries or to approved absences for
union business.
H. The Company will prorate employee's vacations in all cases of
terminations except discharge for cause. In the event of death the full
qualification period will not be required.
Article IV. - SICK AND ACCIDENT BENEFITS
A. In addition to any Group Accident and Health or Compensation
benefits that may accrue to employees under existing policies, it is agreed that
full-time employees, while unable to perform their duties for more than two (2)
days due to sickness or injury, who have completed 120 calendar days of
continuous active employment with the company shall be paid at the rate of
three-quarters (3/4) of their regular rate of pay for worktime lost in excess of
said two (2) days within the first seven (7) days of their disability.
B. In the case of disability absence from on-the-job injuries that
develop into compensation insurance payments beginning on the eighth (8th) day
of such disability, full normal wage payments will prevail under the same
limitations within the first seven (7) days; however, should such disability
absence resulting from an on-the-job injury be longer than two (2) weeks, full
normal wage payments will be made for all worktime lost within the first seven
(7) days.
C. The total benefit paid for any disability claim shall not exceed
the full straight time hourly rate of the employee for the first seven (7)
calendar days of the disability.
12
<PAGE>
D. The Company's Light/Restricted Duty Program is attached hereto as
Appendix "B".
E. The weekly non-work related Health and Accident Benefit shall be
$235.00. Said benefit shall increase to $245.00, effective 2/1/97, and to
$255.00, effective 2/1/98.
Article V. - FUNERAL BENEFITS
A. When it is necessary for employees to be absent from work on
account of the death and funeral of either spouse, child, stepchild, father,
mother, sister, brother, father-in-law, mother-in-law, or, if living in the
employee's household, "in-law" or grandparents, including the spouses
grandparents, the Company will reimburse them at straight time for scheduled
worktime lost not exceeding three (3), eight (8) hour days. In all other cases
concerning the death of grandchildren, "in-laws" or grandparents, including the
spouses grandparents, not exceeding one (1), eight (8) hour day, unless unusual
travel time or other extenuating circumstances may fairly justify partial or
full extension or reimbursement up to the other three (3) days limit.
B. It is understood in all cases that for the sake of efficiency in
plant operation, the employee will need to make prior arrangement with the
Superintendent or delegated assistants in order to receive this benefit.
Article VI. - WORKERS' REPRESENTATION AND METHOD OF SETTLING
DISPUTES
A. A Workers' Committee is hereby established and shall consist of
not more than five (5) members chosen by the Union from and among the production
and maintenance employees of the Company, and there shall be not more than one
(1)
13
<PAGE>
member chosen from any one Department, except that, if the President and Steward
Chairperson are on the committee, they may be from the same department. The
Committee shall designate one (1) of its members to act as Chairperson.
B. A regular meeting of the Committee and the Company shall be held
at the office of the Company at the plant on the second Wednesday of each month,
unless otherwise mutually agreed; provided, however, that emergency meetings may
be held by mutual agreement. The Company shall keep minutes of the proceedings
and shall provide a copy of such minutes to the Union Committee. The Union
Committee shall have two (2) weeks to file a written objection to the contents
of the minutes. If no such objections filed, the minutes shall be final.
C. The names of the members of the Workers' Committee, together with
the name of the Chairman thereof, and any change in personnel thereof, shall be
certified to the Company from time to time by the proper officers of the Union
and under the seal thereof.
D. All complaints arising from discharge must be presented within
five (5) days from the date of discharge excluding Saturdays, Sundays, and
holidays. The hearing shall be confined to the charges contained in the written
complaint.
E. In the event any employee is discharged after the date hereof,
and believes such discharge unjustified, such a discharge shall constitute a
case arising under the Methods of Settling Disputes provided for herein. Unless
such complaint is in writing, setting forth the reason therefore, and is filed
with the Workers' Committee and presented by that Committee to the Company
within five (5) days from the date of discharge, excluding Saturdays, Sundays,
and holidays, it shall not be entertained. All discharge complaints, if properly
filed, must be determined, if possible, within (5)
14
<PAGE>
days from the date of filing. In the event it should be finally determined that
such discharge was not justified, the employee shall be reinstated with or
without pay for all or part of the lost time, as may be agreed upon by the
parties or directed by arbitration.
F. Members of the Committee attending necessary and duly-called
meetings during their regular hours will be afforded such time off without loss
of pay as may be reasonably required for such purposes, provided, twenty-four
(24) hours' notice is given departmental Supervisors. Committee members will not
perform their duties with respect to the investigation of disputes during
working hours without first obtaining approval from their supervisor. The
Company, in considering a request for approval, recognizes that certain work
related grievances are of such a nature that they may need to be addressed
immediately.
G. Should any difference arise between the Company and the Union as
to the meaning, application, or violation of any of the provisions of this
Agreement, or should any local trouble of any kind arise, there should be no
suspension of work on account of such differences until an earnest effort shall
be made to settle them promptly in the following manner:
1. Between the employees who may be accompanied by a
representative of the Union and the Supervisor of their department.
2. If settlement is not thus obtained, the case may be
presented to the Plant Manager or designated representative, in writing, by the
Workers' Committee within ten (10) calendar days after the date upon which the
alleged grievance occurred. Within ten (10) calendar days thereafter, the Plant
Manager or designated representative shall render a written decision.
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<PAGE>
3. If satisfactory results have not been obtained by following
the foregoing procedure, the case will then be submitted within fifteen (15)
calendar days from the Plant Manager's answer to a representative of the
International Organization of the Union and an executive of the Company or
designated representative. A written decision shall be rendered within fifteen
(15) calendar days of this meeting. Additional time, if necessary, will be
subject to mutual consent of both parties.
4. In the event the dispute shall not have been satisfactorily
settled in the proceeding steps, the matter will then be submitted to
arbitration within thirty (30) calendar days thereafter.
Article VII. - ARBITRATION
A. Should any question arise as to the meaning or interpretation of
any of the provisions of this Agreement, there shall be no suspension of work on
account thereof, but the matter shall be submitted to the Federal Mediation and
Conciliation Service who may be requested to furnish the Company and the Union a
list of seven (7) qualified members from the panel of arbitrators. The Union and
the Company will thereupon eliminate three (3) names each within seventy-two
(72) hours, excluding Saturdays, Sundays, and holidays, and the one remaining
shall arbitrate the issue.
B. The fee and expense of the arbitrator shall be borne equally by
the Union and the Company.
C. The decision of the arbitrator shall be final and binding upon
both parties, and may not be effective prior to the date on which the grievance
was first presented to the Supervisor.
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<PAGE>
D. The arbitrator shall not have the power to add to, subtract from,
or alter or modify in any way any of the provisions of this Agreement.
Article VIII. - SENIORITY
A. Employees shall have plant seniority and department seniority.
B. 1. In filling vacancies, the employer accepts the principle of
exercising due regard for the length of service, taking into account ability and
efficiency, and the general practice will be followed by promoting those who by
length of service and ability shall be deemed to have earned promotion to
regular jobs.
2. The oldest employees in point of service shall be given
preference when making promotions with their record and ability and efficiency
being given due consideration. Nothing in this Agreement shall, however,
interfere with the right of the Company to promote any individual for unusually
meritorious service or exceptional ability to special and out-of-the ordinary
jobs.
3. On layoffs and reemployment, plant seniority will apply.
The last employee hired shall be the first employee to be laid off in case of a
reduction of the plant's working force. The last employee laid off shall be the
first employee reemployed. Employees having departmental seniority and
reemployed shall return to their respective department in accordance with their
departmental seniority.
C. Seniority of employees working under this Agreement shall begin
after one hundred twenty (120) calendar days of continuous active employment by
the Company. It is understood that the Company is not required to reemploy any
former employee who has been laid off more than one (1) year.
D. 1. Departmental seniority shall commence on the date on which
employees join the department, and shall be continuous as long as they remain
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<PAGE>
in that department. It is understood that departmental seniority shall be
accumulative. When adding to any department, employees with the most accumulated
seniority in that department shall be given first opportunity.
2. In case of any permanent discontinuance of a department or
any operation therein, employees affected will be allowed to exercise any
departmental seniority which they may hold in another department and displace
therein any employee with less departmental seniority than themselves.
E. It is agreed that full seniority protection will prevail also on
the following daylight job: Gauger.
F. Any transfer within a department, or from one department to
another department, when for a period of less than thirty (30) calendar days,
shall be classed as temporary. Said thirty (30) day period may be extended by
mutual agreement of the Company and the Union. An employee so transferred shall
receive the rate of pay applicable to the job to which the employee was
transferred or the employee's regular rate of pay, whichever is higher. The rate
will be paid for actual hours worked with any part of an hour counting as a full
hour. A regular move within a job sequence shall not be considered a temporary
transfer and shall be governed by provisions of this Agreement.
G. Employees not working due to sickness shall accrue seniority
while sick up to one (1) year. Thereafter they shall continue to accrue
seniority upon presentation of a doctor's certificate mutually agreeable to both
parties. It is not the intent of this paragraph to place employees in a job for
which they have not been trained.
18
<PAGE>
H. 1. All shift jobs that become open will be posted within one
(1) week for a period of at least five (5) working days. Bids shall be submitted
for the job and the senior day employee bidding with the necessary
qualifications shall be chosen for the lowest paid job in a department, and
other operators in this department shall move to the job next higher up. An
employee who cannot move up in a sequence because of a disqualification, medical
or otherwise, shall be demoted to the bottom, full-time, five (5) day position
in the sequence and shall again proceed to move up the sequence. If the employee
is thereafter disqualified for any reason, the employee shall be displaced from
the department and must bump the junior employee, using plant seniority, in the
Helper or Extra classification, in any other department. The vacancy ultimately
created by utilizing this procedure shall be filled under the terms of the
collective bargaining agreement. The Company reserves the right, at its expense,
to require an employee who produces medical certification to submit to an
examination by a doctor chosen by the Company.
2. On entry level classification shift jobs, a minimum ten (10)
workday probationary period will be granted if the employee so desires.
Following successful completion of this probationary period, the employee will
receive the full rate for the job. On subsequent upgrades, similar training will
be provided if necessary.
I. l. All jobs that become open in the lowest rated classification
in the day force (above the classification of laborer) will be posted for bid
for at least five (5) working days and the senior employee with the necessary
qualifications will be chosen for the job. Addendum B lists normal lines of
progression for day workers.
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2. When entry level classifications (Electrician-Instrument
Helper, Helper B Insulator, Helper B Mechanic, Helper B Pipefitter, Helper B
Welder) are bid in the Maintenance Department, a ten (10) workday probationary
period will apply. Where an employee bids directly into the Painter, Rigger, or
Carpenter classification, a thirty (30) workday probationary period will apply.
Following satisfactory completion of this probationary period, the employee will
receive the full rate for the job.
If an employee has one (1) year of seniority or more at the time a job
bid is awarded to the employee, the employee shall be placed on the bid job
within forty-five (45)days of the award or, commencing on the forty-sixth (46th)
day, shall receive the shift breaker rate on said job.
J. The successful bidder who accepts any day or shift job will be
required to serve at least one full year in the department or unit before
becoming eligible to give up the job or bid on another classified job except in
the case of health, incompetence, or unusual hardship cases.
K. Those employees bidding shall place a bid in a bid box furnished
by the Company and also in a box belonging to the Union.
L. After bids have been submitted, any deviation in seniority shall
be made the subject of a conference between a Workers' Committee of three (3)
and the Company prior to placement of any employee in the position.
M. Employees who have been laid off and fail to report for duty
within five (5) days after they are notified by registered letter (copy of which
will be sent to the Local Union Secretary), shall lose their seniority rights,
unless prevented by actual illness, accident, or excessive distance to be
traveled, in which event the
20
<PAGE>
period will be extended to fifteen (15) days. To protect their seniority, it is
the employees' responsibility to keep their Supervisor informed of their proper
home address.
N. Employees may be given a trial period. In case of their failure
to qualify for the job, they shall resume the job originally vacated and accrue
seniority for the trial period.
O. Failure to qualify for any job during the trial period shall act
as a bar to an additional trial for the same job, within six (6) months, but
shall not disqualify such employee's right to bid on any other job openings.
P. Employees covered by the terms of this Agreement, who move out of
the bargaining unit, prior to February 1, 1996, to accept other positions with
the Company, shall retain the Plant and Departmental seniority which they have
acquired while in the unit. In the event they return to the bargaining unit,
they may exercise whatever Plant and Department seniority they held at the time
they left the bargaining unit. However, when employees are promoted to a
supervisory job within their department, they shall accumulate Departmental
seniority in that Department. Persons who are promoted out of the bargaining
unit subsequent to February 1, 1996, and later return to the bargaining unit,
shall be treated in the same manner as newly hired employees.
Q. Seniority lists have been compiled and will be kept available at
all times to the Workers' Committee or to any employee.
R. Leaves of absence will be granted without pay to not more than
two (2) employees limited to one (1) from any single department of under fifteen
(15) shift employees, or two (2) employees on different shift jobs from any
single
21
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department of fifteen (15) or over, at any one time to attend conventions,
council meetings, or conferences of the union not to exceed thirty (30) working
days each in any one calendar year. A six (6) months' leave of absence without
pay will be granted by the Company to one (1) Union member provided, however,
that such member is not a key employee whose absence would cause the Company
undue hardship. Such leaves will involve no loss of seniority. For any leave of
absence, the employee must be an active employee of the Company.
S. The Company agrees to provide the availability of family leave to
all employees in the event of a birth or adoption of a child or the serious
illness of a child, spouse or parent. The leave will be without pay and will be
granted for up to a maximum of twelve (12) weeks in a twelve (12) month period.
Any employee may request more than one family leave within a twelve (12) month
period, but the total time on leave within that period may not exceed twelve
(12) weeks.
Credited service will accrue during the period covered by the family
leave of absence. The leave will be granted with the understanding that the
employee will be reinstated to the position held prior to the leave or to a
comparable position.
ARTICLE IX. - COLLECTION OF DUES
A. Upon receipt of written request from any employee, the Company
shall cooperate with the Union in the collection of dues by deducting from the
wages due said employee each month the regular monthly dues specified therein as
fixed by the Union. All money so deducted by the Company shall be paid to the
Treasurer of the Union within seven (7) working days after said deductions are
made, provided, however, before paying any dues the Company shall first deduct
from any wages due an employee all monies due the Company from said employee.
22
<PAGE>
ARTICLE X. - BULLETIN BOARDS
Two bulletin boards, placed in convenient locations, shall be
furnished by the Company for Union notices concerning meetings, dues,
entertainment, health, safety, and miscellaneous reports. All notices must carry
the Union seal.
ARTICLE XI. - SAFETY AND HEALTH
A. It is mutually agreed that efforts of both the Company and the
Union shall be directed to maintaining all equipment and tools in safe and
efficient working order, and that the lawful Regulations and Safety Codes
adopted by the department of Labor and Industry, Commonwealth of Pennsylvania,
as they affect this industry in the interest of protecting the safety and health
of employees, will be observed by both the Company and the employees.
B. Inspection of any equipment or working conditions for safety
purposes may be secured upon request of any employee working on that equipment
or under those conditions, such inspection to be made by the Plant Manager or
designated assistants, together with the Supervisor in charge and the employee
making the request.
C. 1. There shall be established a joint labor-management health
and safety committee, consisting of two employee representatives of the Union
and two representatives of Management. Lost time accidents will be investigated
by the Joint Safety Committee in accordance with procedures to be developed by
the Joint Safety Committee.
2. The Company will, at its expense, provide training for the
Union-represented Health and Safety Committee members. Such training shall not
23
<PAGE>
exceed five (5) days per trainee and shall take place twice during the three
year Agreement.
It is understood that this training will be conducted by qualified
individuals, institutions, or organizations recognized in the field.
D. The Company will, from time to time, retain at its expense
qualified independent industrial health consultants, subject to the approval of
the International Union President or his designee and the Company, to undertake
industrial health surveys, as decided upon by the committee, to determine if any
health hazards exist in the work place.
E. Such surveys will include measurements of the exposures in the
work place, the results of which will be submitted in writing to the Company,
the International Union President, and the Joint Committee by the consultants,
and the results will also relate the findings to existing recognized standards.
F. The Company agrees to pay for appropriate physical examination
and medical tests at a frequency and extent necessary in light of findings set
forth in the industrial consultant's reports as may be determined by the Joint
Committee.
G. The Union agrees that each report shall be treated as privileged
and confidential to the extent that disclosure of information in the nature of
trade secrets will not be made without prior written approval of the Company.
H. At a mutually established time, subsequent to the receipt of such
survey reports, the Joint Committee will meet for the purpose of corrective
measures which are necessary in light of the industrial consultant's findings;
and to determine the means of implementing such corrective measures.
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<PAGE>
I. Within sixty (60) days following the execution of this Agreement,
and on each successive February 1st thereafter, the Company will furnish to the
Union all available current information on the morbidity and mortality
experience of its employees.
J. The Joint Committee shall meet as often as necessary, but not
less than once each month, at a regularly scheduled time and place, for the
purpose of jointly considering, inspecting, investigating, and reviewing health
and safety conditions and practices and investigating accidents, and for the
purpose of jointly and effectively making constructive recommendations with
respect thereto, including, but not limited to, the implementation of corrective
measures to eliminate unhealthy and unsafe conditions and practices, and to
improve existing health and safety conditions and practices.
K. All matters considered and handled by the Committee shall be
reduced to writing, and joint minutes of all meetings of the Committee shall be
made and maintained, and copies thereof shall be furnished to the International
Union President. Time spent in committee meetings by Union Representatives,
including walk around time during joint inspection and investigations, shall be
considered and compensated for as regularly assigned work.
L. In addition to the foregoing, the Company intends to continue its
existing industrial hygiene program as administered by Company personnel.
M. Any dispute arising with respect to the interpretation or
application of the provisions hereof shall be jointly reviewed by the
International President or designee and the President of the Company or designee
for the purpose
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<PAGE>
of resolving this dispute. Should the parties be unable to resolve such a
dispute, then the dispute shall be subject to the grievance and arbitration
procedure.
N. The Company shall furnish such employees as may be agreed upon by
the Workers' Committee and the Company the following working apparel: rain coat,
rain cap, and rubber boots. Each employee shall receive one dozen pair of
gloves, selected by the Company, on the employee's anniversary date of
employment.
0. The Company shall furnish flame retardant coats, pants, and
welding gloves for all Company welders.
P. The Company shall provide an equivalent cost safety incentive
program to the safety shoe program provided to employees covered by this
Agreement by Quaker State Corporation.
ARTICLE XII. - MILITARY AND JURY SERVICE
A. Any permanent, full-time employee who has completed 120 calendar
days of continuous active employment belonging to the United States Officers or
Enlisted Reserve or Pennsylvania National Guard shall be granted two (2) weeks
leave of absence in any one year to attend any required training, and will be
reimbursed by the Company for the difference between the compensation they would
have earned if working and any payment received from the Government. In
addition, an employee may receive a maximum of one additional week leave of
absence in the event of an emergency call-up because of state disaster or civil
disturbance control. Call-up to active duty status is explicitly excluded from
this provision.
B. It is understood that this Agreement is subject to the rights of
employees returning from military service as required by applicable State and
Federal
26
<PAGE>
laws, court decisions, and regulations of any governmental agency charged with
enforcement of such laws.
C. In the event that employees are called for jury service,
employees will be reimbursed for the difference between their normal earnings
and that earned on jury duty.
