<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY , 1997
REGISTRATION NO. 333-28751
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NEENAH FOUNDRY COMPANY
HARTLEY CONTROLS CORPORATION
NEENAH TRANSPORT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
WISCONSIN 3321 39-1580331
WISCONSIN 3321 39-0842568
WISCONSIN 3321 39-1378433
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
2121 BROOKS AVENUE, BOX 729,
NEENAH, WISCONSIN 54927
(414) 725-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
C/O GARY W. LACHEY
VICE PRESIDENT -- FINANCE, TREASURER AND SECRETARY
NEENAH FOUNDRY COMPANY
2121 BROOKS AVENUE, BOX 729,
NEENAH, WISCONSIN 54927
(414) 725-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
LANCE C. BALK
KIRKLAND & ELLIS
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022-4675
TELEPHONE: (212) 446-4800
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this
Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Neenah Foundry Company's 11 1/8% Senior Subordinated
Notes due 2007, Series B............................ $150,000,000 $1,000 $150,000,000 $51,724.14
Hartley Controls Corporation's Guarantee of 11 1/8%
Senior Subordinated Notes due 2007, Series B........ * * * None
Neenah Transport, Inc.'s Guarantee of 11 1/8% Senior
Subordinated Notes due 2007, Series B............... * * * None
==========================================================================================================================
</TABLE>
* Not applicable
(1) Estimated solely for the purpose of calculating the registration fee.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(b) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF PART I OF FORM S-4
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<CAPTION>
REGISTRATION STATEMENT
ITEM NUMBER AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
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<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front Cover Page; Outside Back Cover
Page
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.............. Prospectus Summary; The Company; Risk
Factors; Unaudited Pro Forma Consolidated
Financial Information; Selected
Consolidated Financial and Other Data
4. Terms of the Transaction................... Outside Front Cover Page; Prospectus
Summary; The Exchange Offer; Description of
Exchange Notes; Certain Federal Income Tax
Consequences
5. Pro Forma Financial Information............ Unaudited Pro Forma Consolidated Financial
Information
6. Material Contracts with the Company Being
Acquired................................... Inapplicable
7. Additional Information Required............ Inapplicable
8. Interests of Named Experts and Counsel..... Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Inapplicable
10. Information with Respect to S-3
Registrants................................ Inapplicable
11. Incorporation of Certain Information by
Reference.................................. Inapplicable
12. Information with Respect to S-3 or S-2
Registrants................................ Inapplicable
13. Incorporation of Certain Information by
Reference.................................. Inapplicable
14. Information with Respect to Registrants
other than S-3 or S-2 Registrants.......... Outside Front Cover Page; Prospectus
Summary; Risk Factors; Use of Proceeds; The
Transactions; Capitalization; Unaudited Pro
Forma Consolidated Financial Information;
Selected Consolidated Financial and Other
Data; Management's Discussion and Analysis
of Financial Condition and Results of
Operations; Industry; Business; Management;
Security Ownership; Certain Relationships
and Related Transactions; Description of
Credit Agreement
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
REGISTRATION STATEMENT
ITEM NUMBER AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
------------------------------------------- -------------------------------------------
<C> <S> <C>
15. Information with Respect to S-3 Companies.. Inapplicable
16. Information with Respect to S-3 or S-2
Companies.................................. Inapplicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies.................. Inapplicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited......... Inapplicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer....................... Management; Security Ownership; Certain
Relationships and Related Transactions
</TABLE>
<PAGE> 4
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 nor 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 securities laws of any such State.
SUBJECT TO COMPLETION, DATED JULY , 1997
PRELIMINARY PROSPECTUS
OFFER FOR ALL OUTSTANDING 11 1/8% SERIES A SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR 11 1/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2007 OF
NEENAH FOUNDRY COMPANY
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON , 1997 UNLESS EXTENDED
NEENAH FOUNDRY COMPANY, a Wisconsin corporation (the "Company"), hereby offers
to exchange an aggregate principal amount of up to $150,000,000 of its 11 1/8%
Series B Senior Subordinated Notes due 2007 (the "New Notes") for a like
principal amount of its 11 1/8% Series A Senior Subordinated Notes due 2007 (the
"Old Notes") outstanding on the date hereof upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal (which together constitute the "Exchange Offer"). The New Notes and
the Old Notes are collectively hereafter referred to as the "Notes." The terms
of the New Notes are identical in all material respects to those of the Old
Notes, except for certain transfer restrictions and registration rights relating
to the Old Notes. The New Notes will be issued pursuant to, and entitled to the
benefits of, the Indenture (as defined) governing the Old Notes. The New Notes
will be unsecured and will be subordinated to all existing and future Senior
Indebtedness (as defined) of the Company. The New Notes will rank pari passu
with any future Senior Subordinated Indebtedness (as defined) of the Company and
will rank senior to all subordinated indebtedness of the Company. The New Notes
will be fully and unconditionally guaranteed on a joint and several basis (the
"Subsidiary Guaranties") by each of the Company's principal operating
subsidiaries, Hartley Controls Corporation ("Hartley Controls") and Neenah
Transport, Inc. ("Neenah Transport") (collectively, the "Guarantor
Subsidiaries"). The Company will derive some of its operating income and cash
flow from its subsidiaries. The Guarantor Subsidiaries guarantee the Senior Bank
Facilities (as defined) and are jointly and severally liable on a senior basis
with the Company for all obligations thereunder. Such obligations are secured by
pledges of all the capital stock of the Guarantor Subsidiaries and security
interests in, or liens on, substantially all other tangible and intangible
assets located in the United States of the Guarantor Subsidiaries. See
"Description of Senior Bank Facilities" and "Description of Notes." As of July
1, 1997, on a pro forma basis, after giving effect to the Transactions (as
defined), the Refinancing (as defined) and the application of proceeds
therefrom, the Company and the Guarantor Subsidiaries would have had outstanding
$0.1 million (excluding $0.6 million of outstanding letters of credit) aggregate
amount of Senior Indebtedness (all of which is Secured Indebtedness (as
defined)), $197.6 million aggregate principal amount of Senior Subordinated
Indebtedness including the indebtedness represented by the Notes and no
indebtedness that is subordinate or junior in right of payment to the Senior
Subordinated Indebtedness.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company and the Guarantor Subsidiaries contained in the
Exchange and Registration Rights Agreement dated April 30, 1997 (the
"Registration Rights Agreement"), among the Company, the Guarantor Subsidiaries
and Chase Securities Inc. and Morgan Stanley & Co. Incorporated (the "Initial
Purchasers"), with respect to the initial sale of the Old Notes.
The Company will not receive any proceeds from the Exchange Offer. The Company
will pay all the expenses incident to the Exchange Offer. Tenders of Old Notes
pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date (as defined) for the Exchange Offer. In the event the Company
terminates the Exchange Offer and does not accept for exchange any Old Notes
with respect to the Exchange Offer, the Company will promptly return such Old
Notes to the holders thereof. See "The Exchange Offer."
Based on no-action letters issued by the staff of the Securities and Exchange
Commission (the "Commission") to third parties, the Company believes the New
Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by any holder thereof (other than any such holder that
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holder's business and such holder has no arrangement
or understanding with any person to participate in the distribution of such
Exchange Notes. See "The Exchange Offer -- Certain Conditions to the Exchange
Offer." Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivery of a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus, as
it may be amended or supplemented from time to time may be used by a broker-
dealer in connection with resales of New Notes received in exchange for Old
Notes where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. Each of the Company and
the Guarantor Subsidiaries has agreed that, for a period of 180 days after the
Expiration Date, it will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of Distribution."
- --------------------------------------------------------------------------------
Prior to the Exchange Offer, there has been no public market for the Old Notes.
If a market for the New Notes should develop, such New Notes could trade at a
discount from their principal amount. The Company currently does not intend to
list the New Notes on any securities exchange or to seek approval for quotation
through any automated quotation system and no active public market for the New
Notes is currently anticipated. There can be no assurance that any public market
for the New Notes will develop.
The Exchange Offer is not conditioned upon any minimum principal amount of Old
Notes being tendered for exchange pursuant to the Exchange Offer.
SEE "RISK FACTORS" COMMENCING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS
THAT HOLDERS OF OLD NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE 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 , 1997.
<PAGE> 5
AVAILABLE INFORMATION
The Company and the Guarantor Subsidiaries have filed with the Commission a
Registration Statement on Form S-4 (the "Exchange Offer Registration Statement",
which term shall encompass all amendments, exhibits, annexes and schedules
thereto) pursuant to the Securities Act, and the rules and regulations
promulgated thereunder, covering the New Notes being offered hereby. This
Prospectus does not contain all the information set forth in the Exchange Offer
Registration Statement. For further information with respect to the Company, the
Guarantor Subsidiaries and the Exchange Offer, reference is made to the Exchange
Offer Registration Statement. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Exchange Offer Registration Statement, including
the exhibits thereto, can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Regional Offices of the Commission at Seven
World Trade Center, Suite 1300, New York, New York 10048 and at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address of such Web site is: http://www.sec.gov.
As a result of the Exchange Offer, the Company will become subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith will be required to file
periodic reports and other information with the Commission. The obligation of
the Company to file periodic reports and other information with the Commission
will be suspended if the New Notes are held of record by fewer than 300 holders
as of the beginning of any fiscal year of the Company other than the fiscal year
in which the Exchange Offer Registration Statement is declared effective. The
Company will nevertheless be required to continue to file reports with the
Commission if the New Notes are listed on a national securities exchange. In the
event the Company ceases to be subject to the informational requirements of the
Exchange Act, the Company will be required under the Indenture to continue to
file with the Commission the annual and quarterly reports, information,
documents or other reports, including, without limitation, reports on Forms
10-K, 10-Q and 8-K, which would be required pursuant to the informational
requirements of the Exchange Act. Under the Indenture, the Company shall file
with the Trustee annual, quarterly and other reports after it files such reports
with the Commission. Annual reports delivered to the Trustee and the holders of
New Notes will contain financial information that has been examined and reported
upon, with an opinion expressed by an independent public accountant. The Company
will also furnish such other reports as may be required by law.
Information contained in this Prospectus contains "forward-looking
statements" which can be identified by the use of forward-looking terminology
such as "believes," "expects," "may," "will," "should," or "anticipates" or the
negative thereof or other similar terminology, or by discussions of strategy.
The Company's actual results could differ materially from those anticipated by
any such forward-looking statements as a result of certain factors, including
those set forth under the "Risk Factors" beginning on page 16 and elsewhere in
this Prospectus.
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2
<PAGE> 6
SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements and
related notes thereto included elsewhere in this Prospectus. Prospective
investors are urged to read this Prospectus in its entirety. Unless otherwise
indicated in this Prospectus, all market share percentages are based on industry
information compiled by Georgetown Economic Services, an independent market
research firm that compiles information on behalf of the foundry industry.
Unless otherwise stated in this Prospectus or unless the context otherwise
requires, references herein to the "Company" are (i) to Neenah Corporation and
its subsidiaries, Neenah Foundry Company, Hartley Controls Corporation and
Neenah Transport, Inc., for periods prior to the Merger (ii) to Neenah
Corporation, as the surviving entity in the Merger, and its subsidiaries, for
the period from the Merger to July 1, 1997 and (iii) to Neenah Foundry Company
and its subsidiaries for periods thereafter. Neenah Corporation was a Wisconsin
corporation organized in 1987 as a holding company for its operating
subsidiaries. The Company's fiscal year ends on March 31, and unless otherwise
indicated all annual references herein refer to such fiscal year.