ARTICLE XIII. - PHYSICAL EXAMINATIONS
A. Employees shall not be required, as a condition of continued
employment, to submit to a physical examination by a physician in the pay of the
Company or its agent, but shall submit to a physical examination by any
reputable physician agreed upon by both parties.
B. Applicants for employment may be examined by a reputable
physician chosen by the Company.
ARTICLE XIV. - EMPLOYEES NOT INCLUDED
A. Management personnel of the Company and their assistant,
supervisors, professional employees, and clerical employees are not included in
or affected by this Agreement. The term "supervisor' as used in this Agreement
refers to persons whose work consist substantially of supervising the work of
others.
B. Supervisors may work in classified or non-classified jobs unless
such action makes it necessary to layoff or demote an employee. Supervisors may
perform tasks involving instruction and demonstration, deminimus work and such
unit work as is made necessary because of difficulties in the operation. This
provision will not be used as a means of having a supervisor displace an hourly
employee from his/her work.
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<PAGE>
ARTICLE XV. - NONDISCRIMINATION
It shall be the continuing policy of the Company and the Union that
the provisions of this Agreement shall be applied to all employees without
regard to race, color, religion, sex, age, or national origin or other legally
prohibited reason.
ARTICLE XVI. - SAVINGS CLAUSE
If any term or provision of this Agreement is, or becomes, invalid or
unenforceable by government regulation or law, such invalidity or
unenforceability shall not affect or impair any other term or provision of this
Agreement.
ARTICLE XVII. - PLANT CLOSURE
A. The Company will notify the Union in writing at least ninety (90)
days in advance of a final decision to completely close the Emlenton Plant that
will involve permanent layoff or permanent transfer of bargaining unit
employees. The Company and Union will meet within fifteen (15) days after such
written notice for the purpose of discussing the effect of such closure on
bargaining unit employees, and to negotiate appropriate conditions for
transferred employees and benefits for employees who are permanently laid off.
B. In the event the parties are unable to arrive at a satisfactory
agreement, either party shall have the right to serve a sixty (60) day written
notice to terminate the Agreement. The Union shall have the right to strike, or
the Company shall have the right to lockout at the end of the sixty (60) day
period unless a mutual agreement has been reached.
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ARTICLE XVIII. - RATE RETENTION
Employees, who by their own request, are granted a move down to yard labor must
return to the yard at the prevailing contract yard labor rate.
ARTICLE XIX. - WAGE RATES
A. A wage rate addendum will be provided the Union on request listing the wage
rates which the Company agrees to. Addendum A reflects current and projected
increases.
B. The Company agrees to place into effect the following hourly wage
increases:
Effective February 1, 1996......... Fifty (50 ) cents
Effective February 1, 1997......... Three and three quarters (3 3/4)
percent
Effective February 1, 1998......... Three and three quarters (3 3/4)
percent
ARTICLE XX. - 401K PLAN
Effective February 1, 1996, the 401K plan shall be changed to provide
that employees who contribute one percent (1%) or more of their gross wages to
the 401K plan shall receive matching funds from the Company in the amount of two
percent (2%) of said gross wages. The two percent (2%) match shall be increased
to three percent (3%), effective February 1, 1997.
ARTICLE XXI. - INSURANCE
The Company will continue to provide, during the terms of this
Agreement, the same or better life, accidental death, health, hospitalization,
dental, organ transplant, and disability insurance coverage as that previously
provided. Within ninety (90) days of February 21, 1996, the Company shall modify
its health
29
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plan to provide "Select Blue" coverage. Employees shall pay (pre-tax where
legally permitted) twenty percent (20%) of the premium of either single or
family coverage,, whichever is desired. The Company will pay the balance of the
cost. If an employee is covered under any other insurance plan providing for the
same benefits or services, there shall be no duplication of coverage provided by
the Company. For employees who retire at age 62 and thereafter, and prior to age
65, the Company will continue said employee's coverage under the group health
and dental plan, for individual coverage only, for which the employee must
contribute twenty percent (20%) of the applicable premium. Said continued
coverage, at Company expense, shall end when the employee turns age 65. If an
employee is covered under any other insurance plan providing for similar
benefits or services, he/she shall not be entitled to such coverage at Company
expense as provided herein.
ARTICLE XXII. - MANAGEMENT RIGHTS
Except as limited by the express provisions of this Agreement, the
Union recognizes that the Company shall continue to have and retain the sole and
exclusive right and authority to administer and/or manage the Company's
business, to exclusively direct the working force and the employees covered
hereby and; in addition to other functions and responsibilities not specifically
mentioned in this Agreement and, therefore, without attempting to list herein
all of these management rights, but prominent among such rights, the right and
authority of the company shall include: the right to lease or sublease; the
right to expand, sell, move, transfer and/or terminate all or part of its
operations; the right to select, hire, and lay off employees and/or to determine
the size and composition of the Company's work force; the establishment and
determination of the required jobs in the plant, including the
30
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right to eliminate or create new jobs, and the determination of reasonable
levels of productivity, quality and efficiency; the right to promote employees;
the right to discipline, suspend, or discharge employees for just cause; the
right to change or introduce any new or improved methods, materials, equipment,
or facilities; the right to determine the methods, techniques, and types of work
to be performed; the determination of the products to be manufactured; and the
right to make and enforce such rules and regulations as the Company may consider
necessary or desirable for the operation of its business. These management
rights are not all inclusive, but indicate the type of matters which belong to
and are inherent to the Company. The Company not exercising rights reserved to
it, or exercising them in a particular way, not be deemed a waiver of its
rights.
ARTICLE XXIII. - ENTIRE AGREEMENT
This Agreement supersedes and cancels all prior practices and
constitutes the complete understanding of the parties on the subject of wages,
rates of pay, hours of work, conditions of employment, and other matters subject
to collective bargaining. All employees' benefits and rights existing before the
effective date of this Agreement are superseded by this Agreement unless
expressly contained herein or otherwise agreed to by the parties.
ARTICLE XXIV. - DURATION AND EFFECTIVE DATE OF AGREEMENT
This Agreement shall continue from 7:00 A.M. February 1, 1996 to and
including, January 31, 1999, and unless terminated under the terms and
conditions of the Labor Management Relations Act, 1947, shall continue
thereafter until terminated by either party on sixty (60) days written notice,
one party to the other, or
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amended by mutual consent. Upon written notice to the Company, no earlier than
November 1, 1999, the parties agree to negotiate with respect to the wages,
benefits, local issues, hours, and working conditions of a new collective
bargaining agreement. If the parties fail to reach an agreement within sixty
(60) days after said notice, the Union shall have the right to strike any time
thereafter, but not prior to February 1, 1999, without further notice,
notwithstanding any other provisions in this Agreement to the contrary. It is
agreed by the parties that any subsequent agreement or agreements reached within
the duration of the Agreement will be in conformance with applicable federal
laws, regulations, and standards.
IN WITNESS WHEREOF, the parties hereto have caused their names to be
subscribed by their duly authorized officers the day and year first above set
forth.
ASTOR CORPORATION, PETROWAX REFINING
DIVISION,
EMLENTON PLANT
By: /s/Thomas P. Causen
--------------------------------
OIL, CHEMICAL AND ATOMIC WORKERS'
INTERNATIONAL UNION
By: /s/illegible
--------------------------------
OIL, CHEMICAL AND ATOMIC WORKERS'
INTERNATIONAL UNION, LOCAL NO. 8-481
By: /s/James L. Meyer
--------------------------------
By: /s/illegible
--------------------------------
By: /s/William E. Gares, Jr.
--------------------------------
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EMLENTON PLANT - LOCAL 8-481
ADDENDUM
BASE WAGE RATE-SHIFT EMPLOYEES
BASE RATE BASE RATE BASE RATE BASE RATE
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
08/01/95 02/01/96 02/01/97 02/01/98
RERUN DEPARTMENT
Operator $13.49 $13.99 $14.51 $15.06
Helper $12.62 $13.12 $13.61 $14.12
B.A.F. DEPARTMENT
Operator $13.49 $13.99 $14.51 $15.06
Refrigeration Attendant $13.04 $13.54 $14.05 $14.57
Filters Attendant $12.87 $13.37 $13.87 $14.39
B.A.F. Helper $12.62 $13.12 $13.61 $14.12
BOILER HOUSE DEPARTMENT
Operator $13.49 $13.99 $14.51 $15.06
Helper $12.97 $13.47 $13.98 $14.50
FILTER HOUSE DEPARTMENT
Operator $13.49 $13.99 $14.51 $15.06
Helper $12.89 $13.39 $13.89 $14.41
Retort and Clay Burn $12.60 $13.10 $13.59 $14.10
SHIPPING AND TRANSFER DEPARTMENT
Truck (Un)Loader $12.48 $13.22 $13.72 $14.23
CONTROL LABORATORY
Senior Day Tester $12.97 $13.47 $13.98 $14.50
Tester $12.69 $13.19 $13.68 $14.20
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EMLENTON PLANT - LOCAL 8-481
ADDENDUM
BASE WAGE RATE-DAY EMPLOYEES
BASE RATE BASE RATE BASE RATE BASE RATE
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
08/01/95 02/01/96 02/01/97 02/01/98
MAINTENANCE DEPARTMENT
Electrician-Instrument
Technician $13.54 $14.04 $14.57 $15.11
Instrument Technician $12.82 $13.99 $14.51 $15.06
Electrician or Instrument
Technician 2nd Class $12.68 $13.18 $13.67 $14.19
Electrician or Instrument
Technician Helper $12.48 $12.98 $13.47 $13.97
Machinist $13.15 $13.65 $14.16 $14.69
Mechanic "A" $13.15 $13.65 $14.16 $14.69
Mechanic "B" $12.73 $13.23 $13.73 $14.24
Helper "B" Mechanic $12.34 $12.84 $13.32 $13.82
Pipefitter "A" $12.98 $13.48 $13.99 $14.51
Pipefitter "B" $12.62 $13.12 $13.61 $14.12
Helper "B" Pipefitter $12.34 $12.84 $13.32 $13.82
Welder $12.98 $13.48 $13.99 $14.51
Helper "B" Welder $12.34 $12.84 $13.32 $13.82
Rigger $13.07 $13.57 $14.08 $14.61
Head Carpenter $13.07 $13.57 $14.08 $14.61
Carpenter $12.82 $13.32 $13.82 $14.34
Insulator $12.74 $13.24 $13.74 $14.25
Helper "B" Insulator $12.34 $12.84 $13.32 $13.82
Painter $12.46 $12.96 $13.45 $13.95
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EMLENTON PLANT - LOCAL 8-481
ADDENDUM
BASE WAGE RATE-DAY EMPLOYEES
BASE RATE BASE RATE BASE RATE BASE RATE
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
08/01/95 02/01/96 02/01/97 02/01/98
MISCELLANEOUS
Day Gauger $12.60 $13.10 $13.59 $14.10
Truck Unloader $12.48 $13.22 $13.72 $14.23
Truck Driver/Backhoe
Operator $12.39 $12.89 $13.37 $13.87
Helper "B" Coal Unloader $12.34 $12.84 $13.32 $13.82
Shift Breakers & Extra Shift
Employees $12.33 $12.83 $13.31 $13.81
Tool Room Attendant $12.22 $12.72 $13.20 $13.69
Shop Janitor $12.17 $12.67 $13.15 $13.64
Truck Loader/
Pumper $12.48 $13.22 $13.72 $14.23
Waste Treatment Attendant $12.72 $13.37 $13.87 $14.39
Extra Waste Treatment
Attendant $12.17 $12.67 $13.15 $13.64
Warehouse Attendant $12.75 $13.25 $13.75 $14.26
Utility Worker EXISTING LABOR RATE
35
<PAGE>
EMLENTON PLANT - LOCAL 8-481
ADDENDUM
BASE WAGE RATE-DAY EMPLOYEES
LABORER CLASSSIFICATION
BASE RATE BASE RATE BASE RATE BASE RATE
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
08/01/95 02/01/96 02/01/97 02/01/98
LABORERS EMPLOYED AFTER 1/8/82
START $7.79 $8.29 $8.60 $8.92
After 6 mo. $8.88 $9.38 $9.73 $10.10
LABORERS EMPLOYED AFTER 1/8/75
$11.35 $11.85 $12.29 $12.76
LABORERS EMPLOYED BEFORE 1/8/75
$12.17 $12.67 $13.15 $13.64
36
<PAGE>
ADDENDUM B
PROGRESSION SCHEDULES
As Amended October 1, 1977
Following a series of joint Union-Management meetings, it was agreed
on February 21, 1975, the following progression schedules:
1. Lines of progression for the day employees will be as shown in
the attached diagrams.
2. Employees with a disability will be given first consideration
when filing a permanent vacancy in the valve repair work and shop
janitor assignments.
3. The day gauger in the Filter House progression unit will become a
day employee as shown on the attached diagram.
4. Two (2) day employees in addition to the Rigger will be trained
to perform Rigging work. Permanent vacancies in the Rigger
classification will be posted for bidding.
37
<PAGE>
PETROWAX REFINING
LINES OF PROGRESSION DAY EMPLOYEES
EMLENTON PLANT
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
MISCELLANEOUS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DAY GAUGER TRUCK BACKHOE HELPER B TOOL ROOM TRUCKLOADER SHIFT/ WAREHOUSE WASTE WATER
UNLOADER OPERATOR COAL ATTENDANT PUMPER BREAKERS ATTENDANT TREATMENT
UNLOADER ATTENDANT
x x x x x x x x x
EXTRA WASTE
TREATMENT
ATTENDANT
x x x x x x x x x
x x x x x x x x x
BID BID BID BID BID BID BID BID BID
</TABLE>
<PAGE>
PETROWAX REFINING
LINES OF PROGRESSION DAY EMPLOYEES
EMLENTON PLANT
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
MAINTENANCE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRICIAN WELDER INSULATOR PAINTER RIGGER MECHANIC MACHINIST PIPEFITTER HEAD
INSTRUMENTS CARPENTER
x x x x x x x x x
INSTRUMENT
TECH x x x x x x x CARPENTER
x x x x x x x x x x
x x x x x x x x
ELECTRICIAN x x x x MECHANIC PIPEFITTER x
INSTRUMENT B B
TECH 2ND
x x x x x x x x
ELECTRICIAN
INSTRUMENT HELPER B HELPER B HELPER B HELPER B
TECH HELPER WELDER INSULATOR MECHANIC PIPEFITTER
x x x x x x x x
BID BID BID BID BID BID BID BID
</TABLE>
<PAGE>
APPENDIX "A"
The following understandings are made part of this Agreement:
(A) The Company will continue its present practice of providing call
time under ARTICLE II D to shift employees who are called out to assist on short
time call and are sent home prior to the beginning of their regular shift. Call
time shall not apply to shift employees who are called prior to their regular
shift and work into that shift.
(B) Operators may be assigned basic maintenance work that the
employee is capable of performing safely, which does not interfere with their
operating duties.
(C) l. All temporary bids will be listed as such together with the
expected duration of the opening. Employees awarded the bid shall accept it for
the duration of the opening with the right to bid off the job being the same as
that which is applicable to a permanent bid.
2. The Company will not offer overtime to temporary employees in
classifications where eligible permanent employees are available for the
overtime and have not refused it.
(D) The Company and the Union have agreed upon employees who will be
grandfathered in the job to which they were moved under the terms of the prior
agreement, after being disqualified for medical reasons from promotion within a
sequence, if those employees do not voluntarily remove themselves from such job.
Those employees are the following:
K.E. Beals
J.E. Thomas
M.E. Wimer
S.M. Orton
38
<PAGE>
(E) Bids from Shift jobs to Day jobs shall continue to be
administered in accordance with the agreement dated August 28, 1990.
(F) The parties agree that safety and health in the work place are
paramount concerns that deserve the cooperative attention of the Management and
the Union. The parties agree, therefore, to meet at the refinery or chemical
plant within sixty (60) days of a request by either the local Union or the
Management to attempt to develop a plan for utilizing the Union represented
employees from the local bargaining unit toward the objective of improving
health and safety in the plant. Such meetings may be held on non-productive
time.
(G) The Company agrees to renew the Letter of Agreement on layoffs,
plant closures, rate retention, national health insurance, and health and safety
clauses, where such Letters of Agreement exist. It is agreed no such letters or
understandings exist as of the time this Agreement was negotiated which have not
been incorporated herein. Future Letters of Agreement will not be incorporated
into the basic working Agreement.
(H) The Company will not assign temporary employees to tasks they are
not qualified to perform.
(I) The senior day light truck (un) loader will have the first
selection among the available shifts.
(J) When a holiday falls on the fifth day of a shift employee's
regularly scheduled work week, and said employee worked a scheduled day off
during that work week, the employee shall be paid for work on that fifth day as
follows:
a. time and one-half for hours worked on said holiday, plus
b. an additional one-half time for hours worked for which the
employee would have received overtime pay had the fifth day
not been a holiday, plus
39
<PAGE>
c. the employee will also receive his/her holiday pay for that
holiday.
(K) Temporary employee rate - $6.00 per hour for mowing, raking, and
also for painting where there is a regular employee at the time in the painting
classification.
40
<PAGE>
APPENDIX "B"
LIGHT/RESTRICTED DUTY PROGRAM
In an effort to provide meaningful work to employees who are not able
to report back to their full time duties after a work related illness/injury, a
light/restricted work program has been developed.
Any administration questions should be to the Manager of Human
Resources.
The program will operate as follows:
An employee returning to work on a light/restricted duty basis must:
1. Provide a return to work slip from the doctor stating the
restrictions and the time frame for the employee to resume full
duties. This return to work slip must be furnished to the Manager
of Human Resources.
2. The maximum time for an employee to be on light/restricted duty
for any one continuous illness or injury is six (6) months. There
will be only one light/restricted duty for a continuous problem.
3. If the doctor states light/restricted duty can be performed by
employees on work related injury/illness and the Company
determines such work is available and the Company determines to
fill such work on light duty, they will be required to return to
work.
4. Light/restricted work duty will be performed based on the
employees capabilities and the availability of work. The Company
reserves the right to have the employee examined by a doctor of
their choice prior to permitting light duty work.
5. Supervisors will be fully informed of the employees restrictions
so as to provide applicable work.
NON WORK RELATED ILLNESS OR INJURY
Employees who are absent due to a non work related illness or injury
may participate in this program at the option of the Company and the employee.
41
<PAGE>
PAY REQUIREMENTS
l. Employees returning on light/restricted work duty will be paid
the applicable laborer rate unless working in their classification and
performing work above that normally performed by a laborer or helper. If working
in their normal classification as stated above, the employee will be paid their
normal rate.
2. Personal illness/injury: Applicable labor rate unless working in
their classification. If working in their classification the employee will be
paid their normal rate.
SENIORITY
The employees seniority will not be affected by the light/restricted
duty program.