THE COMPANY
OVERVIEW
The Company, founded in 1872, is one of the largest manufacturers of a wide
range of high quality ductile and gray iron castings for the heavy municipal
market and selected segments of the industrial market. The Company believes it
is the largest manufacturer of heavy municipal iron castings in the United
States with approximately a 19% market share in calendar year 1996. The
Company's broad range of heavy municipal iron castings includes manhole covers
and frames, storm sewer frames and grates, heavy duty airport castings,
specialized trench drain castings, specialty flood control castings and
ornamental tree grates. These municipal castings are sold throughout the United
States to state and local government entities, utility companies, precast
concrete manhole structure producers and contractors for both new construction
and infrastructure replacement. The municipal market generated approximately 43%
of the Company's 1997 net sales. The Company believes it is also a leading
manufacturer of a wide range of complex industrial castings, including castings
for medium- and heavy-duty truck drive line components, a broad range of
castings for the farm equipment industry and specific components for compressors
used in heating, ventilation and air conditioning systems ("HVAC"). The
industrial market generated approximately 53% of the Company's 1997 net sales.
In addition, the Company engineers, manufactures and sells customized sand
control systems and related products, which are an essential part of the casting
process, to other iron foundries. Sales of these sand control systems and
related products represented approximately 4% of the Company's 1997 net sales.
The Company currently operates two modern foundries with an annual
aggregate rated capacity of approximately 187,000 tons at a single site in
Neenah, Wisconsin. Since 1985, the Company has invested approximately $100
million in its production facilities, with approximately $73 million invested in
a major plant modernization program from 1985 to 1990. This plant modernization
program was a critical part of a long-term strategy to produce higher volume,
value-added castings for its existing industrial customers and to penetrate
other selected segments of the industrial market, while preserving its position
as the leader in the heavy municipal market. This modernization program entailed
the closing of the Company's oldest foundry, Plant 1, and the updating of the
Company's other two foundries, Plants 2 and 3, which enabled the Company both to
produce higher volume, complex castings for selected industrial segments and to
improve the Company's cost position in the heavy municipal market. Following the
completion of the modernization program, the Company has steadily decreased its
production of lower margin products such as axle covers and brake drums and
increased the production of higher margin, more complex parts such as
transmission and axle housings. As a result of this strategy, the Company's
ongoing improvements in its manufacturing process and increased demand for
medium- and heavy-duty truck components,
3
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net sales and EBITDA (as defined) have increased substantially. From 1992 to
1997, net sales have grown from $116.5 million to $165.4 million, representing a
compound annual growth rate of 7.3%, and EBITDA has grown from $13.4 million to
$38.0 million during the same period, representing a compound annual growth rate
of 23.2%.
COMPETITIVE ADVANTAGES
The Company believes it benefits from the following competitive advantages,
which have enabled it to increase sales and operating profitability and to
maintain its position as one of the leaders in the iron casting industry.
Leading Market Position. The Company believes it is the largest
manufacturer of heavy municipal iron castings in the United States with
approximately a 19% market share in calendar year 1995. Furthermore, the
Company, which has produced municipal castings for over 70 years has, according
to its estimates, over a 50% market share in nine of the top ten states in which
the Company sells heavy municipal castings. Sales in those states represented
approximately 69% of the Company's municipal sales in 1997. The Company believes
it is also one of the largest manufacturers of iron castings for selected
segments of the industrial market, including the medium-and heavy-duty truck and
farm equipment segments. The Company is the sole sourced supplier for over 85%
of the industrial products it produces and has multi-year arrangements with
certain of its largest customers. The Company believes it can continue to
capitalize on its strong market position to generate additional revenues and
realize economies of scale, thereby increasing margins and earnings.
Low Cost Structure. As a result of its size, significant investment in
equipment and technology and focus on improving efficiency, the Company believes
it possesses a highly competitive cost structure. Since 1985, the Company has
invested approximately $100 million in its production facilities, with
approximately $73 million invested in plant modernization and new equipment from
1985 to 1990. These investments, combined with the Company's ongoing
improvements to its manufacturing process, have substantially increased
efficiency and manufacturing productivity. From 1992 to 1997, the Company
reduced its scrap rate from 3.5% to 2.0%, which the Company believes is one of
the lowest scrap rates in the industry. During the same period, the Company
reduced its employee hours per ton by approximately 40% from 14.8 to 9.0, while
improving product quality levels and producing higher margin, more complex
parts.
Broad Product Offering. The Company carries a broad range of products,
offering more than 4,400 patterns that can produce over 20,000 part combinations
for the heavy municipal market, and more than 350 patterns for the industrial
market. The Company believes its municipal catalog offers the largest castings
selection of any foundry serving the heavy municipal market. This extensive
product offering, which includes hundreds of one-of-a-kind specialty items,
enables the Company to compete throughout the United States and provide a
substantial number of the many types of municipal castings required for
individual projects. Heavy municipal castings are manufactured from
Company-owned patterns which have been appraised by independent appraisers to
have a value in excess of $22 million. Additionally, the Company's extensive and
growing offering of complex industrial castings enables it to more effectively
service its customers' increasing needs for highly engineered cast parts and
often positions the Company as the sole source of supply to original equipment
manufacturers ("OEMs") and their first tier suppliers. The Company's broad
industrial product offering and its recognized casting engineering expertise
have become increasingly important as large industrial customers seek to reduce
the number of suppliers with whom they conduct business.
Strong, Diverse Customer Relationships. The Company continually focuses on
establishing and maintaining strong relationships with its customers. In the
heavy municipal market, the Company currently sells to over 17,000 active
customers in all 50 states, with the majority of its sales concentrated in the
midwestern states. The Company believes it has the largest sales and marketing
4
<PAGE> 8
effort of any foundry serving the heavy municipal market, including 47 Company
employees and 26 commissioned representatives. The Company believes the size of
its marketing effort, the breadth of its product offering and the level of its
technical support provide it with a significant competitive advantage and will
allow it to further strengthen its leading position in the heavy municipal
market. With respect to the industrial market, the Company has established
strong relationships with leading manufacturers of medium- and heavy-duty truck
components, farm equipment and HVAC systems. The Company is the sole sourced
provider for over 85% of the products it currently supplies to its industrial
customer base and has multi-year arrangements with certain of its largest
customers. Furthermore, the average industrial casting typically takes between
12 and 18 months to go from the design phase to full production and has an
average life cycle of approximately 8 to 10 years. This lengthy development
process, in which the Company actively participates, provides the Company with
an inventory of products that cannot be quickly replicated by its competitors.
Historically, the foundry that has originally manufactured an industrial part
has continued to manufacture that part throughout its product life cycle. The
Company's participation in both the heavy municipal and industrial markets helps
to diversify the Company's business and to reduce the Company's reliance on
individual customers or end-use markets.
High Quality Products and Customer Service. The Company believes it enjoys
a reputation for providing a high level of customer service and is recognized
for its ability to consistently manufacture high-quality, complex products. The
Company believes its manufacturing capabilities and process controls allow it to
manufacture high quality castings which are dimensionally and metallurgically
consistent. In addition to providing high quality products, the Company
emphasizes customer service by providing tooling and engineering development
support to its customers, consistent on-time delivery utilizing its own fleet of
trucks for delivery of many of its municipal products and a small portion of the
Company's industrial products and follow-up through its sales and marketing
team. The Company believes its ability to provide such product quality and
responsive service has fostered customer loyalty and long-term relationships.
Experienced Management Team with Significant Equity Stake. The top seven
members of the Company's senior operating management have an average of
approximately 12 years with the Company and 23 years in the iron foundry
industry. Through an investment in ACP Products, L.L.C., certain members of the
Company's management (the "Management Investors") beneficially own, on a fully
diluted basis, approximately 10% of the common stock of the Company.
BUSINESS STRATEGY
The Company's strategy for achieving continued growth in sales and
profitability includes: (i) increasing the sale of higher margin products, (ii)
selectively entering new markets, (iii) improving operating performance and (iv)
making selective acquisitions.
Increasing the Sale of Higher Margin Products. The Company continually
strives to improve the margins on the parts it produces. In the heavy municipal
market, the Company has historically maintained strong margins by periodically
implementing price increases and introducing new, higher value-added products.
For example, the Company is currently leading the market in the sale of
lightweighted municipal castings, which are less costly to handle and require
less raw material to produce. The Company believes incremental margin
improvements will be realized from the Company's increased production of these
lightweighted products. In the industrial market, the Company increased its
focus on manufacturing complex, highly engineered castings in the early 1990s
following substantial capital investment in the late 1980s. Since 1991, the
Company has steadily increased the volume, array and complexity of the parts it
produces for its industrial customers. The Company intends to continue to pursue
opportunities to produce more complex, higher value-added castings, thereby
continuing to improve product margins.
Selectively Entering New Markets. The Company intends to selectively
expand its presence in both the heavy municipal and industrial markets. In the
heavy municipal market, the Company is
5
<PAGE> 9
considering expanding its product offering in high volume markets such as New
York and Nevada where the Company already has sales representatives in place and
for which the Company has already invested in certain of the toolings necessary
to meet potential product demand. In addition, the Company is exploring further
opportunities in New Jersey, New Hampshire and Massachusetts. The Company's
strategy in its chosen industrial segments is to continue to increase its
penetration of existing customers and to develop similar relationships with
other selected industrial companies which would value the Company's technical
ability and high level of product quality and customer service. The Company also
intends to explore opportunities in austempering (heat-treating ductile iron)
and machining and assembling sub-components for specific industrial customers.
Improving Operating Performance. The Company operates two modern
foundries, and believes it possesses a highly competitive cost structure. The
Company intends to continue to seek ways to capitalize on and extend its
technological expertise and operating efficiencies, thereby reducing its
operating costs. In contrast to the major investments made from 1985 to 1990,
which significantly improved both manufacturing capacity and efficiency, the
Company's near term capital expenditures will be focused primarily on
incrementally improving efficiency and reducing costs through projects such as:
(i) sand system optimization, (ii) material handling improvements and (iii)
energy utilization improvements.
Making Selective Acquisitions. The United States iron foundry industry is
highly fragmented despite significant consolidation over the past decade. In
1986, there were approximately 880 foundries engaged in the casting of iron,
with an aggregate capacity of approximately 15 million tons according to
Stratecasts, Inc., a foundry industry research and consulting organization. By
1996, the number of iron foundries decreased to approximately 730, with an
aggregate capacity of approximately 13 million tons. Management believes the
consolidation that has occurred will continue, particularly in the industrial
market, as technical, environmental and quality standards continue to increase.
The Company intends to pursue selective acquisition opportunities that
complement its existing product offering or enable the Company to expand its
presence in selected geographic areas of the heavy municipal market. The Company
believes such acquisitions will provide opportunities for incremental revenue
and cash flow by leveraging the Company's current expertise in manufacturing,
sales and marketing, and product and process engineering.
THE MERGER
NFC Castings, Inc. ("Holdings") and its wholly-owned subsidiary, NC Merger
Company ("NC Merger"), were organized to effect the acquisition of Neenah
Corporation. On April 30, 1997, pursuant to an Agreement and Plan of
Reorganization, dated November 20, 1996, as amended (the "Merger Agreement"),
among Holdings, NC Merger and Neenah Corporation, NC Merger merged with and into
Neenah Corporation, with Neenah Corporation as the surviving corporation (the
"Merger"). As a result of the Merger, Neenah Corporation became a wholly owned
subsidiary of Holdings. On July 1, 1997 Neenah Foundry Company merged with and
into Neenah Corporation, with Neenah Corporation as the surviving entity.