42
<PAGE>
AGREEMENT BETWEEN
ASTOR CORPORATION
PETROWAX REFINING DIVISION
McKEAN PLANT
AND
OIL, CHEMICAL AND ATOMIC WORKERS
INTERNATIONAL UNION
AND
LOCAL 8-607
FEBRUARY 1, 1996 - JANUARY 31, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
----
Article 1 - PURPOSE............................................................1
Article 2 - UNION RECOGNITION..................................................1
Article 3 - COLLECTION OF DUES.................................................2
Article 4 - DURATION OF AGREEMENT..............................................3
Article 5 - SENIORITY..........................................................3
Article 6 - HOURS OF WORK AND OVERTIME.........................................3
Article 7 - FAMILY LEAVE......................................................16
Article 8 - REPORTING FOR WORK................................................16
Article 9 - BENEFITS..........................................................16
Article 10 - FUNERAL BENEFITS.................................................17
Article 11 - SICK AND ACCIDENT BENEFITS.......................................18
Article 12 - VACATIONS........................................................19
Article 13 - BULLETIN BOARDS..................................................22
Article 14 - SAFETY & HEALTH..................................................22
Article 15 - LEAVE OF ABSENCE.................................................25
Article 16 - PAYDAY...........................................................25
Article 17 - REPRIMANDS.......................................................26
Article 18 - GRIEVANCE PROCEDURE..............................................29
Article 19 - PLANT CLOSURE....................................................29
Article 20 - RATE RETENTION...................................................29
Article 21 - WAGE RATES.......................................................29
Article 22 - NON-DISCRIMINATION...............................................30
Article 23 - SAVINGS CLAUSE...................................................30
Article 24 - UNION COERCION...................................................30
Article 25 - 401K PLAN........................................................31
Article 26 - INSURANCE........................................................31
Article 27 - MANAGEMENT RIGHTS................................................32
Article 28 - ENTIRE AGREEMENT.................................................33
APPENDIX A .................................................................34
ADDENDUM - BASE WAGE RATE - SHIFT EMPLOYEES...................................38
ADDENDUM - BASE WAGE RATE - DAY EMPLOYEES.....................................39
ADDENDUM - BASE WAGE RATE - DAY EMPLOYEES.....................................40
ADDENDUM - BASE WAGE RATE - DAY EMPLOYEES - LABORER
CLASSIFICATION.....................................................41
EXTRA HELPER POOL.............................................................42
ADDENDUM - LIGHT/RESTRICTED DUTY PROGRAM......................................44
<PAGE>
THIS AGREEMENT, made and entered into from February 1, 1996, to and
including January 31, 1999, by and between ASTOR CORPORATION MCKEAN
PLANT, located at Farmers Valley, McKean County, Pennsylvania, hereinafter
called the Company and OIL, CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION, and
LOCAL 8-607, hereinafter called the Union.
WITNESSETH
ARTICLE 1 - PURPOSE
(A) It is the intent and purpose of the parties hereto to set forth
herein the Agreement covering rates of pay, wages, hours of employment, and
other conditions of employment to be observed by the parties hereto, and to
continue and improve the harmonious relationship between the Company and its
employees.
(B) The Company will not interfere with the rights of its employees
to become members of the Union, and agrees that there shall be no
discrimination, interference, restraint, or coercion, by it or any of its agents
against any employee because of membership or lawful activity in the Union.
ARTICLE 2 - UNION RECOGNITION
(A) The Company recognizes the Union as the exclusive bargaining
agent for all production and maintenance employees of the Company at its McKean
Plant, Farmers Valley, Pennsylvania, excluding all other employees, guards,
professional employees, clerical, and supervisory employees.
(B) It shall be a condition of employment that all employees of the
Company covered by this Agreement who are members of the Union in good standing
on the effective date of this Agreement shall remain members in good standing
and
<PAGE>
those who are not members on the effective date shall, within one hundred and
twenty one (121) days of the effective date of this Agreement, become and remain
members in good standing in the Union. It shall also be a condition of continued
employment that all employees covered by this Agreement hired on or after its
effective date shall, not later than the one hundred and twenty first (121st)
day following the beginning of such employment, become and remain members in
good standing in the Union.
(C) The Company will within three (3) working days after receipt of
notice from the Union discharge any employee who is not in good standing in the
Union as required by the preceding paragraph.
(D) The Union shall indemnify and save the Company harmless against
any and all claims, demands, suits or other forms of liability in any manner
arising out of or by reason of action taken or not taken by the Company for the
purpose of complying with any of the provisions of this Article.
ARTICLE 3 - COLLECTION OF DUES
(A) Upon receipt of a written request from any employee, the Company
shall cooperate with the Union in the collection of dues by deducting from the
wages due said employee each month the regular monthly dues specified therein as
fixed by the Union. All money so deducted by the Company shall be paid to the
Treasurer of the Union within seven (7) working days after said deductions are
made, provided, however, before paying any dues the Company shall first deduct
from any wages due employees all monies due the Company from said employee.
2
<PAGE>
(B) It is understood that in no event shall the collection of Union
dues be continued unless an executed Agreement between the Company and the Union
is in full force and effect.
ARTICLE 4 - DURATION OF AGREEMENT
This Agreement shall continue from February 1, 1996 to and including
January 31, 1999, and unless terminated under the terms and conditions of the
Labor Management Relations Act, 1947, shall continue thereafter until terminated
by either party on sixty (60) days written notice, one party to the other, or
amended by mutual consent. Upon written notice to the Company, no earlier than
November 1, 1998, the parties agree to negotiate with respect to the wages,
benefits, local issues, hours, and working conditions of a new collective
bargaining agreement. If the parties fail to reach an Agreement within sixty
(60) days after said notice, the Union shall have the right to strike any time
thereafter, but not prior to February 1, 1999, without further notice,
notwithstanding any other provisions in this Agreement to the contrary. It is
agreed by the parties that any subsequent agreement or agreements reached within
the duration of the Agreement will be in conformance with applicable federal
laws, regulations, and standards.
ARTICLE 5 - SENIORITY
(A) Employees shall have plant and department seniority.
(B) It is the intent that all employees shall start in the "Day
Force" and advance from there to other departments in accordance with provisions
outlined herein.
3
<PAGE>
(C) In decreasing or increasing the working force, promotions or
demotions, layoffs or temporary bids to other jobs or positions within the
bargaining unit, the Company will be governed by continuous length of employment
in the McKean Plant, provided that in all cases the employee must have the
ability and capability of performing the work made available to him as a result
of his seniority. All layoffs shall be made from the labor gang on the basis of
plant seniority.
(D) Plant seniority shall be the period of continuous employment
within the plant. Layoffs and periods of sickness and disability will count
toward seniority as set forth elsewhere in this Article.
(E) Departmental seniority shall become effective as of the date of
the employee's selection as the successful bidder providing he/she completes a
satisfactory break-in period. Departmental seniority is defined as total time
assigned to a department.
(F) Vacancies in all departments will be filled as far as possible
from the existing crews in each department on the basis of departmental
seniority and ability to perform the work provided. It is understood that the
employees who accept promotion will assume their proper seniority position and
job in the unit immediately upon successful completion of break-in.
(G) When two or more departments are consolidated, each employee
shall retain his or her seniority accumulated in his or her respective
department, and this seniority shall apply in promotions and demotions within
the consolidated department. When one department is divided into two or more
departments, employees shall retain their seniority accrued in the old
department which was
4
<PAGE>
divided, but such seniority shall be applicable only to the new department to
which they are transferred.
(H) In case of any permanent discontinuance of a department,
reduction in force or "bumping" in any department, employees affected will be
allowed to exercise any departmental seniority which they may hold in another
department, and displace therein any employee with less department seniority
than themselves, but in no event shall they displace any employee holding a
higher classification than they themselves had held at the time of their service
in that department. Furthermore, employees affected by such reduction in force
may exercise plant seniority within five (5) working days and displace employees
in the classification of "helper" and "extra helper" holding less plant
seniority than they themselves hold. In no event, shall they displace any
employee holding a higher classification then they themselves held, wage rates
notwithstanding. It is understood that no "bumping" will be allowed any employee
affected by a reduction in force in any department lasting ten (10) consecutive
working days or less. If it is anticipated that the reduction in force will be
of more than ten (10) days duration, an employee so affected may "bump" during
this ten (10) day period. It is understood that the purpose of Section (H) is to
protect senior employees in higher classified shift and maintenance jobs from
being reduced to the labor gang, and the "bumping" privileges as outlined above
do not cover members of the labor gang, regardless of seniority, except as an
advanced laborer who can bump and/or be bumped.
(I) All shift jobs that become open will be posted within one (1)
week for a period of at least five (5) working days. Bids shall be submitted for
the job and the senior "Day" employee bidding with necessary qualifications
shall be chosen for
5
<PAGE>
the lowest paid job in a department, and other operators in this department
shall move to the job next higher up. An employee who cannot move up in a
sequence because of a disqualification, medical or otherwise, shall be demoted
to the bottom, full-time, five (5) day, position in the sequence and shall again
proceed to move up the sequence. If the employee is thereafter disqualified for
any reason, the employee shall be displaced from the department and must bump
the junior employee, using plant seniority, in the Helper or Extra
classification, in any other department. The vacancy ultimately created by
utilizing this procedure shall be filled under the terms of the collective
bargaining agreement. The Company reserves the right, at its expense, to require
an employee who produces medical certification to submit to an examination by a
doctor chosen by the Company.
The successful bidder will be notified within five (5) working days
after the end of the posting. All permanent day jobs that become open shall be
posted in the same manner as outlined above with the exception that shift
employees will also be allowed to bid on the jobs under the same conditions as
spelled out in the above paragraph. Those employees bidding shall place a bid in
a bid box furnished by the Company and also in a box belonging to the Union. The
successful bidder will be given a trial period. In case of failure to qualify
for said position, employees shall resume the job they originally vacated and
shall accrue seniority for the trial period. Failure to qualify for any job
during the trial period shall act as a bar to an additional trial for the same
job within six (6) months, but shall not disqualify such employee's right to bid
on any other job opening. In all cases of promotion, the Worker's Committee will
be advised of any deviation in seniority. A minimum of fifteen (15)
6
<PAGE>
days working time will be allowed those employees breaking in on the various
shift classifications.
If an employee has one (1) year of seniority or more at the time a job
bid is awarded to the employee, the employee shall be placed on the bid job
within forty-five (45) days of the award or, commencing on the forty-sixth
(46th) day, shall receive the pool rate on said job. It is mutually agreed that
the successful bidder who accepts any day or shift job, will be required to
serve at least one full year in the department or unit before becoming eligible
to give up the job or bid on another classified job except in case of health,
incompetence, or unusual hardship cases.
(J) Employees not working due to sickness shall accrue seniority
while sick up to eighteen (18) months. Thereafter, they shall continue to accrue
seniority upon presentation of a doctor's certificate mutually agreeable to both
parties.
(K) Any transfer within a department, or from one department to
another department, when for a period of less than thirty (30) calendar days,
shall be classed as temporary. Said thirty (30) day period may be extended by
mutual Agreement of the Company and the Union. An employee so transferred shall
receive the rate of pay applicable to the job to which the employee was
transferred or the employee's regular rate of pay, whichever is higher. The
rate will be paid for actual hours worked with any part of an hour counting as a
full hour. A regular move within a job sequence shall not be considered a
temporary transfer and shall be governed by the following provisions: when an
employee is required to move up in the sequence within his unit, he shall
receive the higher rate for the day; if required to move
7
<PAGE>
temporarily down in the sequence within his unit, he shall receive his regular
rate for the day.
(L) It is understood and agreed that the Company shall not be
required to make interdepartmental transfers of shift employees regardless of
their seniority, except that permanent transfers agreeable to the employee and
the Company may be made in accordance with seniority when the employee can be
qualified. Temporary transfers are controlled by subparagraph (K) of this
Article 5. "Shift" employees desiring permanent transfer to another department
wi11 be required to return to the "day" forces for a period three (3) months at
a rate of seven (7) cents per hour above the then existing rate of pay for
regular yard employees, after which they may bid for subsequent vacancies.
(M) Seniority of employees working under this Agreement shall begin
after one hundred twenty (120) calendar days of continuous active employment by
the Company. It is understood that the Company is not required to re-employ any
former employee who has been laid off more than twenty-four (24) months. If
employees are retained beyond the one hundred twenty (120) calendar days of
continuous active employment, their seniority shall be made retroactive to the
day on which they began work.
(N) Employees shall lose all seniority rights if they quit of their
own accord or if dismissed for just cause and not reinstated by Article 18.
Employees who have been laid off and fail to report for duty within five (5)
days after they are notified by registered letter (copy of which will be sent to
the Local Union Secretary) shall lose their seniority rights, unless prevented
by actual illness, accident, or excessive distance to be traveled, in which
event the period will be extended to fifteen (15) days.
8
<PAGE>
To protect their seniority, it is the employees responsibility to keep their
superintendent informed of their proper home address.
(0) Seniority lists shall be compiled and shall be made available to
the Workmen's Committee upon request. In any questions affecting seniority
rights, the records of the Company will be made available, and in case of a
dispute, such records shall be conclusive.
(P) Persons who were promoted out of the bargaining unit prior to
February 1, 1996 to a position of supervisor within a department in the
bargaining unit, and are later demoted, and the Company permits them to return
to the unit, shall return to the position they previously held without loss of
seniority. Persons who are promoted out of the bargaining unit subsequent to
February 1, 1996, and later return to the bargaining unit, shall be treated in
the same manner as newly hired employees.
(Q) When the force in any department is increased, employees shall be
brought back into said department in the inverse order of their reduction.
ARTICLE 6 - HOURS OF WORK AND OVERTIME
(A) All work performed by employees covered under the terms of this
Agreement shall be done by employees termed "Shift Employees" and "Day
Employees." The term "Shift Employees" shall be deemed to mean employees who are
regularly employed for a specified shift in the unit, which, of necessity,
operates continuously twenty-four (24) hours per day, seven (7) days per week.
All other employees shall be deemed to be "Day Employees." It is mutually
understood and agreed that for the purposes herein, regular employees of the
following units are "Shift Employees":
9
<PAGE>
Stills Filter House
Platformer Boiler House
Solvent Dewaxing Laborator
Propane Deresining Solvent Extraction
Transfer and Shipping
(B) Work week shall start at 12:01 a.m. Sunday of each week and shall
end at 12:00 Midnight the following Saturday. The normal work week for "Day
Employees" shall be Monday through Friday. Eight (8) hours shall constitute a
work day, forty (40) hours shall constitute a work week; all time over eight (8)
hours in any one day or over forty (40) hours in any one week shall be overtime
and will be paid for at one and one-half (1-1/2) times the rate of pay. In
computing the work week for overtime purposes, all hours worked at premium rates
of pay shall be excluded unless as may be required by Wage Hour Regulations;
except, on the weekly basis, hours worked on the holidays enumerated in
Paragraph (F) of this Article shall be included.
In addition, if an employee works his or her eight (8) hour straight
time shift, any hours worked consecutively by the employee continuing beyond the
end of that eight (8) hour straight time shift shall be paid at one and one-half
(1-1/2) times his or her applicable rate, whether or not the total continuous
hours of work fall into the same work day or work week.
The Union recognizes that some overtime work is necessary in the
conduct of the Company's business and that the employees must accept such
overtime work when it is assigned to them unless the employees present good and
legitimate reasons that excessive personal hardship will be involved in such
overtime work. It is agreed and understood that employees may refuse overtime
work when the rate of such overtime is lower than that they normally receive in
their own classification.
10
<PAGE>
No employee shall be required to take time off from his or her
scheduled work week to prevent payment of overtime, except employees (extras)
who substitute in the various shift classifications may be rescheduled as
necessary to fill vacancies in the shift department.
Overtime will be distributed equally as practical among employees. If
an employee, otherwise entitled to overtime is not offered it, there will be no
pay for the lost overtime opportunity, however, the situation will be rectified
by offering the employee the next available overtime. If the next available
overtime is not offered, the employee will be paid for the lost time.
The Company intends to develop a system of documentation so that
appropriate supervisors are aware, before scheduling overtime, if an employee in
the group being considered for overtime is entitled to make up overtime because
an error was made in a prior overtime assignment.
(C) Should employees be required to work (2) hours or more
immediately preceding or following their scheduled hours of work, the Company
will provide a suitable lunch allowance to buy lunch if the employee so desires.
However, it is understood that employees will not qualify for such a lunch
allowance until they have been on the job ten (10) hours or more and they will
not be paid for their time while eating lunch. A limit of $7.50 cost per lunch
is hereby established based on $7.50 supplying a suitable lunch.
Should employees be required to continue their overtime through a
second normal meal period of more than six (6) hours, they shall be provided
with a second lunch allowance to buy lunch if so desired. They will not be paid
for time while eating lunch. In cases where the Company is unable to provide an
employee
11
<PAGE>
with a lunch or lunches, such employee shall be paid the same amount as is
required to furnish a suitable lunch in lieu of said lunch up to a maximum of
$5.00.
(D) When maintenance employees are called out for duty at a time
other than their regular schedule and with less than seven (7) hours notice,
they will be paid for the time actually worked on call at one and one-half
(1-1/2) times their regular rate plus a bonus for each call equivalent to two
(2) hours at their regular rate, except for time actually worked on call during
the holidays specified in this Agreement, for which time worked they will be
paid at double time and one-half (2-1/2).
(E) All regular shift employees as defined in Paragraph (A) of this
Article, working on a scheduled rotating shift between the hours of 4:00 p.m.
and 12:00 Midnight shall receive fifty (50) cents per hour above their normal
rate. All regular shift employees, as defined in Paragraph (A) of this Article,
working on a scheduled rotating shift, between the hours of 12:00 Midnight to
8:00 a.m. shall receive one ($1.00) dollar per hour above their normal rate. The
above rates will be included in the base rates of pay when computing overtime.
Shift differential will be paid at the appropriate rate for all hours
worked between 4:00 p.m. and 8:00 a.m. on previously scheduled shifts for Day
Workers. It is agreed that this will not apply to the period of 7:00 a.m. to
8:00 a.m. for normal Day Workers' starting time.
(F) Double time and one-half (2-1/2) will be paid for all time worked
on the following holidays:
New Year's Day Thanksgiving Day
Good Friday (eff. 2/1/98) Veterans Day
12
<PAGE>
Decoration Day First Day Buck Season
Fourth of July Day before Christmas
Labor Day Christmas Day
Any holiday that falls on Saturday shall be observed on Friday by all
"Day Employees," any holiday that falls on Sunday shall be observed on Monday by
all "Day Employees," and said employees shall be paid for the holiday on the day
on which they are off. All "Shift Employees" shall observe all holidays on the
day on which it falls and be paid for all said holidays on that observed day.
If Christmas falls on a Saturday, the holiday will be observed on
Friday and the day before Christmas will be observed on Thursday. If the day
before Christmas falls on Sunday, it will be observed on the previous Friday.
Employees covered by this Agreement who have completed one hundred
twenty (120) calendar days of continuous active employment shall be paid at
their regular straight time rate for the holidays enumerated above when not
required to work on such holidays.
Employees shall receive no holiday pay in accordance with this Article
if:
a) They have failed to work their last regularly scheduled work
day preceding the holiday and the next scheduled work day
following the holiday unless they are ill and present a
doctor's certificate certifying to their illness, or are
absent because of the death of a member of their immediate
family or are absent because of jury duty. In any of these
cases, they will be eligible for pay for the holiday if they
have worked three days of the seven calendar days
immediately
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preceding the holiday and three days of the seven calendar
days immediately following the holiday. Employees will be
eligible for pay for a holiday which occurs within the first
thirty (30) days from the date of illness upon presenting a
doctor's certificate certifying to their illness. In no
event will holiday pay, funeral benefits, jury pay, or
overtime be duplicated or pyramided.
(b) A holiday falls during their leave of absence, absence for
disability, or layoff.
(c) They refuse to work on a holiday.
Holidays paid for but not worked shall be used in computing
overtime for the week in which the holiday is observed for Day Workers only.
(G) Employees shall be permitted to change shifts or days off for
reasons that do not recur too often. Such employees may substitute work
schedules among themselves within a given twenty-four (24) hour period Midnight
to Midnight of the day of the substituted shift provided:
(1) A shift change request form is filled out.
(2) Approval of the superintendent or delegated assistant
is secured.
(3) That time cards show the hours worked.
(4) That such changes do not work any overtime penalty to the
Company.
(H) The matter of job security for the Company's present refinery
employees was discussed during 1972 contract negotiations. The Company stated to
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the Union Committee the Company's desire to provide job security for the
Company's present employees consistent with the needs of the business and the
different operations of the refinery. In order to provide job security
consistent with these principles during the term of the contract Agreement:
(a) The Company will use emphasis in placing primary reliance on
its present employees in the performance of work in the
plant that they regularly and consistently perform.
(b) The Company hereby assures the Union that it desires to
accomplish future technological improvement and installation
of new units and equipment without layoff of present
personnel of the Bargaining Unit. It shall be the intent of
the Company to only use outside contractors to supplement
the basic work force for legitimate business reasons. When
employees are on layoff, before subcontracting, the Company
will meet with the Union to discuss the potential use of
the laid off employees. The Company shall give at least
sixty (60) days written notice prior to layoff. Thereafter,
either party may request a meeting with the other to discuss
ways and means of avoiding the layoff or lessening the
effect on the employees involved.
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ARTICLE 7 - FAMILY LEAVE
The Company agrees to provide the availability of family leave to all
employees in the event of a birth or adoption of a child or the serious illness
of a child, spouse or parent. The leave will be without pay and will be granted
for up to a maximum of twelve (12) weeks in a twelve (12) month period. Any
employee may request more than one family leave within a twelve (12) month
period, but the total time on leave within that period may not exceed twelve
(12) weeks.
Credited service will accrue during the period covered by the family
leave of absence. The leave will be granted with the understanding that the
employee will be reinstated to the position held prior to the leave or to a
comparable position.
ARTICLE 8 - REPORTING FOR WORK
When telephone communication is available, should the Company fail too
notify employees regularly employed, not to report for work at their regular
time, and such employees, in the absence of such notice, report for work, they
shall receive or be paid for four (4) hours work.
The Company will post work schedules by 2:00 p.m. Thursday. If an
employee's schedule is changed thereafter, the Company is obligated to notify
the employees of such change in accordance with this provision of the collective
bargaining agreement and failure to notify will be excused only where excused
under the terms of this provision.
ARTICLE 9 - BENEFITS
(A) Any permanent, full-time employee (excluding summer or seasonal)
who has completed one hundred twenty (120) calendar days of continuous,
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active employment belonging to the United States Officers or Enlisted Reserve or
National Guard, shall be granted two weeks leave of absence in any one year to
attend any required training and employees will be reimbursed by the Company for
the difference between the compensation they could have earned, based upon their
normal straight time rate for a forty (40) hour week, if working, and any
payment received from the government. In addition, an employee may receive a
maximum of one additional week leave of absence in the event of an emergency
call-up because of state disaster or civil disturbance control. Call-up to
active duty status is explicitly excluded from this provision.
(B) In the event that any employees are called for jury service, said
employees will be reimbursed for the difference between their normal earnings
and that earned on jury duty.
(C) It is understood that this Agreement is subject to the rights of
employees returning from military service as required by applicable state and
federal laws, court decisions and regulations of any government agency charged
with enforcement of such laws.
ARTICLE 10 - FUNERAL BENEFITS
(A) When it is necessary for employees to be absent from work on
account of the death and funeral of either spouse, child, stepchild, father,
mother, sister, brother, father-in-law or mother-in-law, or, if living in the
employee's household, "in-laws" or grandparents, including the spouses
grandparents, the Company will reimburse them at straight time for scheduled
work time lost not exceeding three (3), eight (8) hour days. In all other cases
concerning the death of "in-laws" or grandparents, including the spouses
grandparents, or grandchildren, not
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exceeding one (1), eight (8) hour day, unless unusual travel time or other
extenuating circumstances may fairly justify partial or full extension of
reimbursement up to the other three (3) day limit.
It is understood in all cases that for the sake of efficiency in plant
operations, the employee will need to make prior arrangements with the
superintendent or delegated assistants in order to receive this benefit.
ARTICLE 11 - SICK AND ACCIDENT BENEFITS
(A) In addition to any Group Accident and Health or Compensation
benefits that may accrue to employees under existing policies, it is agreed that
full-time employees while unable to perform their duties for more than two (2)
days, due to sickness or injury, who have completed one hundred twenty (120)
calendar days of continuous active employment with the Company shall be paid at
the rate of three quarters (3/4) of their regular rate of pay for work time lost
in excess of said two (2) days within the first seven (7) days of their
disability.
(B) In the case of disability absence from on-the-job injuries that
develop into compensation insurance payments beginning on the eighth (8th) day
of such disability, full normal wage payments will prevail under the same
limitations within the first seven (7) days. However, should such disability
absence resulting from an on-the-job injury be longer than two (2) weeks, full
normal wage payments will be made for all work time lost within the first seven
(7) days.
(C) The total benefit paid for any disability claim shall not exceed
the full straight-time hourly rate of the employee for the first seven (7)
calendar days of the disability.
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ARTICLE 12 - VACATIONS
(A) All employees covered by this Agreement with less than one (1)
year of service prior to January 1st will have their vacation prorated for that
period only. Thereafter, present vacation qualification date of January 1st will
apply. However, the employees qualifying for prorated vacation under this
provision must complete one hundred twenty (120) calendar days of continuous
active employment with the Company before they may exercise this vacation right.
Employees employed as of the effective date of this Agreement shall receive
credit for service with Quaker State Corporation in the computation of their
vacation benefits.
All employees covered by this Agreement who have been in the
continuous employ of the Company for one (1) year prior to January 1st in any
year, will receive two (2) weeks' vacation with pay. All employees covered by
this Agreement who have been in the continuous employ of the Company five (5)
years or more prior to January 1st in any year will receive three (3) weeks'
vacation with pay. All employees covered by this Agreement who have been in the
continuous employ of the Company ten (10) years or more prior to January 1st in
any year will receive four (4) weeks' vacation with pay. All employees covered
by this Agreement who have been in the continuous employ of the Company twenty
(20) years or more prior to January 1st in any year will receive five (5) weeks'
vacation with pay. Vacations shall be compulsory.
A day employee who has achieved vacation eligibility for four (4) or
more weeks' of vacation may elect to take one (1) scheduled week of annual
vacation one (1) day at a time or in any combination of days. This provision is
subject to the following conditions:
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1. The absence must be for a full day or days on which the employee
is scheduled to work.
2. Approvals for this "split week" vacation shall be made on a
"first come" basis. Split week vacation days cannot be scheduled
during the vacation posting period.
3. All requests for split week vacation days must be scheduled by
twelve noon of the Tuesday prior to the contract work week. Any
exception to this shall be made at the Company's sole discretion.
4. All other provisions of the vacation policy shall apply to these
split vacation days.
(B) For the purpose of establishing the initial vacation requirement
of one continuous year, no deductions shall be made for any layoffs of less than
thirty-one (31) days. After establishment of initial vacation rights, no
deductions shall be made for absences due to layoffs of less than six (6)
consecutive months. No deductions shall be made for absences due to on-the-job
injuries.
(C) Employees who may be laid off, retired, or quit of their own
accord after attaining the full vacation qualifications, but before the actual
vacation period of the general shutdown or their approved choice, as the case
may be, will be given vacation with pay. This will not apply to those who may be
discharged for just cause, but will apply to the estates of those employees who
may die, except in the latter case, the full qualification period will not be
required.
(D) Vacation compensation will be paid upon the regular straight time
hourly rate which the employees are receiving at the time of their vacation.
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Employees qualifying for prorated vacation will receive pay in lieu of
time off for any fraction of a full day to which they may be entitled.
(E) In computing the vacation pay for each employee, the term "Week"
shall mean forty (40) hours.
(F) The Company will agree to give ninety (90) days' previous notice
of a general plant shutdown for vacation purposes.
Employees not required to take their full vacation during the general
plant shutdown will take it at a time mutually agreeable between the employee
and the Company in line with departmental seniority. Employees must signify
their choice of additional vacation time within fifteen (15) days after "Choice
of Vacation" forms have been distributed, or have their vacation time scheduled
by the Company. "Choice of Vacation" forms must be posted by September I for the
vacation period starting the following January.
(G) Vacation eligibility shall be determined as follows: For absences
of 45 calendar days or less - no deduction for entitlement. For absences of 46
to 90 cumulative days - deduct 1/12 from entitlement. To reinstate eligibility
for consideration under the initial 45 calendar day period, the employee must
complete one month of scheduled work. For every 45 calendar day period
thereafter - deduct one additional 1/12 from entitlement. This requirement will
not apply to absences for on-the-job injuries or to approved absences for union
business.
The Company will prorate vacations on all terminations except
discharge for cause.
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ARTICLE 13 - BULLETIN BOARDS
(A) The Company shall provide bulletin boards in the refinery for
exclusive use of the Union. Such use is to be confined exclusively to posting on
said board notices pertaining to dues, meetings, and usual and regular bona fide
activities of the Union. All notices must carry the Union seal.
ARTICLE 14 - SAFETY & HEALTH
(A) It is mutually agreed that efforts of both the Company and the
employees shall be directed to maintaining all equipment and tools in safe and
efficient working order, and that the lawful Regulations and Safety Codes
adopted by the Department of Labor and Industry, Commonwealth of Pennsylvania,
as they affect this industry, in the interest of protecting the safety and
health of employees, will be observed by both the Company and the employees.
(B) Inspection of any equipment or working conditions for safety
purposes may be secured upon request of any employee while working on that
equipment or under those conditions; such inspection is to be made by the Plant
Superintendent or designated Assistants, together with the Supervisor in charge
of the employee making the request.
(C) There shall be established a joint labor-management health and
safety committee, consisting of two employee representatives of the Union and
two representatives of Management. Lost time accidents will be investigated by
the Joint Safety Committee in accordance with procedures to be developed by the
Joint Safety Committee.
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(D) The Company will, at its expense, provide training for the Union
represented Health and Safety Committee members. Such training shall not exceed
five (5) days per trainee and shall take place twice during the three year
Agreement.
It is understood that this training will be conducted by qualified
individuals, institutions, or organizations recognized in the field.
(E) The Company will, from time to time, retain at its expense
qualified independent industrial health consultants, subject to the approval of
the International Union President or his designee and the Company, to undertake
industrial health surveys, as decided upon by the committee, to determine if any
health hazards exist in the work place.
(F) Such surveys will include measurements of the exposures in the
work place, the results of which will be submitted in writing to the Company,
and the International Union President, and the Joint Committee by the
consultants, and the results will also relate the findings to existing
recognized standards.
(G) The Company agrees to pay for appropriate physical examinations
and medical tests at a frequency and extent necessary in light of findings set
forth in the industrial consultant's report as may be determined by the Joint
Committee.
(H) the Union agrees that each report shall be treated as privileged
and confidential to the extent that disclosure of information in the nature of
trade secrets will not be made without prior written approval of the Company.
(I) At a mutually established time, subsequent to the receipt of such
survey reports, the Joint Committee will meet for the purpose of corrective
measures as necessary in light of the industrial consultant's findings and to
determine the means of implementing such corrective measures.
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(J) Within sixty (60) days following the execution of this Agreement,
and on each successive February 1st thereafter, the Company will furnish to the
Union all available current information on the morbidity and mortality
experience of its employees.
(K) The Joint Committee shall meet as often as necessary, but not
less than once each month, at a regularly scheduled time and place, for the
purpose of jointly considering, inspecting, investigating, and reviewing health
and safety conditions and practices and investigating accidents, and for the
purpose of jointly and effectively making constructive recommendations with
respect thereto, including but not limited to the implementation of corrective
measures to eliminate unhealthy and unsafe conditions and practices and to
improve existing health and safety conditions and practices.
(L) All matters considered and handled by the Committee shall be
reduced to writing, and joint minutes for all meetings of the Committee shall be
made and maintained, and copies thereof shall be furnished to the International
Union President. Time spent in Committee meetings by Union representatives,
including walk around time during inspection and investigations shall be
considered and compensated for as regularly assigned work.
(M) In addition to the foregoing, the Company intends to continue its
existing industrial hygiene program as administered by Company personnel.
(N) Any dispute arising with respect to the interpretation or
application of the provisions hereof shall be jointly reviewed by the
International President or designee and the President of the Company or designee
for the purpose
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of resolving this dispute. Should the parties be unable to resolve such a
dispute, then the dispute shall be subject to the grievance and arbitration
procedure.
(O) The Company shall furnish flame retardant coat, pants, and
welding gloves for all Company welders. Each employee shall receive one dozen
pair of gloves, selected by the Company, on the employee's anniversary date of
employment.
(P) The Company shall provide an equivalent cost safety incentive
program to the safety shoe program provided to employees covered by this
Agreement by Quaker State Corporation.
ARTICLE 15 - LEAVE OF ABSENCE
(A) Leaves of absence will be granted, without pay, to not more than
two (2) employees, limited to one (1) from any single department, at any one
time to attend Conventions, Council meetings, or conferences of the Union, not
to exceed a total of thirty (30) working days each in any one calendar year. A
six (6) months' leave of absence without pay will be granted by the Company to
one (1) Union member, provided, however, that such member is not a key employee
whose absence would cause the Company undue hardship. To avail themselves of the
benefits granted by this section, employees must give reasonable notice of such
absence so that the Company can rearrange schedules in their department. For any
leave of absence, the employee must be an active employee of the Company.
ARTICLE 16 - PAYDAY
The Company agrees that for the duration of this Agreement it will
continue its bi-weekly system of payment of wages, and payday shall be every
other
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Friday. Whenever possible, pay checks will be made available to those employees
working the Thursday before payday, on the four to midnight shift, when they
complete their shift at midnight.
ARTICLE 17 - REPRIMANDS
(A) A Union representative and the employee will meet with the
Supervisor before a written reprimand is given. Written reprimands will be
presented to the employee personally by his Supervisor.
(B) In all cases where the risk of more than a verbal warning is
involved two (2) members of the Union Committee may be present to discuss the
matter, provided the employee chooses to have such committee persons present.
ARTICLE 18 - GRIEVANCE PROCEDURE
(A) A Grievance Committee is hereby established and shall consist of
six (6) members chosen by the Union from the production or maintenance employees
of the Company and there shall not be more than one (1) member chosen from any
one department. In order to be eligible for appointment to such Committee, an
employee must have at least six (6) months' service in the production or
maintenance operation of the Company.
(B) The names of the members of the Grievance Committee, together
with the name of the chairman thereof, and any change in personnel therefor
shall be certified to the Company from time to time by the proper officers of
the Union and under the Seal thereof.
(C) A regular meeting of the Committee and the Company shall be held
at the plant offices of the Company on the second Tuesday of each month for the
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purpose of settling grievances, unless changed by mutual Agreement. Other
meetings may be held by mutual Agreement.
(D) Members of the Grievance Committee attending a necessary and duly
called meeting during their scheduled work hours will be afforded such time off
without loss of pay as may be reasonably required for such purposes, provided
twenty-four (24) hours notice is given to department supervisors. Committee
members will not perform their duties with respect to the investigation of
disputes during working hours without first obtaining approval from their
supervisor. The Company, in considering a request for approval, recognizes that
certain work related grievances are of such a nature that they may need to be
addressed immediately.
(E) If any disputes arise as to the meaning, interpretation, or
alleged violation of any of the provisions of the Agreement, such disputes shall
be settled in the following manner:
1. Present the case to the Supervisor in person or through the
Grievance Committee.
2. If settlement is not thus obtained, the case may be
presented to the refinery manager or designated representative in writing, by
the Grievance Committee, within ten (10) days after the date upon which the
alleged grievance occurred; within ten (10) days thereafter, excluding
Saturdays, Sundays, and holidays, the manager or designated representative shall
render a written decision. The employee and a Union Representative may be
present at any second step grievance meetings.
3. If satisfactory results have not obtained by following the
foregoing procedure, the case will then be submitted within fifteen (15) days to
a
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representative of the National Organization of the Union and an executive of the
Company, or designated representative. A written decision shall be rendered
within fifteen (15) days. Additional time, if necessary, will be subject to
mutual consent of both parties.
4. In the event the dispute shall not have been satisfactorily
settled in the preceding steps, the matter will be submitted within thirty (30)
days to the Federal Mediation and Conciliation Service, who will be requested to
furnish the Company and the Union a list of five (5) qualified members from the
panel of arbitrators. The Union and the Company will thereupon eliminate two (2)
names each within ten (10) days and one remaining shall arbitrate the issue. The
decision of the arbitrator for the duration of this Agreement shall be final
and binding upon both parties, and may not be effective prior to the date on
which the grievance was first presented to the foreman.
The arbitrator shall not have the power to add to, subtract from, or
alter or modify in any way any of the provisions of this Agreement. The fee and
expenses of the arbitrator shall be borne equally by the Union and the Company.
(F) In case of discharge for just cause, if it should be finally
determined that such discharge was not justified, the employee shall be
reinstated, with or without pay for all or part of the lost time, as may be
agreed upon by the parties or directed by arbitration.
(G) It is agreed that there shall be no work stoppage, strike, or
lockout, except in the case of failure of one party to abide by the decision of
the arbitrator.
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ARTICLE 19 - PLANT CLOSURE
The Company will notify the Union in writing at least ninety (90) days
in advance of a final decision to completely close the McKean Refinery that will
involve permanent layoff or permanent transfer of bargaining unit employees. The
Company and Union will meet within fifteen (15) days after such written notice
for the purpose of discussing the effect of such closure on bargaining unit
employees and to negotiate appropriate conditions for transferred employees and
benefits for employees who are permanently laid off.
In the event the parties are unable to arrive at a satisfactory
Agreement, either party shall have the right to serve a sixty (60) day written
notice to terminate the Agreement. The Union shall have the right to strike or
the Company shall have the right to lock out at the end of the sixty (60) day
period unless a mutual Agreement has been reached.
ARTICLE 20 - RATE RETENTION
Employees, who by their own request, are granted a move down to yard
labor must return to the yard at the prevailing contract yard labor rate.
ARTICLE 21 - WAGE RATES
(A) A wage rate addendum is attached here to.
(B) The Company agrees to place into effect the following hourly wage
rate increases:
Effective February 1, 1996 - Fifty (50) cents
Effective February 1, 1997 - Three and three quarter (3 3/4)
percent
Effective February 1, 1998 - Three and three quarter (3 3/4)
percent
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The Wage Rate Addendum attached hereto reflects such increases
together with other adjustments agreed to by the parties.
ARTICLE 22 - NON-DISCRIMINATION
It shall be a continuing policy of the Company and the Union that the
provisions of this Agreement shall be applied to all employees without regard to
race, color, religion, sex, age, national origin or other legally prohibited
reason.
ARTICLE 23 - SAVINGS CLAUSE
If any term or provision of this Agreement is at any time during the
life of this Agreement in conflict with any applicable, valid federal or state
law, such term or provision shall continue in effect only to the extent
permitted by such law. If, at any time thereafter, such term or provision is no
longer in conflict with any federal or state law, such term or provision as
originally embodied in this Agreement, shall be reinstated in full force and
effect. If any term or provision of this Agreement is or becomes invalid or
unenforceable, such invalidity or unenforceability shall not affect or impair
any other term or provision of this Agreement.