Following the Internal Merger (as defined), Neenah Corporation changed its name
to Neenah Foundry Company. See "--Internal Merger." Holdings is a wholly-owned
subsidiary of ACP Holding Company ("ACP Holdings"). ACP Holdings is wholly-owned
by ACP Products, L.L.C., which in turn is owned in part by Citicorp Venture
Capital, Ltd. ("CVC") and certain other investors (collectively, the "Investor
Group"). The Management Investors also own an interest in ACP Products, L.L.C.
The consideration for the Merger was $236.9 million in cash (the "Merger
Consideration"), subject to a closing date net worth adjustment. In addition to
the Merger Consideration, and upon consummation of the Merger, the Company paid
approximately $11.3 million to certain former stockholders of the Company (the
"Former Stockholder Payment" and, together with the Merger Consideration, the
"Merger Price"). Pro forma for a March 31, 1997 closing, the closing date net
6
<PAGE> 10
worth adjustment would have been $9.1 million which would result in a total pro
forma Merger Price of $258.3 million (including fees and expenses attributable
to the Merger of $1.0 million). The Merger Price reflects the use of
approximately $25.3 million of cash on the Company's balance sheet pro forma for
a March 31, 1997 closing (resulting in a valuation of the Company's business and
other assets of approximately $233.0 million). In order to finance the Merger
Price, including the payment of related fees and expenses: (i) NC Merger
consummated the Offering; (ii) NC Merger entered into a credit agreement
providing for (a) a term loan (the "Tranche A Term Loan") in the amount of $20.0
million and a second term loan (the "Tranche B Term Loan" and, together with the
Tranche A Term Loan, the "Term Loans") in the amount of $25.0 million, and (b) a
revolving credit facility (the "Revolving Credit Facility" and, together with
the Term Loans, the "Senior Bank Facilities") in the amount of $30.0 million,
subject to a borrowing base formula; (iii) Holdings made an equity contribution
(the "Equity Contribution") of $45.0 million to NC Merger; and (iv) $25.3
million of cash (pro forma for a March 31, 1997 closing) was utilized.
Concurrently with the consummation of the Offering, the Company, as the
surviving corporation in the Merger, assumed, pursuant to the Merger, the
obligations under the Notes and the Senior Bank Facilities. The Offering, the
establishment of the Senior Bank Facilities, the Equity Contribution and the
Merger are referred to collectively herein as the "Transactions."
The sources and uses of funds for the Merger and related Transactions,
assuming that the Merger occurred on March 31, 1997, were as follows (dollars in
millions):
SOURCES OF FUNDS
<TABLE>
<S> <C>
Senior Bank Facilities:(1)(2)
Tranche A Term Loan............................................... $ 20.0
Tranche B Term Loan............................................... 25.0
Senior Subordinated Notes due 2007.................................. 150.0
Equity Contribution(3).............................................. 45.0
Excess Cash and Borrowings under Revolving Credit Facility(2)....... 26.2
------
Total..................................................... $266.2
======
</TABLE>
USES OF FUNDS
<TABLE>
<S> <C>
Merger Price(2)(4).................................................. $258.3
Financing Costs..................................................... 7.9
------
Total..................................................... $266.2
======
</TABLE>
- ---------------
(1) Total borrowings of up to $30.0 million under the Revolving Credit Facility
are available, subject to borrowing base limitations, for working capital
and general corporate purposes, including up to $15.0 million for letters of
credit. At March 31, 1997, on a pro forma basis after giving effect to the
Offering, the other Transactions, and the application of the proceeds
therefrom, as well as borrowing base limitations and $0.6 million of
outstanding letters of credit, the Company estimates that it would have had
the ability to borrow approximately $24.5 million under the Revolving Credit
Facility. See "Description of Senior Bank Facilities."
(2) Based on the Company's results of operations since March 31, 1997, the
Company estimates the closing net worth adjustment will be approximately
$12.6 million resulting in a total Merger Price of approximately $261.8
million, cash on hand of approximately $11.5 million, substantially all of
which will be applied to fund the Merger Price, and approximately $1.0
million will be drawn under the Revolving Credit Facility in order to
provide the remainder of the necessary financing.
(3) Holdings made an Equity Contribution of $45.0 million to NC Merger for which
it received all of NC Merger's common stock. See "Ownership of Securities."
(4) The Merger Price includes a net worth adjustment, which would have been $9.1
million based on a March 31, 1997 pro forma closing.
7
<PAGE> 11
INTERNAL MERGER
In order to realize certain state tax benefits, on July 1, 1997, Neenah
Corporation merged (the "Internal Merger") with its principal operating
subsidiary, Neenah Foundry Company, with Neenah Corporation as the surviving
entity. Following the Internal Merger, Neenah Corporation changed its name to
Neenah Foundry Company. The Company does not anticipate that the Internal Merger
will impact its business in any material respect other than the realization of
the tax benefits mentioned above.
THE REFINANCING
On July 1, 1997, the Company issued $45.0 million aggregate principal
amount of Series C Senior Subordinated Notes due 2007 (the "Refinancing Notes")
and used the proceeds of $47.6 million to pay the Term Loans, the accrued
interest thereon and related fees and expenses. The issuance of the Refinancing
Notes and payment of the Term Loans and related fees and expenses are referred
to herein as the "Refinancing."
PROPOSED AMENDMENT TO SENIOR BANK FACILITIES
The Company is currently negotiating an amendment to the Revolving Credit
Facility which, if adopted, would (i) increase the borrowings available under
the Revolving Credit Facility to the Company from $30.0 million to $50.0 million
and (ii) eliminate all borrowing base limitations from the current Revolving
Credit Facility.
THE EXCHANGE OFFER
Securities Offered......... Up to $150,000,000 aggregate principal amount of
11 1/8% Series B Senior Subordinated Notes due 2007
(the "New Notes"). The terms of the New Notes and
Old Notes are identical in all material respects,
except for certain transfer restrictions and
registration rights relating to the Old Notes.
The Exchange Offer......... The New Notes are being offered in exchange for a
like principal amount of Old Notes. Old Notes may
be exchanged only in integral multiples of $1,000.
The issuance of the New Notes is intended to
satisfy obligations of the Company and the
Guarantor Subsidiaries contained in the
Registration Rights Agreement.
Expiration Date; Withdrawal
of Tender................ The Exchange Offer will expire 5:00 p.m. New York
City time, on , 1997, or such later
date and time to which it is extended by the
Company. The tender of Old Notes pursuant to the
Exchange Offer may be withdrawn at any time prior
to the Expiration Date. Any Old Notes not accepted
for exchange for any reason will be returned
without expense to the tendering holder thereof as
promptly as practicable after the expiration or
termination of the Exchange Offer.
Certain Conditions to the
Exchange Offer........... Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to
third parties, the Company believes that New Notes
issued pursuant to the Exchange Offer in exchange
for Old Notes may be offered for resale, resold and
otherwise transferred by any holder thereof (other
than any such holder which is an"affiliate" of the
Company within the meaning of
8
<PAGE> 12
Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary
course of such holder's business and that such
holder does not intend to participate and has no
arrangement or understanding with any person to
participate in the distribution of such New Notes.
The Company's obligation to accept for exchange, or
to issue New Notes in exchange for, any Old Notes
is subject to certain customary conditions relating
to compliance with any applicable law, or any
applicable interpretation by any staff of the
Commission, or any order of any governmental agency
or court of law. The Company currently expects that
each of the conditions will be satisfied and that
no waivers will be necessary. See "The Exchange
Offer -- Certain Conditions to the Exchange Offer."
Procedures for Tendering
Old Notes................ Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, together
with such Old Notes and any other required
documentation, to the Exchange Agent (as defined)
at the address set forth herein. See "The Exchange
Offer -- Procedures for Tendering Old Notes."
Use of Proceeds............ There will be no proceeds to the Company from the
exchange of Notes pursuant to the Exchange Offer.
Exchange Agent............. United States Trust Company of New York is serving
as the Exchange Agent in connection with the
Exchange Offer.
Federal Income Tax
Consequences............. The exchange of Notes pursuant to the Exchange
Offer should not be a taxable event for federal
income tax purposes. See "Certain Federal Income
Tax Considerations."
9
<PAGE> 13
CONSEQUENCES OF EXCHANGING OLD NOTES PURSUANT TO THE EXCHANGE OFFER
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, the Company is of the view that
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 exchange their Old
Notes for New Notes pursuant to the Exchange Offer generally may offer such New
Notes for resale, resell such New Notes and otherwise transfer such New Notes
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided such New Notes are acquired in the ordinary course
of the holders' business and such holders have no intention, or any arrangement
with any person, to participate in a distribution of such New Notes. Each
broker-dealer that receives New 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 New Notes. See "Plan of Distribution." In addition, to comply
with the securities laws of certain jurisdictions, if applicable, the New Notes
may not be offered for sale unless they have been registered or qualified for
sale in such jurisdiction or an exemption from registration or qualification is
available and is complied with. The Company has agreed, pursuant to the
Registration Rights Agreement and subject to certain specified limitations
therein, to register or qualify the New Notes for offer or sale under the
securities or blue sky laws of such jurisdictions as any holder of the Notes
reasonably requests in writing. If a holder of Old Notes does not exchange such
Old Notes for New Notes pursuant to the Exchange 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 for sale, 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. Holders of Old Notes do not have any appraisal or dissenters' rights under
Delaware General Corporation Law in connection with the Exchange Offer. To the
extent the Old Notes are exchanged for New Notes, the market for the Old Notes
may be adversely affected. See "The Exchange Offer -- Consequences of Failure to
Exchange; Resales of New Notes."
The Old Notes are, and following the Exchange Offer will continue to be,
eligible for trading in the Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") market. Following commencement of the Exchange
Offer but prior to its consummation, the Old Notes may continue to be traded in
the PORTAL market. Following consummation of the Exchange Offer, the New Notes
will not be eligible for PORTAL trading.
10
<PAGE> 14
THE OFFERING
The terms of the New Notes are identical in all material respects to the
Old Notes, except for certain transfer restrictions and registration rights
relating to the Old Notes.
Issuer..................... Neenah Foundry Company.
Securities Offered......... $150,000,000 aggregate principal amount of 11 1/8%
Senior Subordinated Notes due 2007.
Maturity................... May 1, 2007.
Interest Payment Dates..... May 1 and November 1 of each year, commencing
November 1, 1997.
Optional Redemption........ Except as described below, the Company may not
redeem the New Notes (or the Old Notes) prior to
May 1, 2002. On or after such date, the Company may
redeem the New Notes (and any outstanding Old
Notes), in whole or in part, at any time 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 and from time
to time on or prior to May 1, 2000, the Company
may, subject to certain requirements, redeem up to
40% of the original aggregate principal amount of
the Notes with the net cash proceeds of one or more
Public Equity Offerings (as defined) by the
Company, Holdings, or ACP Holdings, for which there
is a Public Market (as defined), at a redemption
price equal to 111.125% of the principal amount of
the Notes to be redeemed, together with accrued and
unpaid interest, if any, to the date of redemption,
provided that at least 60% of the original
aggregate principal amount of the Notes remains
outstanding immediately after each such redemption.
See "Description of Notes -- Optional Redemption."
Change of Control.......... Upon the occurrence of a Change of Control (as
defined), (i) the Company will have the option, at
any time prior to May 1, 2002, to redeem the New
Notes (and any outstanding Old Notes) at a
redemption price equal to 100% of the principal
amount thereof plus the Applicable Premium (as
defined), together with accrued and unpaid
interest, if any, to the date of redemption; and
(ii) if the Company does not redeem the New Notes
(or such Old Notes) pursuant to the preceding
clause (i) or if such Change of Control occurs
after May 1, 2002, each holder will have the right
to require the Company to make an offer to
repurchase the New Notes (and such Old Notes) at a
price equal to 101% of the principal amount
thereof, together with accrued and unpaid interest,
if any, to the date of purchase. See "Description
of Notes -- Change of Control."