ARTICLE 24 - UNION COERCION
It is agreed that the officers, agents and members of the Union shall
not intimidate or coerce non-members, or solicit memberships, or conduct Union
business during working hours.
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ARTICLE 25 - 401K PLAN
Effective February 1, 1996, the 401K plan shall be changed to provide
that employees who contribute one percent (1%) or more of their gross wages to
the 401K plan shall receive matching funds from the Company in the amount of two
percent (2%) of said gross wages. The two percent (2%) match shall be increased
to three percent (3%), effective February 1, 1997.
ARTICLE 26 - INSURANCE
The Company will continue to provide, during the term of this
Agreement, the same or better life, accidental death, health, hospitalization,
dental, organ transplant, and disability insurance coverage as that previously
provided. Within ninety (90) days of February 21, 1996, the Company shall modify
its health plan to provide "Select Blue" coverage. Employees shall pay (pre-tax
where legally permitted) twenty percent (20%) of the premium of either single or
family coverage, whichever is desired. The Company will pay the balance of the
cost. If an employee is covered under any other insurance plan providing for the
same benefits or services, there shall be no duplication of coverage provided by
the Company.
For employees who retire at age 62 and thereafter, and prior to age
65, the Company will continue said employee's coverage under the group health
and dental plan, for individual coverage only, for which the employee must
contribute 20% of the applicable premium. Said continued coverage at Company
expense shall end when the employee turns age 65. If an employee is covered
under any other insurance plan providing for similar benefits or services,
he/she shall not be entitled to such coverage at Company expense as provided
herein.
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ARTICLE 27 - MANAGEMENT RIGHTS
(A) Except as limited by the express provisions of this Agreement,
the Union recognizes that the Company shall continue to have and retain the sole
and exclusive right and authority to administer and/or manage the Company's
business, to exclusively direct the working force and the employees covered
hereby and, in addition to other functions and responsibilities not specifically
mentioned in this Agreement, and, therefore, without attempting to list herein
all of these management rights, but prominent among such rights, the right and
authority of the Company shall include: the right to lease or sublease; the
right to expand, sell, move, transfer and/or terminate all or part of its
operations; the right to select, hire, lay off employees and/or to determine the
size and composition of the Company's work force; the establishment and
determination of the required jobs in the plant, including the right to
eliminate or create new jobs, and the determination of reasonable levels of
productivity, quality and efficiency; the right to promote employees; the right
to discipline, suspend, or discharge employees for just cause; the right to
change or introduce any new or improved methods, materials, equipment or
facilities; the right to determine the methods, techniques, and types of work to
be performed; the determination of the products to be manufactured; and the
right to make and enforce such rules and regulations as the Company may consider
necessary or desirable for the operation of its business. These management
rights are not all-inclusive, but indicate the type of matters which belong to
and are inherent to the Company. The Company not exercising rights reserved to
it, or exercising them in a particular way, shall not be deemed a waiver of its
rights.
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(B) Supervisors may perform tasks involving instruction and
demonstration, deminimus work and such unit work as is made necessary because of
difficulties in the operation. This provision will not be used as a means of
having a supervisor displace an hourly employee from his/her work.
ARTICLE 28 - ENTIRE AGREEMENT
This Agreement supersedes and cancels all prior practices and
constitutes the complete understanding of the parties on the subject of wages,
rates of pay, hours of work, conditions of employment, and other matters subject
to collective bargaining. All employee benefits and rights existing before the
effective date of this Agreement are superseded by this Agreement unless
expressly contained herein or otherwise agreed to by the parties.
IN WITNESS WHEREOF, the parties hereto have caused their names to be
subscribed by their duly authorized officers the day and year first above set
forth.
ASTOR CORPORATION, PETROWAX REFINING DIVISION
MCKEAN PLANT
By: /s/ Thomas P. Causer
-------------------------------------
OIL, CHEMICAL AND ATOMIC
WORKERS INTERNATIONAL UNION
By: /s/ Illegible
-------------------------------------
NEGOTIATING COMMITTEE, LOCAL NO. 8-607
By: /s/ Thomas W. Kio
-------------------------------------
By: /s/ Anthony J. Placer
-------------------------------------
By: /s/ Duane D. Connally
-------------------------------------
Date Signed: ,1996
------------
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APPENDIX "A"
The following understandings are made part of this Agreement:
(A) Operators may be assigned basic maintenance work that the
employee is capable of performing safely, which does not interfere with their
operating duties. A non-exhaustive list of such basic maintenance work is as
follows:
l. Adding packing to pumps.
2. Tightening various nuts and bolts.
3. Tightening leaking fittings and flanges.
4. Installing temporary insulation-safety hazards.
5. Changing light bulbs.
(B) l. All temporary bids will be listed as such together with the
expected duration of the opening. Employees awarded the bid shall accept it for
the duration of the opening with the right to bid off the job being the same as
that which is applicable to a permanent bid.
2. The Company will not offer overtime to temporary
employees in classifications where eligible permanent employees are available
for the overtime and have not refused it.
(C) The Company policy on giving blood i.e., Day employees being
released at 2:30 p.m. and being paid to 3:30 p.m., shall continue as in the
past.
(D) The Company will continue to send bids on open jobs by
registered or certified mail, return receipt requested, to any employee who is
out on a disability. That employee must bid the job at the time and will not be
permitted to bid upon the employee's return to work.
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(E) An employee who is hurt on the job and is released by the Company
will be paid for the remainder of the day if the employee reports to a doctor.
The Company may require that the employee be examined by a Company doctor at
Company expense. If the employee does not report to a doctor, the Company, at
its discretion, can decide whether to pay for the remainder of the day.
(F) As in the past, shift employees called in as extra hands will
receive call time.
(G) On early bids, one where a vacancy does not yet exist, as in the
past the employee awarded the bid and broken in will receive the pool rate from
the day the vacancy actually occurs. Early bids are not subject to the
contractual 45 day provision.
(H) A day employee who accepts a bid has five (5) days from the date
he actually fills the position to disqualify himself.
(I) Monitoring the Waste Treatment VOC shall be part of the duties of
the Extra Waste Treatment Attendant. When the Extra Waste Treatment Attendant is
performing these duties, he shall receive the Waste Treatment Attendant's rate.
(J) The Company shall have the right to require a doctor's
certificate from employees who are absent the day before or the day after a
holiday, or any portion thereof, however, such certificate shall be
discretionary on the part of the Company, not mandatory.
(K) The parties agree that safety and health in the work place are
paramount concerns that deserve the cooperative attention of the Management and
the Union. The parties agree, therefore, to meet at the refinery or chemical
plant within sixty (60) days of a request by either the local Union or the
Management to
35
<PAGE>
attempt to develop a plan for utilizing the Union represented employees from the
local bargaining unit toward the objective of improving health and safety in the
plant. Such meetings may be held on non-productive time.
(L) The Company agrees to renew the Letter of Agreement on layoffs,
plant closures, rate retention, national health insurance, and health and safety
clauses, where such Letters of Agreement exist. It is agreed no such letters or
understandings exist as of the time this Agreement was negotiated which have not
been incorporated herein. Future Letters of Agreement will not be incorporated
into the basic working Agreement.
(M) Prior to this Agreement, employees were permitted to refuse to
accept a promotion in a line of progression within a job sequence. Those who
elected to refuse a promotion become junior to those who bypassed them for
promotion purposes only. Now that medically fit employees can no longer refuse
promotion and employees who previously refused promotion must move up when
openings are available, it is agreed that individuals who bypassed those
employees in the past will retain their favorable seniority treatment. The
Company shall schedule vacations within classifications giving first priority
for available vacation time within a classification on the basis of departmental
seniority.
(N) Single vacation days which fall during an employees regularly
schedule work days for the week in question will be treated as eight (8) hours
worked for purposes of computing an employee's overtime earned during the week.
(O) The Company will use its best efforts to inform the Union when a
contractor will be on the premises doing work of the type performed by
bargaining
36
<PAGE>
unit craft employees when employees in the craft in which the contractor is
working are working outside their craft.
(P) If, within four (4) weeks after an employee's claim for weekly
Workers' Compensation/Disability benefits has been approved, the carrier has not
begun to pay such weekly benefits, the Company will commence payment of the
benefits provided the employee signs an appropriate form assigning to the
Company any benefits later paid to the employee in an amount necessary to
reimburse the Company.
(Q) The Company and the Union have agreed upon employees who will be
grandfathered in jobs to which they were moved under the terms of the prior
agreement after being disqualified, for medical measures, from promotion within
a sequence, if these employees do not voluntarily remove themselves from such
jobs. These employees are the following:
K.D. Stake
R.L. Wilson
(R) Temporary employee rate - $6.00 per hour for mowing, raking and
painting.
(S) In order to clarify how the Rigger Department personnel will be
paid:
If crews are split, the Rigger 2nd class will move up and be paid the
Rigger rate. Also, where they fill the job, the Rigger helper will be
moved up to the Rigger 2nd class rate. This should be interpreted to
mean the helpers are doing the 2nd class job when working directly
with the "Rigger" alone in a two man crew.
37
<PAGE>
MCKEAN PLANT - LOCAL 8-607
ADDENDUM
BASE WAGE RATE-SHIFT EMPLOYEES
BASE RATE BASE RATE BASE RATE BASE RATE
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
08/01/95 02/01/96 02/01/97 02/01/98
STILLS
Operator $13.49 $13.99 $14.51 $15.06
Operator Helper $12.97 $13.47 $13.98 $14.50
Pumper $12.72 $13.22 $13.72 $14.23
SOLVENT DEWAXER
Operator $13.49 $13.99 $14.51 $15.06
Refrigeration $13.04 $13.54 $14.05 $14.57
Filters $12.87 $13.37 $13.87 $14.39
Helpers $12.62 $13.12 $13.61 $14.12
TRANSFER AND SHIPPING
Truck (Un)Loader $12.48 $13.22 $13.72 $14.23
PDA SOUTH
Operator $13.49 $13.99 $14.51 $15.06
Helper $12.71 $13.21 $13.71 $14.22
FILTER HOUSE
Operator $13.49 $13.99 $14.51 $15.06
Helper $12.89 $13.39 $13.89 $14.41
BOILER HOUSE
Operator $13.49 $13.99 $14.51 $15.06
Helper $12.97 $13.47 $13.98 $14.50
LABORATORY
Senior Day Tester $12.87 $13.37 $13.87 $14.39
Shift Tester $12.69 $13.19 $13.68 $14.20
Pool Employee $12.34 $12.84 $13.32 $13.82
(Not working reg. shifts)
38
<PAGE>
MCKEAN PLANT - LOCAL 8-607
ADDENDUM
BASE WAGE RATE-DAY EMPLOYEES
BASE RATE BASE RATE BASE RATE BASE RATE
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
08/01/95 02/01/96 02/01/97 02/01/98
Working Supervisor
Mechanic $13.54 $14.04 $14.57 $15.11
Machinist $12.98 $13.48 $13.99 $14.51
Mechanic $12.78 $13.28 $13.78 $14.29
Mechanic Helper $12.60 $13.10 $13.59 $14.10
Working Supervisor
Pipefitter $13.41 $13.91 $14.43 $14.97
Pipefitter $12.98 $13.48 $13.99 $14.51
Pipefitter Helper $12.34 $12.84 $13.32 $13.82
Chief Welder $13.11 $13.61 $14.12 $14.65
Welder $12.98 $13.48 $13.99 $14.51
Carpenter $13.41 $13.91 $14.43 $14.97
Carpenter Helper $12.34 $12.84 $13.32 $13.82
Working Supervisor
Rigger $13.91 $14.43 $14.97
Rigger $13.07 $13.57 $14.08 $14.61
Rigger 2nd Class $12.60 $13.10 $13.59 $14.10
Rigger Helper $12.34 $12.84 $13.32 $13.82
Working Supervisor Electrical
& Instrument $13.54 $14.04 $14.57 $15.11
Instrumental Technician $12.80 $13.99 $14.51 $15.06
Electrician
2nd Class $12.68 $13.18 $13.67 $14.19
Electrician Helper $12.34 $12.84 $13.32 $13.82
Painter $12.48 $12.98 $13.47 $13.97
Chief Insulator $13.61 $14.12 $14.65
Insulator $12.74 $13.24 $13.74 $14.25
Insulator Helper $12.34 $12.84 $13.32 $13.82
39
<PAGE>
MCKEAN PLANT - LOCAL 8-607
ADDENDUM
BASE WAGE RATE-DAY EMPLOYEES
BASE RATE BASE RATE BASE RATE BASE RATE
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
08/01/95 02/01/96 02/01/97 02/01/98
Plant Gauger $12.48 $12.98 $13.47 $13.97
Advanced Laborer $12.34 $12.84 $13.32 $13.82
Storekeeper $12.75 $13.25 $13.75 $14.26
Assistant Storekeeper $12.41 $12.91 $13.39 $13.90
Truck Driver $12.39 $12.89 $13.37 $13.87
Tank Car Loader $12.48 $12.98 $13.47 $13.97
Wax Loader/Blender $12.82 $13.32 $13.82 $14.34
Waste Treatment
Attendant $12.72 $13.37 $13.87 $14.39
Extra Waste Treatment
Attendant $12.34 $12.84 $13.32 $13.82
Coal Handler $12.17 $13.17 $13.66 $14.18
40
<PAGE>
MCKEAN PLANT - LOCAL 8-607
ADDENDUM
BASE WAGE RATE-DAY EMPLOYEES
LABORER CLASSIFICATION
BASE RATE BASE RATE BASE RATE BASE RATE
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
08/01/95 02/01/96 02/01/97 02/01/98
LABORERS EMPLOYED AFTER 1/8/82
START $7.79 $8.29 $8.60 $8.92
After 6 mo. $8.88 $9.38 $9.73 $10.10
(Prevailing Contract Yard Labor Rate)
LABORERS EMPLOYED AFTER 1/8/75
$11.35 $11.85 $12.29 $12.76
LABORERS EMPLOYED BEFORE 1/8/75
$12.17 $12.67 $13.15 $13.64
41
<PAGE>
EXTRA HELPER POOL
As Established During Company-Union
Negotiations in 1964 and to Become
Effective as of July 6, 1964
As Amended July 6, 1977
This will confirm that, during Union-Company negotiations in 1964,
agreement was reached on the establishment of an Extra Helper Pool. The purpose
of this was to alleviate scheduling problems as a result of extra employees
having more than one classification, and to establish a rate for non-unit work
time as an incentive for Day Employees to bid on the shift jobs. It was agreed
that the Pool rate for non-unit time will be as indicated in the Wage Addendum.
It was agreed that this Pool would include the shift breaker who
normally works part time in the Unit, and part time in the Yard, plus the First
Extra Helper on all the shift units.
Furthermore, it was agreed that the Second Extra Helper, on the
Dewaxing Unit, the Still, the Laboratory and Deresiner-Extraction Units will
also be members of the regular Pool. These employees will be paid the normal
unit Helper shift rate when working in the unit, and the Pool rate when working
elsewhere.
The above employees will make up the regular members of the Extra
Helper Pool.
These Pool employees will be used to fill temporary openings created
by vacations, sickness, or leaves of absence in the Day Forces. It is intended
that the extra shift employees will move up to permanent openings in the shift
units as they occur. The Extra Helper Pool will then be supplemented as a normal
procedures by bidding as outlined in the Contract.
42
<PAGE>
Regarding the Extra Waste Water attendant, they work one (1) day in
these capacities and four (4) days in the yard. These employees will not be
considered members of this Pool, but will work in the yard at prevailing yard
rate of pay when not required in their respective departments in which they are
Extras.
Permanent openings in the Day Forces will be filled by the Bidding
procedure as presently outlined in the Agreement.
43
<PAGE>
ADDENDUM
LIGHT/RESTRICTED DUTY PROGRAM
In an effort to provide meaningful work to employees who are not able
to report back to their full time duties after a work related illness/injury, a
light/restricted work program has been developed.
Any administration questions should be to the Manager of Human
Resources.
The program will operate as follows:
An employee returning to work on a light/restricted duty basis must:
1. Provide a return to work slip from the doctor stating the
restrictions and the time frame for the employee to resume full
duties. This return to work slip must be furnished to the Manager
of Human Resources.
2. The maximum time for an employee to be on light/restricted duty
for any one continuous illness or injury is six (6) months. There
will be only one light/restricted duty for a continuous problem.
3. If the doctor states light/restricted duty can be performed by
employees on work related injury/illness and the Company
determines such work is available and the Company determines to
fill such work on light duty, they will be required to return to
work.
4. Light/restricted work duty will be performed based on the
employees capabilities and the availability of work. The Company
reserves the right to have the employee examined by a doctor of
their choice prior to permitting light duty work.
5. Supervisors will be fully informed of the employees restrictions
so as to provide applicable work.
NON WORK RELATED ILLNESS OR INJURY
Employees who are absent due to a non work related illness or injury
may participate in this program at the option of the Company and the employee.
44
<PAGE>
PAY REQUIREMENTS
l. Employees returning on light/restricted work duty will be paid
the applicable laborer rate unless working in their classification and
performing work above that normally performed by a laborer or helper. If working
in their normal classification as stated above, the employee will be paid their
normal rate.
2. Personal illness/injury: Applicable labor rate unless working in
their classification. If working in their classification the employee will be
paid their normal rate.
SENIORITY
The employees seniority will not be affected by the light/restricted
duty program.
45
<PAGE>
Agreement made this 14th day of February, 1996 by and between Petrowax
Refining, McKean ("Company") and Oil, Chemical and Atomic Workers International
Union and Local 8-607 ("Union").
1. The agreement which expired on January 31, 1996 is extended for a three
(3) year period from February 1, 1996 to and including January 31, 1999 except
as modified herein.
2. The general wage increases shall be as follows:
Effective 2/1/96 - $.50 per hour
Effective 2/1/97 - 3.75% per hour
Effective 2/1/98 - 3.75% per hour
3. Meal allowance referred to in Article 6 C. shall be increased to $7.50.
Meal tickets, when issued, must be utilized within 48 hours or such tickets
shall be void.
4. Holidays: Effective the first year of the agreement and thereafter,
Veterans Day shall be an additional holiday. Effective the third year of the
agreement, Good Friday shall be added as an additional holiday.
5. The Spouse's grandparent will be added to the coverage provided in
Article 10.
6. The Sick and Accident Benefit shall be increased to $235 per week,
effective 2/1/96, $245 per week, effective 2/1/97, and $255 per week, effective
2/1/98.
7. Each employee shall receive one dozen pairs of gloves, selected by the
Company, on the employee's anniversary date of employment.
8. 401K - Effective 2/1/96 the 401K plan shall be changed to provide that
employees who contribute 1% or more of their gross wages to the 401K plan shall
receive matching funds from the Company in the amount of 2% of said gross wages.
The 2% match shall be increased to 3% effective 2/1/97.
9. Temporary employee rate - $6.00 for mowing, raking and painting.
10. Rate Changes: The following classifications shall be paid the
following wage rates BEFORE the wage increase provided for in paragraph 2 above:
Instrument Technician --- $13.49
Shift (Un)Loader --- $12.72
Waste Treatment Attendant --- $12.87
Working Supervisor, Rigger --- $13.41
Chief Insulator --- $13.11
<PAGE>
Coal Handler --- $12.17
11. For employees who retire at age 62 and thereafter, and prior to age
65, the Company will continue said employee's coverage under the group health
and dental plan, for individual coverage only, for which the employee must
contribute 20% of the applicable premium. Said continued coverage at Company
expense shall end when the employee turns age 65. If an employee is covered
under any other insurance plan providing for similar benefits or services,
he/she shall not be entitled to such coverage at Company expense as provided
herein.