Subsidiary Guaranties...... The New Notes will be (as are the Old Notes) fully
and unconditionally guaranteed, jointly and
severally, on an unsecured, senior subordinated
basis by the Guarantor Subsidiaries. Neenah Foundry
Company derives some of its income from its
subsidiaries, Hartley Controls Corporation and
Neenah Transport, Inc. The Guarantor Subsidiaries
have guaranteed the Senior Bank Facilities (as
defined), and are jointly and severally liable on a
senior basis with the Company for the
11
<PAGE> 15
obligations thereunder. Such obligations are
secured by pledges of all the capital stock of the
Company and the Guarantor Subsidiaries and security
interests in, or liens on, substantially all other
tangible and intangible assets of the Company and
the Guarantor Subsidiaries. See "Description of
Notes -- Subsidiary Guaranties" and "-- Certain
Covenants -- Future Note Guarantors."
Ranking.................... The New Notes will be (as are the Old Notes)
unsecured and will be subordinated to all existing
and future Senior Indebtedness (as defined) of the
Company. The New Notes will (as do the Old Notes)
rank pari passu with any future Senior Subordinated
Indebtedness of the Company and will rank senior to
all other subordinated indebtedness of the Company.
The Subsidiary Guaranties are unsecured, senior
subordinated obligations of the Guarantor
Subsidiaries, subordinated in right of payment to
existing and future Senior Indebtedness of the
Guarantor Subsidiaries. As of March 31, 1997, on a
pro forma basis, after giving effect to the
Transactions and the Refinancing, and the
application of the net proceeds therefrom, the
Company and the Guarantor Subsidiaries would have
had outstanding $0.1 million (excluding $0.6
million of outstanding letters of credit) aggregate
principal amount of Senior Indebtedness (all of
which is Secured Indebtedness), $197.6 million
aggregate amount of Senior Subordinated
Indebtedness including the indebtedness represented
by the Notes and no indebtedness that is
subordinate or junior in right of payment to the
indebtedness represented by the Notes. As of July
1, 1997, after giving effect to the Transactions
and the Refinancing, and the application of the net
proceeds therefrom, the Company and the Guarantor
Subsidiaries would have had outstanding $0.1
million (excluding $0.6 million of outstanding
letters of credit) aggregate principal amount of
Senior Indebtedness (all of which is Secured
Indebtedness), $197.6 million aggregate amount of
Senior Subordinated Indebtedness including the
indebtedness represented by the Notes and no
indebtedness that is subordinate or junior in right
of payment to the indebtedness represented by the
Notes.
Restrictive Covenants...... The indenture (the "Indenture") governing the New
Notes, which is the Indenture governing the Old
Notes, limits (i) the incurrence of additional
Indebtedness by the Company and its Restricted
Subsidiaries (as defined); (ii) the payment of
dividends on, and redemption of, capital stock of
the Company and its Restricted Subsidiaries and the
redemption of certain Subordinated Obligations of
the Company and its Restricted Subsidiaries; (iii)
certain other restricted payments, including
without limitation, investments; (iv) sales of
assets and Restricted Subsidiary stock; (v) certain
transactions with affiliates; (vi) the sale or
issuance of capital stock of its Restricted
Subsidiaries; (vii) the creation of liens; (viii)
the lines of business in which the Company and its
Restricted Subsidiaries may operate; (ix)
consolidations, mergers and transfers of all or
substantially all of the Company's assets; and (x)
sale and leaseback transactions. The Indenture also
prohibits certain restrictions on distributions
from Restricted Subsidiaries. However, all of these
limitations and prohibitions are subject to a
number of important qualifications and exemptions.
12
<PAGE> 16
See "Description of Notes -- Certain Covenants" and
"-- Merger and Consolidation."
Transfer Restrictions;
Absence of a Public Market
for the Notes............ The New Notes are new securities and there is
currently no established market for the New Notes.
Accordingly, there can be no assurance as to the
development or liquidity of any market for the New
Notes. The Initial Purchasers have advised the
Company that they currently intend to make a market
in the New Notes. However, they are not obligated
to do so, and any market making with respect to the
New Notes may be discontinued without notice. The
Company does not intend to apply for listing of the
New Notes on any national securities exchange or
for their quotation through the National
Association of Securities Dealers Automated
Quotation System.
The address for the Company and each of the Guarantor Subsidiaries is 2121
Brooks Avenue, Box 729, Neenah, Wisconsin 54927 and the telephone number is
(414) 725-7000.
RISK FACTORS
Holders of Old Notes should carefully consider all of the information set
forth in this Prospectus and, in particular, should evaluate the specific
factors under "Risk Factors" beginning on page 16 for risks in connection with
the Exchange Offer.
13
<PAGE> 17
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
The following table sets forth summary historical consolidated, financial
and other data of the Company for the five years ended March 31, 1997, and
certain financial and other data for the year ended March 31, 1997. The summary
historical consolidated financial and other data, (with the exception of tons
produced, employees, employee hours per ton and scrap rate) are derived from the
audited historical consolidated financial statements and the "Unaudited Pro
Forma Financial Information" of the Company, all of which are included elsewhere
in this Prospectus. The historical consolidated balance sheets for 1995, 1996
and 1997 and the historical consolidated statements of income for 1994, 1995,
1996 and 1997 were audited by Ernst & Young LLP, independent auditors. The
historical consolidated balance sheets for 1993 and 1994 and the historical
consolidated statement of income for 1993 were audited by other auditors. The
unaudited pro forma balance sheet data as of March 31, 1997 gives effect to the
Transactions and the Refinancing as if such transactions had occurred on March
31, 1997. The unaudited pro forma consolidated statement of income for the year
ended March 31, 1997 gives effect to the Transactions and the Refinancing as if
they were consummated on April 1, 1996. The unaudited pro forma financial and
other data do not purport to represent what the Company's financial position or
results of operations would actually have been had the Transactions and the
Refinancing in fact occurred on the assumed dates or to project the Company's
financial position or results of operations for any future date or future
period. The information contained in the following table should also be read in
conjunction with "Capitalization," "Selected Consolidated Financial and Other
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations," "Unaudited Pro Forma Consolidated Financial Information," and
the Company's historical consolidated financial statements and related notes
included elsewhere in this Prospectus.
14
<PAGE> 18
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
FISCAL YEAR ENDED MARCH 31,
<TABLE>
<CAPTION>
PRO FORMA FOR
TRANSACTIONS
AND
REFINANCING
-------------
1993 1994 1995 1996 1997 1997
-------- -------- -------- -------- -------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales(1)...................... $133,422 $131,982 $160,621 $166,951 $165,426 $ 165,426
Gross profit...................... 25,143 25,451 39,640 45,320 48,690 48,747
Operating income.................. 6,106 11,837 22,967 28,337 31,143 29,718
Interest expense (income), net.... 2,118 1,043 397 (481) (1,162) 20,948
Net income........................ 5,080 6,581 13,704 17,142 19,838 4,190
BALANCE SHEET DATA
(AT END OF PERIOD):
Cash and cash equivalents......... $ 79 $ 118 $ 238 $ 10,126 $ 22,403 $ 202
Working capital(2)................ 13,425 14,596 15,174 18,094 21,438 30,101
Total assets...................... 87,388 74,327 73,813 82,957 93,869 307,984
Total debt........................ 21,409 13,325 887 241 134 197,722
Total stockholders' equity........ 36,862 37,929 43,198 54,790 68,857 43,396
OTHER DATA:
EBITDA(3)......................... $ 13,399 $ 18,577 $ 29,809 $ 35,113 $ 38,024 $ 41,539
Depreciation and amortization..... 7,293 6,740 6,842 6,776 6,881 12,979
Capital expenditures.............. 3,967 4,583 3,665 7,275 4,546 4,546
Net cash provided by (used in):
Operating activities............ 15,240 18,301 23,581 22,273 23,479 13,187
Investing activities............ (4,239) (4,949) (3,412) (7,299) (3,104) (3,104)
Financing activities............ (11,499) (13,313) (20,049) (5,086) (8,098) (4,896)
Cash interest expense(4).......... 2,128 1,049 624 84 39 21,733
Tons produced..................... 137,260 136,754 171,727 168,400 155,134 155,134
Employees......................... 1,169 931 952 922 910 910
Employee hours per ton(5)......... 13.3 10.7 8.7 8.6 9.0 9.0
Scrap rate(6)..................... 3.3% 2.9% 2.2% 2.0% 2.0% 2.0%
</TABLE>
- ---------------
(1) Net sales for the years ended March 31, 1993 and 1994 include sales of
products manufactured in Plant 1, which was closed in 1994 as part of the
Company's strategy to increase its focus on higher volume, complex parts for
its industrial customers. The majority of the parts produced in Plant 1 were
then discontinued. Plant 1 provided sales of $30.9 million and $4.4 million
for the fiscal years ended March 31, 1993 and 1994, respectively.
(2) Working capital represents total current assets (excluding cash and cash
equivalents) less total current liabilities (excluding the Revolving Credit
Facility and the current portion of long-term debt).
(3) EBITDA represents operating income plus depreciation and amortization. The
Company has included information concerning EBITDA because management
believes that EBITDA is generally accepted as providing useful information
regarding a company's ability to service and/or incur debt. EBITDA should
not be considered in isolation or as a substitute for net income, cash flows
or other income or cash flow data prepared in accordance with generally
accepted accounting principles or as a measure of a company's profitability
or liquidity. The Company understands that, while EBITDA is frequently used
by securities analysts in the evaluation of companies, EBITDA, as used
herein, is not necessarily comparable to other similarly titled captions of
other companies due to potential inconsistencies in the method of
calculation. EBITDA is not intended as an alternative to cash flow from
operating activities as a measure of liquidity, an alternative to net income
as an indicator of the Company's operating performance or an alternative to
any other measure of performance in conformity with generally accepted
accounting principles.
(4) Cash interest expense is defined as interest expense less amortization of
debt issuance cost.
(5) Employee hours per ton represents the number of hours worked by hourly
employees during this period (excluding supervisory employee hours) divided
by the number of tons produced.
(6) The scrap rate is the percentage of castings that are determined to be
unusable prior to delivery to customers.
15
<PAGE> 19
RISK FACTORS
Holders of Old Notes should carefully consider the following factors in
addition to the other information set forth in this Prospectus in connection
with the Exchange Offer. The risk factors set forth below are generally
applicable to the Old Notes as well as the New Notes.
SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE INDEBTEDNESS
The Company is highly leveraged. As of March 31, 1997, on a pro forma
basis, after giving effect to the Transactions, the Refinancing and the
application of the proceeds therefrom, the Company and the Guarantor
Subsidiaries would have had $0.1 million (excluding $0.6 million of outstanding
letters of credit) aggregate amount of Senior Indebtedness (all of which is
Secured Indebtedness), $197.6 million aggregate amount of Senior Subordinated
Indebtedness including the indebtedness represented by the Notes and no
indebtedness that is junior in right of payment to the indebtedness represented
by the Notes. As of July 1, 1997, after giving effect to the Transactions and
the Refinancing, and the application of the net proceeds therefrom, the Company
and the Guarantor Subsidiaries would have had outstanding $0.1 million
(excluding $0.6 million of outstanding letters of credit) aggregate principal
amount of Senior Indebtedness (all of which is Secured Indebtedness), $197.6
million aggregate amount of Senior Subordinated Indebtedness, including the
indebtedness represented by the Notes and no indebtedness that is subordinated
or junior in right of payment to the indebtedness represented by the Notes. As
of March 31, 1997, on a pro forma basis, after giving effect to the
Transactions, the Refinancing and the application of the proceeds therefrom, as
well as borrowing base limitations and $0.6 million of outstanding letters of
credit, the Company estimates that it would have had the ability to borrow
approximately $24.5 million under the Revolving Credit Facility. Subject to the
restrictions in the Senior Bank Facilities and the Indenture, the Company may
incur additional indebtedness from time to time, including additional Senior
Indebtedness. The degree to which the Company is leveraged could have important
consequences to holders of the New Notes (and to holders of Old 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 limited; (ii) a substantial portion of the Company's
cash flow from operations must be dedicated to the payment of interest on the
New Notes (and any outstanding Old Notes), and interest and principal on the
Senior Bank Facilities and the Company's other existing indebtedness, thereby
reducing the funds available to the Company for other purposes; (iii) all of the
indebtedness under the Senior Bank Facilities is and will be at variable rates
of interest, which causes the Company to be vulnerable to increases in interest
rates; (iv) all of the indebtedness outstanding under the Senior Bank Facilities
is secured by pledges of all the capital stock of the Company and the Guarantor
Subsidiaries and security interests in, or liens on, substantially all other
assets of the Company and the Guarantor Subsidiaries, and will become due prior
to the time the principal on the Notes will become due; (v) the Company may be
hindered in its ability to adjust rapidly to changing market conditions; and
(vi) 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 Company's ability to pay interest on the New Notes (and any outstanding
Old Notes) and to satisfy its other debt obligations will depend on its future
operating performance, which will be affected by prevailing economic conditions
and financial, business and other factors, certain of which are beyond the
Company's control. If the Company's cash flow from operations and capital
resources is insufficient to fund its debt service obligations, the Company may
be forced to reduce or delay capital expenditures, sell assets, obtain
additional equity capital or restructure its debt. There can be no assurance
that the Company's cash flow from operations and capital resources will be
sufficient for payment of its indebtedness in the future. In the absence of such
operating results and resources, the Company could face substantial liquidity
problems and might be required to dispose of material assets or operations to
meet its debt service and other obligations, and there can be no assurance as to
the timing of such sales or the proceeds that the Company could realize
therefrom. The financial covenants and other restrictions in the Senior Bank
Facilities and the
16
<PAGE> 20
Indenture will limit the Company's ability to borrow additional funds and
dispose of certain assets. See "Description of Senior Bank Facilities" and
"Description of Notes."
SUBORDINATION; ASSET ENCUMBRANCE
The payment of principal of and interest on, and any premium or other
amounts owing in respect of, the New Notes will be (as is the case with the Old
Notes) subordinated to the prior payment in full of all existing and future
Senior Indebtedness of the Company, including all amounts owing or guaranteed
under the Senior Bank Facilities. Consequently, in the event of a bankruptcy,
liquidation, dissolution, reorganization or similar proceeding with respect to
the Company, assets of the Company will be available to pay obligations of the
New Notes (and any outstanding Old Notes) only after all Senior Indebtedness of
the Company has been paid in full, and there can be no assurance that there will
be sufficient assets to pay amounts due on all or any of the New Notes (and any
outstanding Old Notes).
Payments in respect of the respective Subsidiary Guaranties of the New
Notes will be (as is the case with the Old Notes) subordinated to the prior
payment in full of all existing and future Senior Indebtedness of the respective
Guarantor Subsidiaries, including all amounts guaranteed in respect of the
Senior Bank Facilities. As of March 31, 1997, on a pro forma basis after giving
effect to the Transactions, the Refinancing and the application of the proceeds
therefrom, (i) the aggregate principal amount of such Senior Indebtedness would
have been $0.1 million (excluding $0.6 million of outstanding letters of credit)
guaranteed under the Senior Bank Facilities and (ii) after giving effect to
borrowing base limitations and $0.6 million of outstanding letters of credit,
the Company estimates that it would have had the ability to borrow approximately
$24.5 million under the Revolving Credit Facility. The Company expects to
negotiate an amendment to the Revolving Credit Facility which will remove
borrowing base limitations and increase the borrowings available to the Company
under the Revolving Credit Facility from $30.0 million to $50.0 million. See
"Summary -- Amendments to the Senior Bank Facilities." Consequently, in the
event of a bankruptcy, liquidation, dissolution, reorganization or similar
proceeding with respect to a Guarantor Subsidiary, its assets will be available
to pay obligations only after the Senior Indebtedness of such Guarantor
Subsidiary has been paid in full, and there can be no assurance that there will
be sufficient assets to pay amounts due in respect of such Guarantor
Subsidiary's guaranty of the New Notes (or any outstanding Old Notes).
The Indenture permits the Company and the Guarantor Subsidiaries to incur
certain Secured Indebtedness, including indebtedness under the Senior Bank
Facilities, which will be secured by pledges of all the capital stock of the
Company and the Guarantor Subsidiaries, and security interests in, or liens on,
substantially all other assets of the Company and the Guarantor Subsidiaries.
The New Notes (and the Old Notes) and the Subsidiary Guaranties are unsecured
and therefore do not have the benefit of such collateral. Accordingly, if an
event of default occurs under the Senior Bank Facilities, the lenders will have
a prior right to the assets of the Company and the Guarantor Subsidiaries, and
may foreclose upon such collateral to the exclusion of the holders of the New
Notes (and of any of the Old Notes), notwithstanding the existence of an event
of default with respect thereto. In such event, such assets would first be used
to repay in full amounts outstanding under the Senior Bank Facilities, resulting
in all or a portion of the Company's and the Guarantor Subsidiaries' assets
being unavailable to satisfy the claims of the holders of the New Notes (and of
any of the Old Notes) and other unsecured indebtedness.
RESTRICTIVE LOAN COVENANTS
The Senior Bank Facilities include certain covenants that, among other
things, restrict the ability of the Company and its subsidiaries to: (i) dispose
of assets; (ii) incur additional indebtedness; (iii) incur guarantee
obligations; (iv) prepay other indebtedness or amend other debt instruments; (v)
pay dividends; (vi) create liens on assets; (vii) enter into sale and leaseback
transactions; (viii) make investments, loans or advances; (ix) make
acquisitions; (x) engage in mergers or consolidations; (xi) change the business
conducted by the Company; (xii) make capital expendi-
17
<PAGE> 21
tures; or (xiii) engage in certain transactions with affiliates and otherwise
restrict certain corporate activities. In addition, under the Senior Bank
Facilities the Company is required to comply with a consolidated leverage ratio,
a consolidated net worth test and a consolidated interest coverage ratio. The
Company is currently in compliance with such ratios and test. However, there can
be no assurance that these requirements will be met in the future. If they are
not, the holders of the indebtedness under the Senior Bank Facilities would be
entitled to declare such indebtedness immediately due and payable. See
"Description of Senior Bank Facilities."
HOLDING COMPANY STRUCTURE; POSSIBLE UNENFORCEABILITY OF THE SUBSIDIARY
GUARANTIES
The Company is a holding company which derives substantially all of its
operating income from its subsidiaries. The holders of the New Notes (and of any
of the Old Notes) will have no direct claim against the Guarantor Subsidiaries
other than the claim created by the Subsidiary Guaranties, which may themselves
be subject to legal challenge in the event of the bankruptcy of a Guarantor
Subsidiary. See "-- Fraudulent Conveyance." If such a challenge were upheld, the
Subsidiary Guaranties would be unenforceable. To the extent that the Subsidiary
Guaranties are not enforceable, the rights of holders of the New Notes (and of
any of the Old Notes) to participate in any distribution of assets of any
Guarantor Subsidiary upon liquidation, bankruptcy, reorganization or otherwise
may, as is the case with other unsecured creditors of the Company, be subject to
prior claims of creditors of that Guarantor Subsidiary. The Company must rely
upon dividends and other payments from its subsidiaries to generate the funds
necessary to meet its obligations, including the payment of principal of and
interest on the New Notes (and any of the Old Notes). The Indenture contains
covenants that restrict the ability of the Company's Restricted Subsidiaries (as
defined) to enter into agreements limiting distributions and transfers,
including dividends. However, the ability of the Company's subsidiaries to pay
dividends and make other payments may be restricted by, among other things,
applicable state corporate laws and regulations or by terms of agreements to
which they may become party. See "Description of Notes."
DEPENDENCE ON KEY PERSONNEL
Three of the Company's senior executives, including the chief executive
officer, did not remain with the Company after the Closing. The Company retained
James K. Hildebrand to serve as Chairman and Chief Executive Officer following
the Merger, and the Company's current management assumed primary responsibility
for the other duties conducted by the departing senior executives. The ability
of the Company to maintain its competitive position will depend to a significant
degree upon its ability to continue to attract and retain highly qualified
managerial and manufacturing personnel. There can be no assurance that the
Company will be able to continue to recruit and retain such personnel. In
particular, the Company is dependent on certain key management personnel, and
there can be no assurance that the loss of key personnel would not have a
material adverse effect on the Company's results of operations. See
"Management."
CHANGE OF CONTROL
After May 1, 2002, upon the occurrence of a Change of Control, unless the
Company redeems the Notes, each holder of the New Notes (and of any outstanding
Old Notes) will have the right to require the Company to repurchase all or any
portion of such holder's Notes at a price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase. The
occurrence of a Change of Control would constitute a default under the Senior
Bank Facilities. In addition, the Senior Bank Facilities will prohibit the
purchase of the New Notes (and of any outstanding Old Notes) by the Company in
the event of a Change of Control, unless and until such time as all indebtedness
under the Senior Bank Facilities is repaid in full. The Company's failure to
purchase the New Notes (and any outstanding Old Notes) would result in a default
under the Indenture. The inability to repay the indebtedness under the Senior
Bank Facilities, if accelerated, would also constitute an event of default under
the Indenture. In the event of a Change of Control, there can be no assurance
that the Company would have sufficient assets to satisfy all of its
18
<PAGE> 22
obligations under the Senior Bank Facilities and the New Notes (and any
outstanding Old Notes). The Company could in the future, enter into certain
transactions, including acquistions, refinancings or other recapitalizations or
highly leveraged transactions, that would not constitute a Change of Control
under the Indenture, but that would increase the amount of indebtedness
outstanding at such time or otherwise affect the Company's capital structure or
credit ratings or otherwise adversely affect holders of the Notes. See
"Description of Senior Bank Facilities" and "Description of Notes -- Change of
Control."
CONCENTRATION OF CUSTOMERS
In 1997, sales to one of the Company's customers, Rockwell International,
accounted for 16.1% of the Company's total net sales, and the Company's top
three customers accounted for approximately 34.8% of the Company's net sales. A
significant reduction of purchases by one or more of the Company's key
industrial customers could have a material adverse effect on the Company's
business, financial condition or results of operations. See
"Business -- Products, Customers and Markets."
DEPENDENCE ON INDUSTRY/CYCLICALITY
The Company has historically experienced moderate cyclicality in the heavy
municipal market. Sales of municipal castings are influenced by, among other
things, public spending. The Company's industrial sales are largely dependent on
orders from OEMs of medium- and heavy-duty trucks and truck components and their
first-tier suppliers and orders for farm equipment. The truck market has
historically been subject to fluctuations due to general economic conditions
and, in particular, the industrial sector of the economy. From 1993 to 1995, the
truck market experienced significant growth, while in 1996 the medium- and
heavy-duty truck market declined substantially from 1995 levels. In 1997, the
medium- and heavy-duty truck market increased over 1996 levels but remained
below 1995 levels. There can be no assurance that the truck market will not
decline. The farm equipment market has also experienced cyclicality. A downturn
in these markets could reduce demand for, and prices of, the Company's products.