12. Within 90 days of the ratification of the Agreement, the Company shall
modify its health plan to provide "Select Blue" coverage.
13. Attached hereto are local agreements reached between the Company and
the Union.
In witness whereof: the parties hereto have caused their names to be
subscribed by their duly authorized officers this day of , 1996.
Petrowax Refining, McKean Plant
by:
---------------------------------------------------------
Oil, Chemical and Atomic Worker's
International Union
by:
---------------------------------------------------------
Local 8-607
by:
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
<PAGE>
MCKEAN LOCAL AGREEMENTS - NON-ECONOMIC
Union 4 Typographical errors to be corrected. Article 5, Paragraph (H).
Next to last paragraph insert "If" prior to "it."
Company 4 Article 6 (E) change "7:30 a.m. to 7:00 a.m.
Union 6 Article 5 (J) - change "one (1) year" to "eighteen (18) months".
Medical coverage shall continue for twelve (12) months as at
present.
Union 7 Article 5 (K) in the last phrase starting with "; if required"
before the words "move down" insert the word "temporarily" and
delete the words "and the rate" through "consecutive days
thereafter."
Company 8 Appendix "A" (J) add words "Waste Treatment" after the words
"Monitoring the."
Union 8 Article 5 (M) change "twelve (12) months" to "twenty four (24)
months."
Union 9 Change Article 5 (P) to read:
"Persons who were promoted out of the bargaining unit prior
to February 1, 1996 to a position of supervisor within a
department in the bargaining unit, and are later demoted,
and the Company permits them to return to the unit, shall
return to the position they previously held without loss of
seniority. Persons who are promoted out of the bargaining
unit subsequent to February 1, 1996, and later return to the
bargaining unit, shall be treated in the same manner as
newly hired employees."
Union 10 Article 6(A) "Transfer and Shipping" shall be added to the list
of departments for shift employees.
Union 15 LETTER OF INTENT - The Company intends to develop a system of
documentation so that appropriate supervisors are aware, before
scheduling overtime, is an employee in the group being considered
for overtime is entitled to make up overtime because an error was
made in a prior overtime assignment.
Union 20 LETTER OF INTENT - single vacation days which fall during an
employees regularly schedule work days for the week in question
will be treated as eight (8) hours worked for purposes of
computing an employee's overtime earned during the week.
<PAGE>
Union 21 LETTER OF INTENT - The Company will use its best efforts to
inform the Union when a contractor will be on the premises doing
work of the type performed by bargaining unit craft employees
when employees in the craft in which the contractor is working
are working outside their craft.
Union 22 LETTER OF INTENT - The Company will post work schedules by 2:00
p.m. Thursday. If an employee's schedule is change thereafter,
the Company is obligated to notify the emloyees of such change
in accordance with the report pay provision of the collective
bargaining agreement and failure to notify will be excused only
where excused under the terms of that provision.
Union 24 LETTER OF INTENT - If, within four (4) weeks after an employee's
claim for weekly Workers' Compensation benefits has been
approved, the compensation carrier has not begun to pay such
weekly benefits, the Company will commence payment of the
benefits provided the employee signs an appropriate form
assigning to the Company any benefits later paid to the employee
in an amount necessary to reimburse the Company.
Union 26 Article 12 - add to first paragraph
"The Company shall schedule vacations within classifications
giving first priority for available vacation time within a
classification on the basis of departmental seniority "
Union 28 Article 12(A) - change beginning of the third paragraph by adding
and the word "day" prior to the word "employee."
Company 1
Shift employees shall no longer be entitled to single day
vacations.
Union 29 The Company has agreed to enlarge the union bulletin boards.
Union 33 Article 17 (B) eliminate "a maximum of" add "provided the
employee chooses to have such committee persons present."
Union 35 Article 18 (D)
"Committee members will not perform their duties with
respect to the investigation of disputes during working
hours without first obtaining approval from their supervisor.
The Company, in considering a request for approval,
recognizes that certain work related grievances are of such
a nature that they may need to be addressed immediately."
Union 40 Appendix A - eliminate paragraph (A)
<PAGE>
Union 41 Appendix A - paragraph (B) add -
A non-exhaustive list of such basic maintenance work is as
follows:
l. Adding packing to pumps.
2. Tightening various nuts and bolts.
3. Tightening leaking fittings and flanges.
4. Installing temporary insulation-safety hazards.
5. Changing light bulbs.
Union 43 Eliminate the last sentence of Article 5 and rewrite as follows:
An employee who cannot move up in a sequence because of a
disqualification, medical or otherwise, shall be demoted to
the bottom, full-time, five (5) day, position in the
sequence and shall again proceed to move up the sequence. If
the employee is thereafter disqualified for any reason, the
employee shall be displaced from the department and must
bump the junior employee, using plant seniority, in the
Helper or Extra classification, in any other department. The
vacancy ultimately created by utilizing this procedure shall
be filled under the terms of the collective bargaining
agreement.
The parties have agreed upon previously disqualified
employees to be grandfather in their present classification,
the names of which are attached hereto.
Union 45 The Union withdrew this request based on assurances that going to
Emlenton to work on a temporary basis will be voluntary.
Union 55 EXTRA HELPER POOL - sixth paragraph - eliminate "Extra Lube Oil
Loader" and No. 3 Light Oil Loading Rack Loader."
Union withdrew union requests #3, #5, #16, #23, #32, #38, #39,
#42, #44
The Company's Light/Restricted Duty Program is attached hereto.
This is a complete settlement of all non-economic issues at the McKean
Plant.
<PAGE>
LIGHT/RESTRICTED DUTY PROGRAM
In an effort to provide meaningful work to employees who are not able to report
back to their full time duties after a work related illness/injury, a
light/restricted work program has been developed.
Any administration questions should be directed to the Manager of Human
Resources.
The program will operate as follows:
An employee returning to work on a light/restricted duty basis must:
1. Provide a return to work slip from the doctor stating the restrictions
and the time frame for the employee to resume full duties. This
return to work slip must be furnished to the Manager of Human
Resources.
2. The maximum time for an employee to be on light/restricted duty for
any one continuous illness or injury is six (6) months. There will be
only one light/restricted duty for a continuous problem.
3. If the doctor states light/restricted duty can be performed by
employees on work related injury/illness and the Company determines
such work is available and the Company determines to fill such work on
light duty, they will be required to return to work.
4. Light/restricted work duty will be performed based on the employees
capabilities and the availability of work. The Company reserves the
right to have the employee examined by a doctor of their choice prior
to permitting light duty work.
5. Supervisors will be fully informed of the employees restrictions so as
to provide applicable work.
NON WORK RELATED ILLNESS OR INJURY
Employees who are absent due to a non work related illness or injury may
participate in this program at the option of the Company and the employee.
PAY REQUIREMENTS
1. Employees returning on light/restricted work duty will be paid the
applicable laborer rate unless working in their classification and
performing work above that normally performed by a laborer or helper.
If working in their normal classification as stated above, the
employee will be paid their normal rate.
2. Personal illness/injury: Applicable labor rate unless working in
their classification. If working in their classification the employee
will be paid their normal rate.
SENIORITY
The employees seniority will not be affected by the light/restricted duty
program.
<PAGE>
MCKEAN JOB CLASSIFICATION LISTING
SKILLS
Operator
Operator Helper
Pumper
SOLVENT DEWAXER
Operator
Refrigerator
Filter
Helper
TRANSFER AND SHIPPING
Shift (un)Loader
PDA SOUTH
Operator
Helper
FILTER HOUSE
Operator
Oper. Helper
BOILER HOUSE
Operator
Oper. Helper
LABORATORY
Shift Tester
Senior Day Tester
Pool Employ. (Not working scheduled shifts)
<PAGE>
MAINTENANCE
Working Supervisor Mechanic
Machinist
Mechanic
Mechanics Helper
Working Supervisor Pipefitter
Pipefitter
Pipefitter Helper
Chief Welder
Welder
Carpenter
Carpenter Helper
Rigger
Rigger 2nd Class
Rigger Helper
Working Supervisor, Electrical, and Instrument
Instrumental Technician
Electrician 2nd Class
Electrician Helper
Painter
Insulator
Insulator Helper
Plant Gauger
Advanced laborer
Storekeeper
Assistant Storekeeper
Truck Driver
Tank Car Loader
Wax Loader/Blender
Waste Treatment Attendant
Extra Waste Treatment Attendant
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into on June 28,
1995 by and between Boyd P. Wainscott, an individual ("Executive"), and Petrowax
PA Inc., a Delaware corporation (the "Company").
1. EMPLOYMENT BY THE COMPANY AND TERM.
(a) FULL TIME AND BEST EFFORTS. Subject to the terms set forth
herein, the Company agrees to employ Executive as Chairman and Chief Executive
Officer, and in such other executive capacities as may be requested from time to
time by the Board of Directors of the Company or a duly authorized committees
thereof, and Executive hereby accepts such employment. Executive shall serve, if
elected, as a member of the Board of Directors of the Company, and shall render
such other services for the Company and corporations controlled by, under common
control with or controlling, directly or indirectly, the Company, and to
successor entities and assignees of the Company ("Company's Affiliates") as the
Company may from time to time reasonably request and as shall be consistent with
the duties Executive is to perform for the Company and with Executive's stature
and experience. During the term of his employment with the Company, Executive
will devote his full time and exclusive attention to, and use his best efforts
to advance, the business and welfare of the Company, and will not engage in any
other employment or business activities for any direct or indirect remuneration
that would be harmful or detrimental to, or that may compete with, the business
and affairs of the Company.
(b) DUTIES. Executive shall serve in an executive capacity and shall
perform such duties as are customarily associated with his then current title,
consistent with the Bylaws of the Company and as required by the Company's Board
of Directors (the "Board") and the officers to whom the Executive reports.
(c) COMPANY POLICIES. The employment relationship between the parties
shall be governed by the general employment policies and practices of the
Company, including but not limited to those relating to protection of
confidential information and assignment of inventions, except that when the
terms of this Agreement differ from or are in conflict with the Company's
general employment policies or practices, this Agreement shall control.
(d) TERM. The initial term of employment of Executive under this
Agreement shall begin as of June 28, 1995 for an initial term ending on June 28,
1998 (such three year period, the "Initial Term"), subject to the provisions for
termination set forth herein and renewal as provided in Section 1(e) below.
(e) RENEWAL. Unless the Company shall have given Executive notice
that this Agreement shall not be renewed at least ninety (90) days prior to
the end of the Initial Term, the term of this Agreement shall be
automatically extended for a period of one year, such procedure to be
followed in each such successive period. Each extended term shall continue to
be subject to the provisions for termination set forth herein.
1
<PAGE>
2. COMPENSATION AND BENEFITS.
(a) SALARY. Executive shall receive for services to be rendered
hereunder a salary at the rate of Twenty-Five Thousand Dollars ($25,000) per
month payable at least as frequently as monthly and subject to payroll
deductions as may be necessary or customary in respect of the Company's salaried
employees (the "Base Salary"). The Base Salary will be reviewed by and shall be
subject to increase at the sole discretion of the Board of Directors of the
Company each year during the term of this Agreement.
(b) PARTICIPATION IN BENEFIT PLANS. During the term hereof, Executive
shall be entitled to participate in any group insurance, hospitalization,
medical, dental, health and accident, disability or similar plan or program of
the Company now existing or established hereafter to the extent that he is
eligible under the general provisions thereof. The Company may, in its sole
discretion and from time to time, establish additional senior management benefit
programs as it deems appropriate. Until such time as the Company establishes a
medical, dental, health and accident or disability plan or program of its own,
Executive shall be entitled to the extent legally permitted to obtain coverage
therefor under, and pursuant to the terms of, any such plans or programs of the
Company's subsidiaries, as may be designated by the Executive.
(c) VACATION. Executive shall be entitled to a period of annual
vacation time equal to that generally provided to senior managers of the
Company, but in any event not more than four weeks per twelve month period, to
accrue PRO RATA during the course of each such twelve month period. The days
selected for Executive's vacation must be mutually agreeable to Company and
Executive. Accrued unused vacation will expire 12 months after the date of
accrual and in no event shall Executive's total accrued vacation exceed four
weeks.
(d) 401(K) PLAN. To the extent legally permitted, Executive shall be
entitled to place a portion of his Base Salary into a 401(K) or other qualified
deferred tax annuity plan of the Company or, if the Company does not have such a
plan, of any such plan of any of the Company's subsidiaries, as may be
designated by the Executive.
(e) TERM LIFE INSURANCE. During the term hereof, the Company shall
procure and pay for a $1,000,000 term life insurance policy covering Executive,
for the benefit of such beneficiaries as Executive shall designate.
3. OPTION AND BONUS PLANS.
(a) OPTIONS. Executive shall be entitled to receive stock options of
MSC Holdings, Inc., a Delaware corporation ("Holdings ), in the amount and on
the terms and conditions set forth in that certain Stock Option Agreement of
even date herewith between Executive and Holdings.
(b) BONUSES. For each fiscal year of the Company ending March 31 that
the applicable EBITDA target set forth on Appendix A attached hereto is
achieved, and if Executive is employed by the Company pursuant to the terms of
this Agreement on the last day of such fiscal year, Executive shall receive a
bonus equal to 75% of his then annual base salary, to be paid on the June 30
immediately following the end of such fiscal year. In addition to such bonus,
for each fiscal year of the Company ending March 31 that 110% of the applicable
EBITDA target set forth on Appendix A attached hereto is achieved, and if
Executive is employed by the Company pursuant to the terms of this Agreement on
the last day of such fiscal year, Executive shall receive an additional bonus
equal to 25% of his then annual base salary, to be paid on the June 30
immediately following the end of such
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fiscal year. Notwithstanding the foregoing terms of this paragraph (b), the
Board of Directors of the Company may elect in its sole discretion to award all
or any part of such bonuses notwithstanding any failure of the applicable EBITDA
target or 110% of the applicable EBITDA target to have been achieved.
4. REASONABLE BUSINESS EXPENSES AND SUPPORT.
Executive shall be reimbursed for documented and reasonable business
expenses in connection with the performance of his duties hereunder. Executive
shall be furnished reasonable office space, assistance and facilities.
5. TERMINATION OF EMPLOYMENT.
The date on which Executive's employment by the Company ceases,
under any of the following circumstances, shall be defined herein as the
"Termination Date."
(a) TERMINATION FOR CAUSE.
(i) TERMINATION: PAYMENT OF ACCRUED SALARY AND VACATION. The
Board may terminate Executive's employment with the Company at any time for
cause, immediately upon notice to Executive of the circumstances leading to
such termination for cause. In the event that Executive's employment is
terminated for cause, Executive shall receive payment for all accrued salary
and vacation time through the Termination Date, which in this event shall be
the date upon which notice of termination is given. The Company shall have no
further obligation to pay severance of any kind nor to make any payment in
lieu of notice.
(ii) DEFINITION OF CAUSE. "CAUSE" means the occurrence or
existence of any of the following with respect to Executive, as determined by
a majority of the disinterested directors of the Board: (a) a material breach
by Executive of any of his obligations hereunder which remains uncured after
the lapse of 30 days following the date that the Company has given Executive
written notice thereof; (b) a material breach by the Executive of his duty
not to engage in any transaction that represents, directly or indirectly,
self-dealing with the Company or any of its Affiliates which has not been
approved by a majority of the disinterested directors of the Board or of the
terms of his employment, if in any such case such material breach remains
uncured after the lapse of 30 days following the date that the Company has
given the Executive written notice thereof; (c) the repeated material breach
by the Executive of any duty referred to in clause (b) above as to which at
least one written notice has been given pursuant to such clause (b); (d) any
act of dishonesty, misappropriation, embezzlement, intentional fraud or
similar conduct involving the Company or any of its Affiliates; (e) the
conviction or the plea of nolo contendere or the equivalent in respect of a
felony involving moral turpitude; (f) any intentional damage of a material
nature to any property of the Company or any of its Affiliates; (g) the
repeated non-prescription use of any controlled substance or the repeated use
of alcohol or any other non-controlled substance which, in any case described
in this clause (g), the Board reasonably determines renders the Executive
unfit to serve in his capacity as an officer or employee of the Company or
its Affiliates; or (h) any other material misconduct on the part of Executive
which remains uncured after the lapse of 30 days following the date that the
Company has given Executive written notice thereof.
(b) TERMINATION BY EXECUTIVE. Executive shall have the right, at its
election, to terminate his employment with the Company by written notice to the
Company to that effect if the Company shall have failed to substantially perform
a material condition or covenant of this Agreement ("Company's Material
Breach"); provided, however, that termination for Company's Material Breach will
not be effective until Executive shall have
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given written notice specifying the claimed breach and, provided such breach is
curable, Company fails to correct the claimed breach within thirty (30) days
after the receipt of the applicable notice or such longer time as may be
reasonably required by the nature of the claimed breach (but within ten (10)
days if the failure to perform is a failure to pay monies when due under the
terms of this Agreement).
(c) TERMINATION UPON DISABILITY. Company may terminate Executive's
employment in the event Executive suffers a disability that renders Executive
unable to perform the essential functions of his position, even with reasonable
accommodation, for four (4) months within any eight (8) month period. After the
Termination Date, which in this event shall be the date upon which notice of
termination is given, no further compensation will be payable under this
Agreement except that Executive shall receive the accrued portion of any bonus
through the Termination Date, less standard withholdings for tax and social
security purposes, payable upon such date or over such period of time which
is in accordance with the applicable bonus plan.
(d) TERMINATION WITHOUT CAUSE.
(i) TERMINATION PAYMENT DURING THE INITIAL TERM. In the event
Executive's employment is terminated by the Company other than pursuant to
paragraph 5(a) or 5(c), or by Executive pursuant to paragraph 5(b), the Company
shall pay Executive as severance an amount equivalent to his then base salary
for the remaining period of the Initial Term, less standard withholdings for tax
and social security purposes, payable over such term in monthly PRO RATA
payments commencing as of the Termination Date plus the accrued portion of any
bonus through the Termination Date, less standard withholdings for tax and
social security purposes, payable upon such date or over such period of time
which is in accordance with the applicable bonus plan.
(ii) TERMINATION PERIOD AFTER THE INITIAL TERM. In the event
that the term of this Agreement is extended pursuant to Section 1(e) hereof (an
"Extension Period") and during such Extension Period Executive's employment is
terminated by the Company other than pursuant to paragraph 5(a) or 5(c), or by
Executive pursuant to paragraph 5(b), the Company shall pay Executive as
severance an amount equal to twelve (12) months of his then base salary, less
standard withholdings for tax and social security purposes, payable over such
twelve (12) month term in monthly PRO RATA payments commencing as of the
Termination Date plus the accrued portion of any bonus through the
Termination Date, less standard withholdings for tax and social security
purposes, payable upon such date or over such period of time which is in
accordance with the applicable bonus plan.