A significant downturn in either of these markets could have a material adverse
effect on the Company's business, financial condition or results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
COMPETITION
The markets for the Company's products are highly competitive. Competition
is based not only on price, but also on quality of product, range of capability,
level of service and reliability of delivery. The Company competes with numerous
independent and captive domestic iron foundries, as well as with a number of
foreign iron foundries, including certain foundries located in India. The
Company also competes with several large domestic foundries and manufacturers
whose casting products are made with materials other than ductile and gray iron,
such as steel or aluminum. Industry consolidation over the past decade has
resulted in a significant reduction in the number of smaller foundries and a
rise in the share of production by larger foundries, some of which have
significantly greater financial resources than the Company. There can be no
assurance that the Company will be able to maintain or improve its competitive
position in the markets in which it competes. See "Business -- Competition."
FLUCTUATIONS IN PRICE AND SUPPLY OF RAW MATERIALS
The Company is dependent upon outside suppliers for all of its raw material
needs and, therefore, is subject to price increases and delays in receiving
supplies of such materials. Changes in the supply of or demand for raw materials
could affect delivery times and prices. Although historically the Company has
been able to increase prices in response to increased raw material costs, no
assurance can be given that the Company will continue to have available
necessary raw materials at reasonable prices or that any increases in raw
material costs would not have a material adverse effect on the Company's
business, financial condition, or results of operations. See "Business -- Raw
Materials."
19
<PAGE> 23
CONTROLLING SHAREHOLDERS
The Investor Group beneficially owns approximately 90% of the Common Stock
of the Company and, together with the Management Investors, collectively, has
the ability to elect the entire Board of Directors and generally to control the
affairs and policies of the Company. Circumstances may occur in which the
interests of the Investor Group and Management Investors, as shareholders of the
Company, could be in conflict with the interests of the holders of the New Notes
(and of any outstanding Old Notes). In addition, the Investor Group and
Management Investors may have an interest in pursuing acquisitions, divestitures
or other transactions that, in their judgment, could enhance their equity
investment, even though such transactions might involve disproportionate risks
to the holders of the New Notes (and of any outstanding Old Notes). See
"Ownership of Securities" and "Certain Relationships and Related Transactions"
and "Business -- Business Strategy."
ENVIRONMENTAL MATTERS
The Company's facilities are subject to numerous federal, state and local
laws and regulations relating to the protection of the environment and worker
health and safety, including those relating to discharges to air, water and
land, the handling and disposal of solid and hazardous waste and the cleanup of
properties affected by hazardous substances. The Company does not currently
anticipate any material adverse effect on its operations or financial condition
as a result of its efforts to comply with, or its liabilities under, such
requirements. Risk of environmental liability is inherent in the manufacturing
of casting products, however, and there can be no assurance that material
environmental costs will not arise in the future. In particular, the Company
might incur capital and other costs to comply with increasingly stringent air
emission control laws and enforcement policies. See "Business -- Environmental
Matters."
FRAUDULENT CONVEYANCE
The incurrence by the Company of indebtedness such as the Old Notes (and
the New Notes exchanged therefor) to finance the Transactions may be subject to
review under relevant state and federal fraudulent conveyance and similar laws
if a bankruptcy or reorganization case or a lawsuit is commenced by or on behalf
of creditors of the Company. Under these laws, if a court were to find that,
after giving effect to the sale of the Old Notes and the exchange of the New
Notes therefor and the application of the net proceeds therefrom, either (a) the
Company incurred such indebtedness with the intent of hindering, delaying or
defrauding then-existing or future creditors or (b) the Company received less
than a reasonably equivalent value or fair consideration for incurring such
indebtedness and at the time of the incurrence of such indebtedness the Company
(i) was insolvent or was rendered insolvent by reason of such transactions; (ii)
was engaged in a business or transaction for which the assets remaining with the
Company constituted unreasonably small capital; or (iii) intended to incur, or
believed that it would incur, debts beyond its ability to pay as they matured,
such court may subordinate such indebtedness to presently existing and future
indebtedness of the Company, avoid the issuance of such indebtedness and direct
the repayment of any amounts paid thereunder to the creditors of the Company or
take other action detrimental to the holders of such indebtedness.
The measure of insolvency for purposes of determining whether a transfer is
avoidable as a fraudulent transfer varies depending upon the law of the
jurisdiction which is being applied. Generally, however, a debtor would be
considered insolvent if the sum of all its liabilities, including contingent
liabilities, was greater than the value of all its assets at a fair valuation,
or if the present fair saleable value of the debtor's assets was less than the
amount required to repay its probable liabilities on its debts, including
contingent liabilities, as they become absolute and matured.
There can be no assurance as to what standard a court would apply in order
to determine solvency. To the extent that proceeds from the sale of the Old
Notes were used to finance the Transactions, a court may find that the Company
did not receive fair consideration or reasonably equivalent value for the
incurrence of the indebtedness represented thereby. In addition, if a court were
to find that any of the components of the Transactions constituted a fraudulent
transfer, to the
20
<PAGE> 24
extent that proceeds from the sale of the Old Notes were used to finance such
Transactions, a court may find that the Company did not receive fair
consideration or reasonably equivalent value for the incurrence of the
indebtedness represented by the Old Notes.
The Company believes that it received equivalent value at the time the
indebtedness under the Old Notes was incurred. In addition, the Company does
not, after giving effect to the consummation of the Transactions: (i) believe
that it was insolvent or rendered insolvent; (ii) believe that it was engaged in
a business or transaction for which its remaining assets constitute unreasonably
small capital; or (iii) intended to incur, or believe that it incurred, debts
beyond its ability to pay as they mature. These beliefs are based on the
Company's analysis of internal cash flow projections and estimated values of
assets and liabilities of the Company and the Guarantor Subsidiaries at the time
of the offering of the Old Notes. There can be no assurance, however, that a
court passing on the issues would make the same determination.
In addition, the Subsidiary Guaranties may be subject to review under
relevant federal and state fraudulent conveyance and similar statutes in a
bankruptcy or reorganization case or a lawsuit by or on behalf of creditors of
any of the Guarantor Subsidiaries. In such a case, the analysis set forth above
would generally apply, except that the Subsidiary Guaranties could also be
subject to the claim that, since the Subsidiary Guaranties were incurred for the
benefit of the Company (and only indirectly for the benefit of the Guarantor
Subsidiaries), the obligations of the Guarantor Subsidiaries thereunder were
incurred for less than reasonably equivalent value or fair consideration. A
court could void a Guarantor Subsidiary's obligation under the Subsidiary
Guaranties, subordinate the Subsidiary Guaranties to other indebtedness of a
Guarantor Subsidiary or take other action detrimental to the holders of the Old
Notes (and the New Notes exchanged therefor).
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER
The New Notes are new securities for which there currently is no market.
Although the Initial Purchasers have informed the Company that they currently
intend to make a market in the New Notes, they are not obligated to do so and
any such market making may be discontinued at any time without notice in the
sole discretion of the Initial Purchasers. Accordingly, there can be no
assurance as to the development or liquidity of any market for the New Notes.
The Old Notes are eligible for trading by qualified buyers in the PORTAL market.
The Company does not intend to apply for listing of the Old Notes or, if issued,
the New Notes, on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System.
The liquidity of, and trading market for, the New Notes also may be
adversely affected by general declines in the market for similar securities.
Such declines may adversely affect such liquidity and trading markets
independently of the financial performance of, and prospects for, the Company.
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition, including,
in particular, the likelihood of the Company's success in developing and
expanding its business. These statements are based upon a number of assumptions
and estimates which are inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company, and reflect
future business decisions which are subject to change. The foregoing description
of risk factors specifies the principal contingencies and uncertainties to which
the Company believes it is subject. Some of these assumptions inevitably will
not materialize, and unanticipated events will occur which will affect the
Company's results.
USE OF PROCEEDS
There will be no proceeds to the Company from the exchange of Notes
pursuant to the Exchange Offer.
21
<PAGE> 25
CAPITALIZATION
The following table sets forth as of March 31, 1997 (i) the consolidated
historical capitalization of the Company, and (ii) the unaudited consolidated
pro forma capitalization of the Company after giving effect to the Transactions
and the Refinancing, assuming the Transactions and the Refinancing were
consummated on such date. This table should be read in conjunction with the
"Selected Consolidated Financial and Other Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma
Consolidated Financial Information" and the consolidated financial statements
and related notes included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------------
PRO FORMA
FOR TRANSACTIONS
ACTUAL AND REFINANCING
------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................. $22,403 $ 202(1)(2)
======= ========
Debt:
Revolving Credit Facility(2)(3)......................... $ -- $ --
11 1/8% Senior Subordinated Notes due 2007.............. -- 150,000
Refinancing Notes, including unamortized premium of
$2,588............................................... -- 47,588
Other................................................... 134 134
------- --------
Total debt...................................... 134 197,722
Stockholders' equity:
Common stock............................................ 444 100
Additional paid-in capital.............................. -- 44,900
Retained earnings (accumulated deficit)................. 71,335 (1,604)(4)
Notes receivable from owners to finance stock
purchase............................................. (2,922) --
------- --------
Total stockholders' equity...................... 68,857 43,396
------- --------
Total capitalization............................ $68,991 $241,118
======= ========
</TABLE>
- ---------------
(1) Pro Forma cash and cash equivalents include actual cash and cash equivalents
at March 31, 1997, plus $2.9 million in repayments of notes receivable from
certain stockholders of the Company prior to the Merger, less $25.3 million
to be paid as part of the Merger Price, plus $0.2 million of cash resulting
from the Refinancing.
(2) Based on the Company's results of operations since March 31, 1997, the
Company estimates the closing net worth adjustment will be approximately
$12.6 million resulting in a total Merger Price of approximately $261.8
million, cash on hand of approximately $11.5 million (after giving effect to
payments during April of 1997 of approximately $17.5 million, including the
Former Stockholder Payment, that are included in the Merger Price),
substantially all of which will be applied to fund the balance of Merger
Price, and approximately $1.0 million will be drawn under the Revolving
Credit Facility in order to provide the remainder of the necessary
financing.
(3) Total borrowings of up to $30.0 million under the Revolving Credit Facility
are available, subject to borrowing base limitations, for working capital
and general corporate purposes, including up to $15.0 million for letters of
credit. The Company expects that the Senior Bank Facilities will be amended
to provide total borrowing availability of up to $50.0 million under the
Revolving Credit Facility. See "Summary -- Proposed Amendment to Senior Bank
Facilities." At March 31, 1997, on a pro forma basis after giving effect to
the Offering, the other Transactions, and the application of the proceeds
therefrom, as well as borrowing base limitations and $0.6 million of
outstanding letters of credit, the Company estimates that it would have had
the ability to borrow approximately $24.5 million under the Revolving Credit
Facility. See "Description of Senior Bank Facilities."
(4) Represents a write-off of approximately $2.7 million of financing costs
related to the Term Loans, less a tax deduction of approximately $1.1
million.