(iii) FUNDAMENTAL CHANGES. In the event that the Company makes
a substantial change which results in diminution in the Executive's duties,
authority, responsibility or compensation without performance or market
justification, Executive may terminate his employment; PROVIDED, HOWEVER, that
Executive shall provide the Company 10 days' notice prior to any such
termination and the Company shall have a reasonable period of time to cure. A
termination in such circumstances shall be treated as a Company termination
without cause and Executive shall be entitled to the same severance payments
provided in paragraphs 5(d)(i) and (5)(d)(ii), as applicable.
(e) BENEFITS UPON TERMINATION. All benefits provided under paragraph
2(b) hereof shall be extended, at Executive's election and cost, to the extent
permitted by the Company's insurance policies and benefit plans, for one year
after Executive's Termination Date, except (a) as required by law (e.g., COBRA
health
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insurance continuation election) or (b) in the event of a termination described
in paragraph 5(a).
(f) TERMINATION UPON DEATH. If Executive dies prior to the
expiration of the term of this Agreement, the Company shall (i) continue
coverage of Executive's dependents (if any) under all benefit plans or
programs of the type listed above in paragraph 2(b) herein for a period of
three (3) months, and (ii) pay to Executive's estate the accrued portion of
any bonus through the Termination Date, less standard withholdings for tax
and social security purposes, payable upon such date or over such period of
time which is in accordance with the applicable bonus plan.
6. PROPRIETARY INFORMATION OBLIGATIONS.
During the term of employment under this Agreement, Executive will
have access to and become acquainted with the Company's confidential and
proprietary information, including but not limited to information or plans
regarding the Company's customer relationships, personnel, or sales, marketing,
and financial operations and methods; trade secrets; formulas; devices; secret
inventions; processes; and other compilations of information, records, and
specifications (collectively "Proprietary Information"). Executive shall not
disclose any of the Company's Proprietary Information directly or indirectly, or
use it in any way, either during the term of this Agreement or at any time
thereafter, except as required in the course of his employment for the Company
or as authorized in writing by the Company. All files, records, documents,
computer-recorded information, drawings, specifications, equipment and similar
items relating to the business of the Company, whether prepared by Executive or
otherwise coming into his possession, shall remain the exclusive property of the
Company and shall not be removed from the premises of the Company under any
circumstances whatsoever without the prior written consent of the Company,
except when (and only for the period) necessary to carry out Executive's duties
hereunder, and if removed shall be immediately returned to the Company upon any
termination of his employment and no copies thereof shall be kept by Executive;
PROVIDED, HOWEVER, that Executive shall be entitled to retain documents
reasonably related to his interest as a shareholder and any documents that were
personally owned or acquired.
7. NONINTERFERENCE. While employed by the Company and until two years
from termination of this Agreement, Executive agrees not to interfere with the
business of the Company by directly or indirectly soliciting, attempting to
solicit, inducing, or otherwise causing any employee of the Company to terminate
his or her employment in order to become an employee, consultant or independent
contractor to or for any other employer.
8. NONCOMPETITION. Executive agrees that during the term of this
Agreement and for a period of two (2) years after the termination hereof, he
will not, without the prior consent of the Company, directly or indirectly,
have an interest in, be employed by, or be connected with, as an employee,
consultant, officer, director, partner, stockholder or joint venturer, in any
person or entity owning, managing, controlling, operating or otherwise
participating or assisting in any business which is similar to or in
competition with the business of the Company (i) during the term of this
Agreement, in any location, and (ii) for the two year period following the
termination of this Agreement, in any state in which the Company was
conducting business at the date of termination of Executive's employment and
continues to do so thereafter, provided, however, that the foregoing shall
not prevent the Executive from being a stockholder of less than 1% of the
issued and outstanding securities of any class of a corporation listed on a
national securities exchange
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or designated as national market system securities on an interdealer quotation
system by the National Association of Securities Dealers, Inc.
9. MISCELLANEOUS.
(a) NOTICES. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by telecopy or telex) or the third day after mailing by first
class mail to the recipient at the address indicated below:
To the Company:
Petrowax PA Inc.
c/o Aurora Capital Partners L.P.
1800 Century Park East
Suite 1000
Los Angeles, California 90067
Attention: Richard K. Roeder, Esq.
Facsimile: (310) 551-0101
To Executive:
Boyd D. Wainscott
do Petrowax PA Inc.
501 W. Main Street
P.O. Box 3367
Smethport, PA 16749
Facsimile: (814) 887-2356
or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.
(b) SEVERABILITY. Any provision of this Agreement which is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this paragraph be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provisions of this Agreement invalid, illegal, or unenforceable in any other
jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable
because its scope is considered excessive, such covenant shall be modified so
that the scope of the covenant is reduced only to the minimum extent necessary
to render the modified covenant valid, legal and enforceable.
(c) ENTIRE AGREEMENT. This document constitutes the final, complete,
and exclusive embodiment of the entire agreement and understanding between the
parties related to the subject matter hereof and supersedes and preempts any
prior or contemporaneous understandings, agreements, or representations by or
between the parties, written or oral.
(d) COUNTERPARTS. This Agreement may be executed on separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement.
(e) SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company, and
their
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respective successors and assigns, except that Executive may not assign any of
his duties hereunder and he may not assign any of his rights hereunder without
the prior written consent of the Company.
(f) ATTORNEYS' FEES. If any legal proceeding is necessary to
enforce or interpret the terms of this Agreement, or to recover damages for
breach therefore, the prevailing party shall be entitled to reasonable
attorney's fees, as well as costs and disbursements in addition to any other
relief to which he or it may be entitled.
(g) AMENDMENTS. No amendments or other modifications to this
Agreement may be made except by a writing signed by both parties. No
amendment or waiver of this Agreement requires the consent of any individual,
partnership, corporation or other entity not a party to this Agreement.
Nothing in this Agreement, express or implied, is intended to confer upon any
third person any rights or remedies under or by reason of this Agreement.
(h) CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the internal
law, and not the law of conflicts, of the State of New York.
IN WITNESS WHEREOF, the parties have executed this agreement effective as
of the date it is last executed below by either party.
/s/ Boyd D. Wainscott
---------------------------------------
BOYD D. WAINSCOTT
PETROWAX PA INC.
By: /s/ illegible
--------------------------------
Title: Vice President
--------------------------------
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APPENDIX A
FISCAL YEAR ENDING EBITDA* TARGET
March 31, 1996 19,500,000
March 31, 1997 23,100,000
March 31, 1998 27,000,000
March 31, 1999
(applicable if Agreement renewed) 26,300,000
March 31, 2000
(applicable if Agreement renewed) 27,700,000
*"EBITDA" shall have the meaning ascribed thereto in the Facility Agreement,
dated as of June 16, 1995 (the "Facility Agreement"), between ABI Acquisition 2
PLC and Petrowax PA Inc. as initial borrowers, the Companies named therein as
initial guarantors, Union Bank of Switzerland as arranger, Union Bank of
Switzerland as facility agent, Union Bank of Switzerland as security trustee,
and certain others, but adjusted to subtract therefrom, without duplication, the
sum of all performance bonuses paid to employees of the Group (as such term is
defined in the Facility Agreement) with respect to the fiscal year for which
EBITDA is being computed, regardless of when such performance bonuses are
actually paid.
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Dated as of ___1995
ASTOR-STAG LIMITED
AND
CHARLES RICHARD SPALTON
AND
MSC HOLDINGS INC.
---------------------
SERVICE AGREEMENT
---------------------
ALLEN & OVERY
London
<PAGE>
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CONTENTS
CLAUSE PAGE
1. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . 1
2. APPOINTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. DUTIES OF EXECUTIVE. . . . . . . . . . . . . . . . . . . . . . 2
4. REMUNERATION . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. TRAVELING EXPENSES . . . . . . . . . . . . . . . . . . . . . . 3
6. CAR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
7. PENSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
8. MEDICAL AND SICKNESS . . . . . . . . . . . . . . . . . . . . . 3
9. HOLIDAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10. CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . 4
11. INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . 5
12. CODES OF CONDUCT . . . . . . . . . . . . . . . . . . . . . . . 6
13. TERMINATION OF APPOINTMENT . . . . . . . . . . . . . . . . . . 6
14. CHANGE OF CONTROL. . . . . . . . . . . . . . . . . . . . . . . 8
15. PROTECTIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 8
16. GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
17. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
THE SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
<PAGE>
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THIS AGREEMENT is made as of July 1, 1995 BETWEEN:
(1) ASTOR-STAG LIMITED (Registered No. 146739) whose registered office is at
Tavistock Road, West Drayton, Middlesex UB7 7RA (the "COMPANY");
(2) CHARLES RICHARD SPALTON of Longcroft House, Studley Green, Near High
Wycombe,Bucks (the "EXECUTIVE"); and
(3) MSC Holdings INC. of c/o Aurora Capital Partners, 1800 Century Park East
Suite 1000, L.A., CA 90067 (the "PARENT").
IT IS AGREED as follows:
l. INTERPRETATION
(1) In this agreement:
"ASSOCIATED COMPANY" means:
(a) a company which is not a Subsidiary of the Parent but whose issued
equity share capital (as defined in section 744 of the Companies Act
1985) is owned as to at least 20 per cent. by the Parent or one of its
Subsidiaries; and
(b) a Subsidiary of a company within (a) above;
"BOARD" means the board of directors of the Company;
"GROUP" means the Parent and its subsidiaries and Associated Companies for
the time being and "GROUP COMPANY" means any one of them;
"RECOGNISED INVESTMENT EXCHANGE" has the same meaning as in section 207 of
the Financial Services Act 1986;
"SUBSIDIARY" means a subsidiary within the meaning of section 736 of the
Companies Act 1985; and
"WORKING DAY" means a day other than a Saturday, Sunday or bank or other
public holiday in England.
(2) References in this agreement to a person include a body corporate and an
unincorporated association of persons and references to a company include
any body corporate.
(3) Any reference in this agreement to a statutory provision includes any
statutory modification or re-enactment of it for the time being in force.
(4) Subclauses (1) to (3) above apply unless the contrary intention appears.
(5) The headings in this agreement do not affect its interpretation.
(6) Where appropriate, references to the Executive include his personal
representatives.
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(7) The terms set out in the Schedule in accordance with the requirements of
the employment Protection (Consolidation) Act 1978 form part of this
agreement.
2. APPOINTMENT
The Company shall employ the Executive and the Executive shall serve the
Company as the Managing Director of the Company, the President of Petrowax
PA Inc. (a subsidiary of the Parent) and a Director of the Parent or in
such other capacity consistent with his position as the Company may from
time to time require, on the terms set out in this agreement (the
"Appointment").
3. DUTIES OF EXECUTIVE
(1) The Executive shall use his best endeavours to promote and protect the
interests of the Group and shall not do anything which is harmful to those
interests.
(2) The Executive shall diligently and faithfully perform such duties and
exercise such powers as may from time to time be assigned to or vested in
him in relation to the conduct and management of the affairs of the Group
by the Board.
(3) The Executive shall give to the Board such information regarding the
affairs of the Group as it shall require and shall comply with all proper
instructions of the Board.
(4) The Executive shall (unless prevented by ill-health or accident or
otherwise directed by the Board) devote such of his time during normal
business hours to the duties of the Appointment and such additional time as
is necessary for the proper fulfillment of those duties.
(5) The Executive shall not accept any appointment to any office in relation to
any body, whether corporate or not, or directly or indirectly be interested
in any manner in any other business which is or may be competitive with the
business of a Group Company except:
(a) as holder or beneficial owner (for investment purposes only) of any
class of securities in a company if those securities are listed or
dealt in on a Recognised Investment Exchange and if the Executive
(together with his spouse, children, parents and parents' issue)
neither holds nor is beneficially interested in more than five per
cent. of the securities of that class; or
(b) with the consent in writing of the Company which may be given subject
to any terms or conditions which the Company requires.
(6) The Executive shall not resign as an officer of any Group Company, except
at the request or direction of the Board.
(7) The duties of the Appointment shall be performed at the Company's premises
in West Drayton but shall extend to travel in the United Kingdom and abroad
when required by the Company.
4. REMUNERATION
(1) The Company shall pay or shall procure that a Group Company shall pay to
the Executive a salary at the rate of L125,000 per annum.
<PAGE>
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(2) The Executive's salary shall be reviewed by the Board at least once in
every year, the first review to be on or about 1st July, 1996. The Company
shall not reduce the Executive's salary without his prior written consent.
(3) The Executive's salary shall accrue from day to day and be payable by equal
instalments in arrear on the last day of every month and shall be
inclusive of any fees receivable by the Executive as a director of any
Group Company.
(4) In addition to the above salary the Executive shall be entitled to be paid
an annual bonus of up to 75% of the above salary which shall be dependent
on the performance of the companies for which he is responsible. The
Executive and the Company by separate agreement will agree the basis on
which such a bonus becomes payable at the commencement of each financial
year of the Company.
5. TRAVELLING EXPENSES
The Company shall reimburse the Executive (on production of such evidence
as it may reasonably require) the amount of all travelling and other
expenses properly and reasonably incurred by him in the discharge of his
duties.
6. CAR
(1) The Company shall provide the Executive with a Jaguar Sovereign or similar
car for his use in the performance of his duties and the Executive and his
wife may use the car for their private purposes.
(2) The Company shall pay all normal servicing, insurance and running expenses
in relation to the car and all fuel expenses incurred by the Executive.
(3) The Executive shall take good care of the car and shall observe the terms
and conditions of the insurance policy relating to it.
(4) The Executive shall inform the Company immediately if he is disqualified
from holding a driving license.
7. PENSIONS
The Company agrees to maintain for the benefit of the Executive a pension
scheme which will provide for the Executive no less than the benefits to
which the Executive is prospectively entitled under the scheme in which he
participates as at the date of this agreement.
8. MEDICAL AND SICKNESS
(1) The Executive shall be paid in full during any period of absence from work
due to sickness or injury not exceeding 6 months in any period of 12 months
subject to the provisions of clause 13 and to the production of
satisfactory evidence from a registered medical practitioner in respect of
any period of absence in excess of five consecutive Working Days. The
Executive's salary during any period of absence due to sickness or injury
shall be inclusive of any statutory sick pay to which he is entitled and
the Company may deduct from his salary the amount of any social security
benefits he may be entitled to receive.
<PAGE>
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(3) If the Executive is incapable of performing his duties by reason of injury
sustained wholly or partly as a result of negligence, nuisance or breach of
any statutory duty on the part of a third party and the Executive recovers
any amount by way of compensation for loss of earnings from that third
party, he shall pay to the Company a sum equal to the amount recovered or,
if less, the amount paid to him by the Company under subclause (2) above in
respect of the relevant period of absence as a result of that injury.
(4) The Company shall provide permanent health insurance for the benefit of the
Executive to a level that will provide the Executive (subject to the rules
of the Scheme) with at least two thirds of his salary in the event of
serious incapacity as defined by the terms of the relevant scheme. The
permanent health insurance provided by the Company to the Executive shall
offer in all respects benefits that are at least equivalent to those
enjoyed by the Executive under the scheme in which he participates at the
date of this Agreement.
9. HOLIDAYS
(1) The Executive shall be entitled to 20 Working Days' holiday with pay (plus
one additional day's holiday for each five years' completed service since
October 1969) in every calendar year at times convenient to the Company.
(2) Any entitlement to holiday remaining at the end of any calendar year may be
carried forward to the next calendar year but no further. The entitlement
to holiday (and on termination of employment to holiday pay in lieu of
holiday) accrues pro rata throughout each calendar year (disregarding
fractions of days).
10. CONFIDENTIAL INFORMATION
(1) The Executive shall not make use of or divulge to any person, and shall use
his best endeavours to prevent the use, publication or disclosure of, any
information of a confidential or secret nature:
(a) concerning the business of the Company or any Group Company and which
comes to his knowledge during the course of or in connection with his
employment or his holding any office within the Group from any source
within the Company or any Group Company: or
(b) concerning the business of any person having dealings with the Company
or any Group Company and which is obtained from any person outside the
Company or any Group Company who has required the Company or any Group
Company to keep any such information confidential.
(2) This clause shall not apply to information which is:
(a) used or disclosed in the proper performance of the Executive's duties
or with the prior written consent of the Company; or
(b) ordered to be disclosed by a court of competent jurisdiction or
otherwise required to be disclosed by law.
<PAGE>
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(3) This clause shall continue to apply after the termination of the
Appointment (whether terminated lawfully or not) without limit of time.
(4) Each of the restrictions in each paragraph or subclause above shall be
enforceable independently of each of the others and its validity shall not
be affected if any of the others is invalid. If any of those restrictions
is void but would be valid if some part of the restriction were deleted,
the restriction in question shall apply with such modification as may be
necessary to make it valid.
11. INTELLECTUAL PROPERTY
(1) In this clause "INTELLECTUAL PROPERTY RIGHT" means a formula, process,
invention, improvement, utility model, trade mark, service mark, business
name, copyright, design right, patent, know-how, trade secret and any other
intellectual property right of any nature whatsoever throughout the world
(whether registered or unregistered and including all applications and
rights to apply for the same) which:
(a) relates to or is useful in connection with the business or any product
or service of a Group Company; and
(b) is invented, developed, created or acquired by the Executive (whether
alone or jointly with any other person) during the period of the
Appointment
(2) Subject to the provisions of the Patents Act 1977, the entire interest of
the Executive in any Intellectual Property Right shall, as between the
Executive and the Company, become the property of the Company as absolute
beneficial owner without any payment to the Executive for it.
(3) The Executive shall promptly communicate in confidence to the Company full
particulars of any Intellectual Property Right (whether or not it is vested
in the Company pursuant to subclause (2) above or otherwise) and the
Executive shall not use, disclose to any person or exploit any Intellectual
Property Right belonging to the Company without the prior written consent
of the Company.
(4) With respect to any Intellectual Property Right which is not vested in the
Company pursuant to subclause (2) above or otherwise, the Executive shall
negotiate in good faith with the Company with a view to the Company
acquiring all the Executive's right, title and interest in that
Intellectual Property Right and, unless the Company has declined in writing
to negotiate or acquire such Intellectual Property Right, the Executive
shall not jeopardise the grant of any registration in respect of that
Intellectual Property Right by any public or non-confidential disclosure
for a period of three months from the date on which full particulars of it
are communicated to the Company.
(5) The Executive shall, at the request and expense of the Company, prepare and
execute such instruments and do such other acts and things as may be
necessary or desirable to enable the Company or its nominee to obtain
protection of any Intellectual Property Right vested in the Company in such
parts of the world as may be specified by the Company or its nominee and to
enable the Company to exploit any Intellectual Property Right vested in the
Company to best advantage.
<PAGE>
6
- --------------------------------------------------------------------------------
(6) The Executive hereby irrevocably appoints the Company to be his attorney in
his name and on his behalf to sign, execute or do any instrument or thing
and generally to use his name for the purpose of giving to the Company or
its nominee the full benefit of the provisions of this clause and in favour
of any third party a certificate in writing signed by any director or the
secretary of the Company that any instrument or act falls within the
authority conferred by this clause shall be conclusive evidence that such
is the case.
(7) The Executive hereby waives all of his moral rights (as defined in the
Copyright Designs and Patents Act 1988) in respect of any act of the
Company and any act of a third party done with the Company's authority in
relation to any Intellectual Property Right which is or becomes the
property of the Company.
12. CODES OF CONDUCT
The Executive shall comply with all codes of conduct from time to time
adopted by the Board.