22
<PAGE> 26
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
The following table sets forth the selected historical consolidated
financial and other data of the Company for the five years ended March 31, 1997
and certain pro forma consolidated financial and other data for the year ended
March 31, 1997. The selected historical consolidated financial and other data,
with the exception of tons produced, employees, employee hours per ton and scrap
rate, for the five years ended March 31, 1997 are derived from the audited
consolidated financial statements of the Company. The historical consolidated
financial statements of the Company as of March 31, 1995, 1996 and 1997 and for
each of the four years in the period ended March 31, 1997, have been audited by
Ernst & Young LLP, independent auditors. The historical consolidated financial
statements of the Company as of March 31, 1993 and 1994 and for the year ended
March 31, 1993 have been audited by other auditors. The pro forma consolidated
financial and other data, with the exception of tons produced, employees,
employee hours per ton and scrap rate, as of and for the year ended March 31,
1997, were derived from the "Unaudited Pro Forma Consolidated Financial
Information" included elsewhere herein. The pro forma financial data does not
purport to represent what the Company's financial position or results of
operations would actually have been had the Transactions and the Refinancing in
fact occurred on the assumed dates or to project the Company's financial
position or results of operations for any future date or period. The information
contained in the following table should also be read in conjunction with
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Unaudited Pro Forma Consolidated Financial
Information," and the Company's historical consolidated financial statements and
related notes included elsewhere in this Prospectus.
23
<PAGE> 27
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
FISCAL YEAR ENDED MARCH 31,
<TABLE>
<CAPTION>
PRO FORMA
FOR
TRANSACTIONS
AND
REFINANCING
1993 1994 1995 1996 1997 1997
-------- -------- -------- -------- -------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales(1)....................................... $133,422 $131,982 $160,621 $166,951 $165,426 $ 165,426
Cost of sales...................................... 108,279 106,531 120,981 121,631 116,736 116,679
-------- -------- -------- -------- -------- --------
Gross profit....................................... 25,143 25,451 39,640 45,320 48,690 48,747
Selling, general and administrative expenses....... 12,865 13,614 16,673 16,983 17,547 19,029
Restructuring charge............................... 6,172 -- -- -- -- --
-------- -------- -------- -------- -------- --------
Operating income................................... 6,106 11,837 22,967 28,337 31,143 29,718
Interest expense (income), net..................... 2,118 1,043 397 (481) (1,162) 20,948
-------- -------- -------- -------- -------- --------
Income before income taxes and cumulative effect of
accounting changes............................... 3,988 10,794 22,570 28,818 32,305 8,770
Provision for income taxes......................... 1,544 4,213 8,866 11,676 12,467 4,580
-------- -------- -------- -------- -------- --------
Income before cumulative effect of accounting
changes.......................................... 2,444 6,581 13,704 17,142 19,838 4,190
Cumulative effect of accounting changes:
Income taxes..................................... 5,200 -- -- -- -- --
Postretirement benefits other than pensions...... (2,564) -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net income......................................... $ 5,080 $ 6,581 $ 13,704 $ 17,142 $ 19,838 $ 4,190
======== ======== ======== ======== ======== ========
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents.......................... $ 79 $ 118 $ 238 $ 10,126 $ 22,403 $ 202
Working capital(2)................................. 13,425 14,596 15,174 18,094 21,438 30,101
Total assets....................................... 87,388 74,327 73,813 82,957 93,869 307,984
Total debt......................................... 21,409 13,325 887 241 134 197,722
Total stockholders' equity......................... 36,862 37,929 43,198 54,790 68,857 43,396
OTHER DATA:
EBITDA(3).......................................... $ 13,399 $ 18,577 $ 29,809 $ 35,113 $ 38,024 $ 41,539
Depreciation and amortization...................... 7,293 6,740 6,842 6,776 6,881 12,979
Capital expenditures............................... 3,967 4,583 3,665 7,275 4,546 4,546
Net cash provided by (used in):
Operating activities............................. 15,240 18,301 23,581 22,273 23,479 13,187
Investing activities............................. (4,239) (4,949) (3,412) (7,299) (3,104) (3,104)
Financing activities............................. (11,499) (13,313) (20,049) (5,086) (8,098) (4,896)
Cash interest expense(4)........................... 2,128 1,049 624 84 39 21,733
Ratio of earnings to fixed charges(5).............. 2.7x 9.5x 25.9x 70.3x 81.4x 1.4x
Tons produced...................................... 137,260 136,754 171,727 168,400 155,134 155,134
Employees.......................................... 1,169 931 952 922 910 910
Employee hours per ton(6).......................... 13.3 10.7 8.7 8.6 9.0 9.0
Scrap rate(7)...................................... 3.3% 2.9% 2.2% 2.0% 2.0% 2.0%
</TABLE>
See accompanying Notes to Selected Consolidated Financial and Other Data.
24
<PAGE> 28
NOTES TO SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(1) Net sales for the years ended March 31, 1993 and 1994 include sales of
products manufactured in Plant 1, which was closed in 1994 as part of the
Company's strategy to increase its focus on higher volume, complex parts for
its industrial customers. The majority of the parts produced in Plant 1 were
then discontinued. Plant 1 provided sales of $30.9 million and $4.4 million
for the fiscal years ended March 31, 1993 and 1994, respectively.
(2) Working capital represents total current assets (excluding cash and cash
equivalents) less total current liabilities (excluding the Revolving Credit
Facility and the current portion of long-term debt).
(3) EBITDA represents operating income plus depreciation and amortization. The
Company has included information concerning EBITDA because management
believes that EBITDA is generally accepted as providing useful information
regarding a company's ability to service and/or incur debt. EBITDA should
not be considered in isolation or as a substitute for net income, cash flows
or other income or cash flow data prepared in accordance with generally
accepted accounting principles or as a measure of a company's profitability
or liquidity. The Company understands that, while EBITDA is frequently used
by securities analysts in the evaluation of companies, EBITDA, as used
herein, is not necessarily comparable to other similarly titled captions of
other companies due to potential inconsistencies in the method of
calculation. EBITDA is not intended as an alternative to cash flow from
operating activities as a measure of liquidity, an alternative to net income
as an indicator of the Company's operating performance or an alternative to
any other measure of performance in conformity with generally accepted
accounting principles.
(4) Cash interest expense is defined as interest expense less amortization of
debt issuance costs.
(5) For purposes of the computation, the ratio of earnings to fixed charges has
been calculated by dividing (i) income before income taxes and cumulative
effect of accounting changes plus fixed charges by (ii) fixed charges. Fixed
charges are equal to interest expense plus the portion of the rent expense
estimated to represent interest.
(6) Employee hours per ton represents the number of hours worked by hourly
employees during this period (excluding supervisory employee hours) divided
by the number of tons produced.
(7) The scrap rate is the percentage of castings that are determined to be
unusable prior to delivery to customers.
25
<PAGE> 29
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information (the
"Unaudited Pro Forma Financial Information") has been derived by the application
of pro forma adjustments, which give effect to the Transactions and the
Refinancing, to the Company's historical consolidated financial statements
included elsewhere in this Prospectus. The unaudited pro forma consolidated
balance sheet gives effect to the Transactions and the Refinancing as if they
had occurred on March 31, 1997. The unaudited pro forma consolidated statement
of income for the year ended March 31, 1997 gives effect to the Transactions and
the Refinancing as if they were consummated on April 1, 1996.
The Unaudited Pro Forma Financial Information is for comparative purposes
only and does not purport to represent what the Company's financial position or
results of operations would actually have been had the Transactions and the
Refinancing in fact occurred on the assumed dates or to project the Company's
financial position or results of operations for any future date or future
period. The Unaudited Pro Forma Financial Information should be read in
conjunction with the Company's historical consolidated financial statements and
related notes included elsewhere in this Prospectus.
The pro forma adjustments, as described in the accompanying Notes to the
Unaudited Pro Forma Consolidated Balance Sheet and Statement of Income, are
based on available information and certain assumptions that management believes
are reasonable.
The acquisition of the Company is accounted for under the purchase method
of accounting. Assuming the Merger was consummated on March 31, 1997, the Merger
Price would have been $258.3 million, which would include (i) a net worth
adjustment of $9.1 million at the Closing based on a March 31, 1997 closing, and
(ii) an $11.3 million payment to certain former stockholders of the Company upon
consummation of the Merger. The Merger Price reflects the use of approximately
$25.3 million of cash on the Company's balance sheet and borrowings under the
Revolving Credit Facility of $0.9 million. In addition, there was a repayment of
$2.9 million in notes receivable from certain stockholders of the Company prior
to the Merger, which reduces the net effect on cash to $22.4 million. The Merger
Price has been allocated to the tangible and identifiable intangible assets and
to the liabilities based on preliminary estimates of their fair values. However,
the allocation of the Merger Price is subject to revision when additional
information concerning certain asset valuations is obtained. Management believes
that the final allocation of the Merger Price will not materially differ from
the preliminary estimated amounts. The Merger Price is subject to a closing date
net worth adjustment.
26
<PAGE> 30
NEENAH CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA PRO FORMA
ADJUSTMENTS PRO FORMA ADJUSTMENTS FOR
FOR FOR FOR TRANSACTIONS
HISTORICAL TRANSACTIONS TRANSACTIONS REFINANCING AND REFINANCING
---------- ------------- ------------- ----------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash $ 2,922(a)
equivalents............. $ 22,403 (25,325)(b) $ -- $ 202(g) $ 202
Accounts receivable....... 21,423 21,423 21,423
Inventories............... 13,956 7,995(c) 21,951 21,951
Deferred income taxes and
other................... 2,726 (401)(c) 2,325 2,325
------- ------- ------- ------- -------
60,508 (14,809) 45,699 202 45,901
Property, plant and
equipment................. 31,379 69,821(c) 101,200 101,200
925(c) 1,500(g)
Other assets................ 1,982 7,925(d) 10,832 (2,673)(h) 9,659
Identifiable intangible
assets.................... -- 29,245(c) 29,245 29,245
Goodwill.................... -- 121,979(c) 121,979 121,979
------- ------- ------- ------- -------
Total assets....... $ 93,869 $ 215,086 $ 308,955 $ (971) $ 307,984
======= ======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit
facility................ $ -- $ 886(b) $ 886 $ (886)(g) $ --
Accounts payable.......... 8,497 8,497 8,497
Income taxes payable
(refundable)............ 573 573 (1,069)(h) (496)
Other current
liabilities............. 7,597 7,597 7,597
Current portion of long-
term debt............... 134 5,000(e) 5,134 (5,000)(g) 134
------- ------- ------- ------- -------
16,801 5,886 22,687 (6,955) 15,732
Long-term debt, including
unamortized premium of 47,588(g)
$2,588.................... -- 190,000(e) 190,000 (40,000)(g) 197,588
Post-retirement benefit
obligations............... 5,667 (243)(c) 5,424 5,424
Deferred income taxes....... 2,544 43,300(c) 45,844 45,844
------- ------- ------- ------- -------
Total
liabilities...... 25,012 238,943 263,955 633 264,588
2,922(a)
(71,779)(c)
Stockholders' equity........ 68,857 45,000(f) 45,000 (1,604)(h) 43,396
------- ------- ------- ------- -------
Total liabilities
and stockholders'
equity........... $ 93,869 $ 215,086 $ 308,955 $ (971) $ 307,984
======= ======= ======= ======= =======
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheet.
27
<PAGE> 31
NEENAH CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(a) Adjustment to reflect repayment of $2,922 notes receivable from owners
(reported as a reduction from stockholders' equity in the historical
balance sheet) prior to the closing of the Transactions.