13. TERMINATION OF APPOINTMENT
(1) The Appointment shall be deemed to commence on 1st July, 1995. The
Company may terminate the Appointment by giving to the Executive at
least 24 months' notice in writing and the Executive may terminate the
Appointment by giving to the Company at least six months' notice in
writing, such notice, whether given by the Company or the Executive
expiring at any time on or after 30th June, 1998.
(2) If the Executive:
(a) becomes of unsound mind or is, or may be, suffering from mental
disorder and either:
(i) he is admitted to hospital for treatment under the Mental
Health Act 1983; or
(ii) an order is made by any competent court for his detention or
for the appointment of a receiver, CURATOR BONIS or other
person to exercise powers with respect to his property or
affairs; or
(b) is unable properly to perform his duties by reason of ill-health,
accident or otherwise for a period or periods aggregating at
least 6 months in any period of 12 consecutive months; or
(c) commits any serious breach or after warning in writing repeats or
continues any material breach of his obligations under this
agreement (including any consent granted under it); or
(d) is guilty of serious misconduct or any other conduct which
affects or is likely to affect prejudicially the interests of the
Company or the Group or is convicted of an arrestable offence
(other than a road traffic offence for which a non-custodial
penalty is imposed); or
(e) becomes bankrupt or makes any arrangement or composition with his
creditors; or
<PAGE>
7
- --------------------------------------------------------------------------------
(f) is disqualified from being a director of any company by reason of
an order made by any competent court; or
(g) is guilty of any material breach or non-observance of any code of
conduct referred to in clause 12,
the Company may (whether or not any notice of termination has been
given under subclause (1) above) by written notice to the Executive
terminate the Appointment with immediate effect but a notice under
paragraph (b) above may be given by the Company to the Executive only
within 90 days after the end of any period or periods of disability
referred to in that paragraph.
Provided always as regards paragraphs (a) and (b) above that if and so
long as the Executive shall be entitled (subject to his remaining in
employment with the Company) to receive benefits under the permanent
health insurance scheme referred to in Clause 8(4) hereof by virtue of
the unsoundness of mind, illness or injury which shall have given rise
to the termination of the employment of the Executive hereunder, the
Company shall after such termination offer to re-engage the Executive
in such capacity and on such terms and conditions as the Company sees
fit for the purpose of allowing the Executive either immediately or at
a future date to become a claimant under the terms and conditions of
the relevant permanent health insurance scheme (or any replacement
scheme) from time to time in force and to receive benefits under the
said policy at the same level as he would have been entitled to
receive had his employment not been terminated.
The Company shall be entitled to set-of and/or deduct from any sums
paid to the Executive during any absence due to ill health or
incapacity the amount of any permanent health insurance and/or
statutory sick pay and/or sickness related benefit to which the
Executive is entitled under the rules of the relevant health insurance
scheme or Social Security legislation as appropriate, or for the time
being in force.
(3) During any period of notice of termination of the Appointment (whether
or not such notice has been given by the Company or the Executive) the
Company may require the Executive to take any holiday to which the
Executive is entitled under clause 9 at such time or times as the
Company may decide.
(4) The Company may during any period after notice of termination of the
Appointment has been given by the Company or the Executive suspend any
of the Executive's powers or duties for a period not exceeding six
months where the Executive leaves the Company's employment in
circumstances where it is reasonable for the Company to believe that
he shall be interested or concerned in a business, company or firm
carrying on, or about to commence, a business which is, or is likely
to be, competitive with any part of the business of any Group Company
with which the Executive was engaged or concerned in the previous 12
months before the suspension started. In addition or alternatively,
the Company may during the whole or any part of such period require
the Executive to perform duties (including any modified duties arising
from an exercise by the Company of its rights under clause 3(2) at
such locations as the Company may require consistent with clause
3(7)). Throughout any such period of suspension the Executive's salary
and other benefits to which he is entitled under this agreement shall
continue to be paid or provided by the Company. At any time during
such period the Executive shall, at the request of the Board,
immediately resign, without claim for compensation from once as a
director of the Company the Parent and any Group Company and from any
other office held by him in the Company or any Group Company.
<PAGE>
8
- --------------------------------------------------------------------------------
(5) On the termination of the Appointment in any way (whether lawfully or
otherwise) the Executive shall immediately:
(a) resign all offices held by him in any Group Company (without
prejudice to the rights of any party arising out of this
agreement or the termination of the Appointment);
(b) return the car and its keys to the Company at such place as it
shall nominate for the purpose; and
(c) deliver to the Company Secretary all property in his possession,
custody or under his control belonging to any Group Company
including (but not limited to) business cards, credit and charge
cards, security and computer passes, original and copy documents
or other media on which information is held in his possession
relating to the business or affairs of any Group Company.
(6) If the Executive does not resign any office held by him in any Group
Company when required to do so under this agreement the Company is
irrevocably authorised to appoint some person in his name and on his
behalf to do all such things and execute all such documents as may be
necessary for or incidental to giving effect to his resignation of
that office.
(7) With effect from the date of termination of the Appointment, all the
rights and obligations of the parties under this agreement shall cease
except for those which are expressed to continue after that date and
except in relation to any breach of any provision of this agreement
before that date. Termination of the Appointment shall not prejudice
any other rights of the Company.
14. CHANGE OF CONTROL
If the person or persons having the right to control, directly or
indirectly, a majority of the votes which may ordinarily be cast at general
meetings of the Company or the right to control the composition of the
Board, cease to have those rights, the Executive may by three months'
written notice to the Company terminate the Appointment and in such a case
the Executive shall be entitled to be compensated for the loss of 12
months' salary and benefits at the level applicable at the time when notice
is given.
15. PROTECTIVE COVENANTS
(1) In this clause:
(a) "TERMINATION DATE" means the date on which the Appointment terminates;
(b) "PERSON" includes any company, firm, organization or other entity; and
(c) references to a Group Company include its successors in business where
the succession occurs after the Termination Date.
(2) The Executive covenants with the Company (for itself and as trustee for
each Group Company) that he shall not for a period of 24 months after the
Termination Date be concerned in any business which is carried on in the
United Kingdom, Western Europe, the United States of America or any other
country in which the company or any Group Company has conducted
<PAGE>
9
- --------------------------------------------------------------------------------
business in the 12 months prior to the Termination Date and which is
competitive or likely to be competitive with any business carried on at the
Termination Date by the Company or a Group Company and with which the
Executive was actively involved during the course of his employment during
the 12 months ending on the Termination Date. For this purpose, the
Executive is concerned in a business if:
(i) he carries it on as principal or agent; or
(ii) he is a partner, director, employee, secondee, consultant or agent
in, of or to any person who carries on the business; or
(iii) he has any direct or indirect financial interest (as shareholder or
otherwise) in any person who carries on the business; or
(iv) he is a partner, director, employee, secondee, consultant or agent
in, of or to any person who has a direct or indirect financial
interest (as shareholder or otherwise) in any person who carries on
the business;
disregarding any financial interest of a person in securities which are
listed or dealt in on any Recognised Investment Exchange if that person,
the Executive and any person connected with him (within the meaning of
section 839 of the Income and Corporation Taxes Act 1988) are interested in
securities which amount to less than five per cent. of the issued
securities of that class and which, in all circumstances, carry less than
five per cent. of the voting rights (if any) attaching to the issued
securities of that class.
(3) The Executive covenants with the Company (for itself and as trustee for
each Group Company) that he shall not directly or indirectly on his own
account or on behalf of or in conjunction with any person for a period of
24 months after the Termination Date (except on behalf of the Company or a
Group Company) canvass or solicit business or custom for goods of similar
type to those being manufactured or dealt in or services similar to those
being provided by the Company or a Group Company at the Termination Date,
and with which the Executive was actively involved in the course of his
employment during the 12 months ending on the Termination Date, from any
person who has been at any time during the 12 months ending on the
Termination Date a customer of the Company or a Group Company and with whom
the Executive was actively involved in the course of his employment during
the 12 months ending on the Termination Date.
(4) The Executive covenants with the Company (for itself and as trustee for
each Group Company) that he shall not directly or indirectly on his own
account or on behalf of or in conjunction with any person for a period of
24 months after the Termination Date induce or attempt to induce any
supplier of the Company or a Group Company, with whom the Executive was
actively involved in the course of his employment during the 12 months
ending on the Termination Date, to cease to supply, or to restrict or vary
the terms of supply to, the Company or the Group Company or otherwise
interfere with the relationship between such a supplier and the Company or
the Group Company.
(5) The Executive covenants with the Company (for itself and as trustee for
each Group Company) that he will not directly or indirectly on his own
account or on behalf of or in conjunction with any person for a period of
24 months after the Termination Date induce or attempt to induce any
employee of the Company or Group Company who is engaged in an business or
activity
<PAGE>
10
- --------------------------------------------------------------------------------
carried on by the Company or Group Company at the Termination Date, and
with whom the Executive during the 12 months ending on the Termination Date
had material dealings in the course of his employment, to leave the
employment of the Company or Group Company (whether or not this would be a
breach of contract by the employee).
(6) Each of the restrictions in each paragraph or subclause above shall be
enforceable independently of each of the others and its validity shall not
be affected if any of the others is invalid. If any of those restrictions
is void but would be valid if some part of the restriction were deleted,
the restriction in question shall apply with such modification as may be
necessary to make it valid.
(7) The Executive acknowledges that the provisions of this clause are no more
extensive than is reasonable to protect the Company and the Group.
16. GENERAL
(1) Save in respect of certain business related benefits enjoyed by the
Executive as a consequence of his employment at the date of this agreement,
details of which have been provided to the Company, as from the effective
date of the Appointment all other agreements or arrangements between the
Executive and any Group Company relating to the employment of the Executive
shall cease to have effect.
(2) The Parent executes this agreement for the purpose of confirming the
appointment of the Executive as a director of the Parent and in addition,
the Parent irrevocably and unconditionally guarantees to the Executive the
performance of the obligations of the Company under this agreement.
(3) This agreement shall be governed by and construed in accordance with
English law.
17. NOTICES
(1) Any notice or other document to be served under this agreement may, in the
case of the Company, be delivered or sent by first class post or telex or
facsimile process to the Company at its registered office for the time
being and, in the case of the Executive, may be delivered to him or sent by
first class post to his usual or last known place of residence.
(2) Any such notice or other document shall be deemed to have been served:
(a) if delivered, at the time of delivery;
(b) if posted, at 10.00 a.m. on the second Working Day after it was put
into the post; or
(c) if sent by telex or facsimile process, at the expiration of two hours
after the time of despatch, if despatched before 3.00 p.m. on any
Working Day, and in any other case at 10.00 a.m. on the Working Day
following the date of dispatch.
(3) In proving such service it shall be sufficient to prove that delivery was
made or that the envelope containing such notice or other document was
properly addressed and posted as a pre-paid first class letter or that the
telex or facsimile message was properly addressed and dispatched as the
case may be.
<PAGE>
11
- --------------------------------------------------------------------------------
AS WITNESS the hands of the Executive and the duly authorised representatives of
the Company and the Parent on the date which appears first on page l.
<PAGE>
12
- --------------------------------------------------------------------------------
THE SCHEDULE
The following constitutes the statement of the particulars of the Executive's
employment issued pursuant to the Employment Protection (Consolidation) Act
1978. The particulars are those which apply on the date of this agreement:
NAME OF EMPLOYER - the Company as defined on page 1 above.
NAME OF EMPLOYEE - the Executive as defined on page 1 above.
DATE OF COMMENCEMENT OF EMPLOYMENT - see clause 13(1).
DATE OF COMMENCEMENT OF CONTINUOUS PERIOD OF EMPLOYMENT (if different from
above) - the Executive's previous employment with the Company shall be
treated as part of his continuous period of employment. Accordingly the
Executive's continuous period of employment commenced in October 1969.
SCALE OR RATE OF REMUNERATION OR METHOD OF CALCULATING REMUNERATION - see
clause 4.
INTERVALS AT WHICH REMUNERATION IS PAID - monthly - see clause 4.
HOURS OF WORK - there are no fixed hours of work - see clause 3(4).
HOLIDAYS (INCLUDING PUBLIC HOLIDAYS) AND HOLIDAY PAY - see clause 9.
SICKNESS OR INJURY AND SICK PAY - see clause 8.
PENSION - SEE CLAUSE 7. A contracting out certificate within the meaning of
Part III of the Pension Schemes Act 1993 is in force.
NOTICE - see clause 13(1).
JOB TITLE - Managing Director of the Company and President of Petrowax PA
Inc.
PLACE OF WORK - see clause 3(7).
COLLECTIVE AGREEMENTS - the Company is not a party to any collective
agreement which affects the Executive's employment.
WORKING OVERSEAS - the Executive may be required to work overseas for
periods exceeding one month but there are currently no particulars to be
entered in this regard.
DISCIPLINE AND GRIEVANCE PROCEDURE - there are no specific disciplinary
rules applicable to the Executive's employment. If the Executive is
dissatisfied with any disciplinary decision or seeks to redress any
grievance relating to his employment, he should apply in writing to the
Board and the Board shall endeavour to propose a solution within 14 days.
<PAGE>
13
- --------------------------------------------------------------------------------
SIGNED by ) /s/ P. Bowes
on behalf of ASTOR-STAG LIMITED ) /s/ P.E. Woolford
in the presence of: ) P.E. Woolford - 51 Telford Way
Yeading
Middx. UB4 9
SIGNED by CHARLES RICHARD ) /s/ C.R. Spalton
SPALTON ) /s/ P.E. Woolford
in the presence of: ) P.E. Woolford - 51 Telford Way
Yeading
Middx. UB4 9th
SIGNED by ) /s/ Richard K. Roeder
on behalf of MSC HOLDINGS INC. ) /s/ Richard R. Crowell
in the presence of: )
<PAGE>
Exhibit 21
SUBSIDIARIES OF ASTOR CORPORATION
---------------------------------
STATE OR COUNTRY
SUBSIDIARY OF INCORPORATION
---------- ----------------
ABI Corporation Delaware
ABI Acquisition 1 plc Delaware and
England
ABI Acquisition 2 plc England
Astor Stag Ltd. England
Astor Stag S.A. Belgium
<PAGE>
CONSENT OF ERNEST & YOUNG LLP
We consent to the reference to our firm under the captions "Independent
Auditors" and "Selected Financial Data," and to the use of our reports dated
June 7, 1996, in the Registration Statement (S-4 No. 333- ) and related
Prospectus of Astor Holdings II, Inc. dated October 25, 1996.
S/ ERNST & YOUNG LLP
Buffalo, New York
October 25, 1996
<PAGE>
CONSENT OF ERNST & YOUNG LLP
We consent to the use of our reports dated February 1, 1996, with respect to the
financial statements of Adco Technologies, Inc. and March 18, 1994, with respect
to the financial statements of Adco Products, Inc. included in the Registration
Statement (Form S-4 No. 333- ) and related Prospectus of Astor Holdings II,
Inc. dated October 25, 1996.
S/ ERNST & YOUNG LLP
Detroit, Michigan
October 25, 1996
<PAGE>
[KPMG LETTERHEAD]
The Directors
Astor Corporation
8521 Six Forks Road
Suite 105 Our ref mww-01/a1/560
Raleigh
NC 27615 Contact Alan Buckle
USA 0171-3118468
24 October 1996
Dear Sirs
We consent to the use of our report herein and to the reference to our firm
under the heading "Independent Auditors" in the registration statement.
Yours faithfully,
/s/ KPMG
KPMG
[KPMG LETTERHEAD]
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
_________
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) __
STATE STREET BANK AND TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
Massachusetts 04-1867445
(JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER
ORGANIZATION IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
225 Franklin Street, Boston, Massachusetts 02110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
John R. Towers, Esq. Senior Vice President and Corporate Secretary
225 Franklin Street, Boston, Massachusetts 02110
(617)654-3253
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
_____________________
ASTOR CORPORATION
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3550228
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8521 SIX FORKS ROAD
RALEIGH, NORTH CAROLINA 27615
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
_____________________
ASTOR HOLDINGS II, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 25-1766332
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8521 SIX FORKS ROAD
RALEIGH, NORTH CAROLINA 27615
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
____________________
SENIOR SUBORDINATED DEBT SECURITIES
(TITLE OF INDENTURE SECURITIES)
<PAGE>
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System,
Washington, D.C., Federal Deposit Insurance Corporation,
Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Boston Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement
of Eligibility and Qualification of Trustee (Form T-1) filed
with the Registration Statement of Morse Shoe, Inc. (File
No. 22-17940) and is incorporated herein by reference
thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the
trustee to commence business was necessary or issued is on
file with the Securities and Exchange Commission as Exhibit
2 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-
17940) and is incorporated herein by reference thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE
DOCUMENTS SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by
reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is
on file with the Securities and Exchange Commission as
Exhibit 4 to the Statement of Eligibility and Qualification
of Trustee (Form T-1) filed with the Registration Statement
of Eastern Edison Company (File No. 33-37823) and is
incorporated herein by reference thereto.
1
<PAGE>
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS
IN DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(b) OF THE ACT.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR
EXAMINING AUTHORITY.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is annexed hereto as
Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates
to matters peculiarly within the knowledge of the obligor, the trustee has
relied upon information furnished to it by the obligor, and the trustee
disclaims responsibility for the accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 25TH DAY OF OCTOBER, 1996.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Jill Olson
------------------------------
JILL OLSON
ASSISTANT VICE PRESIDENT
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by Astor
Corporation of its Senior Subordinated Debt Securities, guaranteed by Astor
Holdings II, Inc. ,we hereby consent that reports of examination by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Jill Olson
--------------------------------
JILL OLSON
ASSISTANT VICE PRESIDENT
DATED: OCTOBER 25, 1996
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company of
Boston, Massachusetts and foreign and domestic subsidiaries, a state banking
institution organized and operating under the banking laws of this commonwealth
and a member of the Federal Reserve System, at the close of business JUNE 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act and in
accordance with a call made by the Commissioner of Banks under General Laws,
Chapter 172, Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin . . . . . . . . . . . . 1,787,130
Interest-bearing balances. . . . . . . . . . . . . . . . . . . . . . . . . 5,971,326
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,325,054
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary. . . . . . . . . . . . . . . . . . . . 5,436,994
Loans and lease financing receivables:
Loans and leases, net of unearned income . . . . . 4,308,339
Allowance for loan and lease losses. . . . . . . . 63,491
Loans and leases, net of unearned income and allowances. . . . . . . . . . 4,244,848
Assets held in trading accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,042,846
Premises and fixed assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374,362
Other real estate owned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,223
Investments in unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . 31,624
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . 57,472
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,384
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 670,058
------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,840,879
===========
LIABILITIES
Deposits:
In domestic offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,531,683
Noninterest-bearing. . . . . . . . . . . 4,728,115
Interest-bearing . . . . . . . . . . . . 2,152,116
In foreign offices and Edge subsidiary . . . . . . . . . . . . . . . . . . 9,607,427
Noninterest-bearing. . . . . . . . . . . 28,265
Interest-bearing . . . . . . . . . . . . 9,579,162
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary. . . . . . . . . . . . . . . . . . . . 5,913,969
Demand notes issued to the U.S. Treasury and Trading Liabilities . . . . . . . . . . 530,406
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493,191
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . 57,387
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620,287
-------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,102,898
-------------
EQUITY CAPITAL
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,176
Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228,448
Undivided profits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,197,496
-------------
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,455,120
-------------
Total liabilities and equity capital . . . . . . . . . . . . . . . . . . . . . . . . 28,840,879
============
</TABLE>
4
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
5