(b) Adjustment to reflect the net effect of the Transactions (decrease in cash
and cash equivalents of $25,325 and increase in borrowings under the
Revolving Credit Facility of $886), as follows:
<TABLE>
<S> <C> <C>
Proceeds from Term Loans and Senior Subordinated Notes.............. $ 195,000
Proceeds from Equity Contribution................................... 45,000
Purchase price:
Merger Consideration................................ $(236,840)
Closing date net worth adjustment................... (9,103)
Former Stockholder Payment.......................... (11,336)
---------
(257,279)
Acquisition costs................................... (1,007)
Financing costs..................................................... (7,925)
---------
$ (26,211)
=========
</TABLE>
(c) Adjustment to reflect the push-down of the $258,286 Merger Price (which
includes the acquisition costs) to the assets and liabilities of the
Company, allocated as follows:
<TABLE>
<S> <C>
Book value of Company as of March 31, 1997
($68,857 + $2,922(1)).................................. $ 71,779
Fair value adjustments(2):
Write-up inventories(3)................................ 7,995
Eliminate other current assets repaid at closing....... (401)
Write-up property, plant and equipment(4).............. 69,821
Write-up net pension asset............................. 925
Record identifiable intangible assets(5)............... 29,245
Reduce post-retirement benefit obligations............. 243
Record deferred income taxes(6)........................ (43,300)
Residual -- goodwill(7)................................ 121,979
---------
$258,286
=========
</TABLE>
--------------------
(1) Add back notes receivable from owners (repaid prior to the Closing),
which is shown as a reduction from stockholders' equity in the
historical balance sheet.
(2) For all other recorded assets and liabilities of the Company, the
historical book values were estimated to approximate their fair values
at the balance sheet date.
(3) Net effect of changing inventory costing method from last in, first out
to fair value.
(4) The fair value of property, plant and equipment was based on outside
appraisals completed in connection with the Transactions. The write-up
has been allocated to the fixed asset categories as shown below. The
remaining economic useful lives used in depreciating the new basis of
the depreciable fixed assets are also indicated:
<TABLE>
<CAPTION>
REMAINING ECONOMIC
ALLOCATED EXCESS USEFUL LIFE
------------------ ---------------------
<S> <C> <C>
Land....................................... $ 53 N/A
Buildings and improvements................. 1,995 10 to 35 years
Machinery and equipment.................... 45,373 7 to 20 years
Municipal patterns......................... 22,400 15 years
--------
$ 69,821
===============
</TABLE>
28
<PAGE> 32
(5) The fair value of identifiable intangible assets was based on an
outside valuation. The identifiable intangible assets and the estimated
useful lives are as follows:
<TABLE>
<CAPTION>
FAIR ESTIMATED
VALUE USEFUL LIFE
------------ -------------
<S> <C> <C>
Customer lists.......................................... $ 14,200 10 years
Trade names............................................. 11,700 40 years
Assembled work force.................................... 2,050 15 years
Internally prepared materials........................... 1,025 10 years
Patents................................................. 270 15 years
-------
$ 29,245
=======
</TABLE>
(6)Deferred income taxes were calculated at 40% of all fair value
adjustments except for goodwill since there is no step-up in basis of
assets or liabilities for income tax purposes resulting from the
Transactions.
(7)An amortization period of 40 years will be used for goodwill because the
period expected to be benefited exceeds 40 years.
(d) Adjustment to record the estimated financing costs of $7,925. The amount is
being amortized using the interest method over the term of the related debt.
(e) Adjustment to record the debt used to finance the acquisition of the
Company:
<TABLE>
<S> <C> <C>
Term Loans
Tranche A Term Loan........................... $20,000
Tranche B Term Loan........................... 25,000
------
$ 45,000
Senior Subordinated Notes due 2007....................... 150,000
--------
$195,000
========
</TABLE>
(f) Adjustment to record the $45,000 Equity Contribution to the Company by
Holdings.
(g) Adjustment to reflect the net effect of the Refinancing on cash and cash
equivalents and borrowings under the Revolving Credit Facility, as follows:
<TABLE>
<S> <C>
Proceeds from Refinancing Notes $47,588
=======
Uses:
Repay Term Loans $45,000
Repay borrowings under Revolving Credit Facility 886
Financing costs 1,500
Cash for working capital 202
-------
$47,588
=======
</TABLE>
The premium of $2,588 resulting from the issuance of the Refinancing Notes
at 105.75% will be amortized using the interest method over the term of the
related debt. The estimated financing costs of $1,500 will be amortized
using the interest method over the term of the related debt.
(h) Adjustment to write-off the financing costs of $2,673 related to the Term
Loans, net of taxes of $1,069.
29
<PAGE> 33
NEENAH CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA PRO FORMA
ADJUSTMENTS PRO FORMA ADJUSTMENTS FOR
FOR FOR FOR TRANSACTIONS
HISTORICAL TRANSACTIONS TRANSACTIONS REFINANCING AND REFINANCING
---------- ----------- ------------ ----------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net sales............... $ 165,426 $ 165,426 $ 165,426
Cost of sales........... (116,736) $ 57(a) (116,679) (116,679)
--------- -------- --------- ---------
Gross profit............ 48,690 57 48,747 48,747
Selling, general and 22(a)
administrative (5,019)(b)
expenses.............. (17,547) 3,515(c) (19,029) (19,029)
--------- -------- --------- ---------
Operating income........ 31,143 (1,425) 29,718 29,718
Interest income
(expense), net........ 1,162 (21,527)(d) (20,365) $(583)(f) (20,948)
--------- -------- --------- ----- ---------
Income before income
taxes and
extraordinary item.... 32,305 (22,952) 9,353 (583) 8,770
Provision for income
taxes................. (12,467) 7,663(e) (4,804) 224(g) (4,580)
--------- -------- --------- ----- ---------
Income before
extraordinary item.... $ 19,838 $ (15,289) $ 4,549 $(359) $ 4,190
========= ======== ========= ===== =========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Statement of Income.
30
<PAGE> 34
NEENAH CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
(a) Adjustment to reflect depreciation expense based on the new basis and
remaining economic useful lives of the Company's property, plant and
equipment, as follows:
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, 1997
-----------------------
COST OF SALES SG&A
------------- -----
<S> <C> <C>
Historical depreciation (accelerated and straight line
methods).................................................. $(6,723) $(158)
New basis depreciation (straight line method)............... 6,666 136
------- -----
$ (57) $ (22)
======= =====
</TABLE>
(b) Adjustment to record in selling, general and administrative expenses, the
amortization of the identifiable intangible assets and residual goodwill,
calculated as follows:
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, 1997
--------------
<S> <C>
Intangible assets................................................... $1,970
Goodwill............................................................ 3,049
------
$5,019
======
</TABLE>
(c) Adjustment to reduce selling, general and administrative expenses for the
compensation expense (salary, bonuses, and benefits) relating to the four
executives (Edmund W. Aylward, Jr., Andrew A. Aylward, Thomas R. Franklin,
and James P. Keating, Jr.) who did not continue with the Company after the
Transactions. Compensation expense relating to replacement executives,
including additional compensation to current employees who will assume new
responsibilities, is included based on planned employment arrangements.
Messrs. E.W. Aylward and A.A. Aylward resigned from their positions in
connection with the consummation of the Transactions. Mr. Franklin retired
on February 28, 1997. Mr. Keating's employment agreement terminated on June
30, 1997. James K. Hildebrand has been named chief executive officer of the
Company. The responsibilities of the other three executives not continuing
with the Company were assumed by current employees.
<TABLE>
<S> <C>
Compensation expense related to four executives not continuing with
the Company......................................................... $ (4,015)
Compensation expense related to replacement executive................. 120
Additional compensation expense for current employees who assumed
additional responsibilities......................................... 380
-------
$ (3,515)
=======
</TABLE>
(d) Adjustment to record interest expense and amortization of deferred
financing costs on the debt incurred to finance the Transactions,
calculated as follows:
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, 1997
--------------
<S> <C>
Tranche A Term Loan ($20,000 @ 8.25%)............................. $ 1,526
Tranche B Term Loan ($25,000 @ 8.75%)............................. 2,155
Senior Subordinated Notes due 2007 ($150,000 @ 11.125%)........... 16,688
-------
20,369
Amortization of deferred financing costs.......................... 1,158
-------
$ 21,527
=======
</TABLE>
31
<PAGE> 35
The interest expense amounts are based on quarterly principal payments of
$1,000 and $250 for the Tranche A and Tranche B Term Loans, respectively.
(e) Adjustment to record the tax effect on the above adjustments using the
marginal effective income tax rate of 38.5%. All adjustments were
tax-effected except for goodwill amortization.
(f) Adjustment to record interest expense and amortization of deferred
financing costs on the debt incurred to refinance the Term Loans,
calculated as follows:
<TABLE>
<S> <C>
Refinancing Notes due 2007 ($45,000 @ 11.125%).......................... $ 5,006
Amortization of premium of $2,588 on Refinancing Notes.................. (259)
Eliminate interest expense on Term Loans................................ (3,681)
------
1,066
Amortization of deferred financing costs on Refinancing Notes due
2007.................................................................. 150
Eliminate amortization of deferred financing costs on Term Loans........ (633)
------
$ 583
======
</TABLE>
(g) Adjustment to record the tax effect on the above adjustments using the
marginal effective income tax rate of 38.5%.
32
<PAGE> 36
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of
operations covers periods before consummation of the Transactions and the
Refinancing. The following information should be read in conjunction with
"Selected Consolidated Financial and Other Data," "Unaudited Pro Forma
Consolidated Financial Information," and the consolidated financial statements
and the notes thereto included elsewhere in this Prospectus.
GENERAL
Historically, the Company's net sales have been derived primarily from
sales of heavy municipal and industrial iron castings, which represented 43% and
53%, respectively, of the Company's net sales for the year ended March 31, 1997.
In addition, the Company sells sand control systems and other related products,
which represented 4% of net sales for the year ended March 31, 1997. Sales to
the heavy municipal market have produced, and continue to produce, significantly
higher gross profit margins than sales to the industrial market.
Since 1985, the Company has invested approximately $100 million in its
facilities, with approximately $73 million invested in a major plant
modernization program from 1985 to 1990. This plant modernization program was a
critical part of a long-term strategy to produce higher value-added castings for
its existing industrial customers and to penetrate other selected segments of
that market, while preserving its position as the leader in the heavy municipal
market. This modernization program entailed the closing of the Company's oldest
foundry, Plant 1, and the updating of the Company's other two foundries, Plants
2 and 3. Plant 1 was closed due to its age and the significant investment
required to keep it competitive with more modern mold technology. Plants 2 and 3
were updated with four new molding lines to enable the Company both to produce
higher volume, complex castings for selected industrial segments, and to improve
the Company's cost position in the heavy municipal market. Following the
completion of the modernization program, the Company has steadily decreased its
production of lower margin products such as axle covers and brake drums and
increased the production of more complex, higher value-added parts such as
transmission housings and axle housings. In 1996, the Company began to introduce
what it calls "lightweighted" castings to the municipal market. These
lightweighted castings have been reengineered in order to reduce both their
weight and the amount of raw materials necessary for their manufacture, while
maintaining the high quality performance characteristics of the heavier version
of the casting. This improvement in the design and manufacture of municipal
castings has resulted in lower material costs and improved margins for this
product line. The impact of lightweighted parts on operating results has
generally been lower tons produced, equal or higher unit volumes, higher prices
per ton, lower raw material costs and improved margins.
From 1992 to 1997, the Company's net sales increased from $116.5 million to
$165.4 million, representing a compound annual growth rate of 7.3%, and
operating income increased from $6.2 million to $31.1 million, representing a
compound annual growth rate of 38.1%. The Company's net sales during this period
have been driven primarily by the Company's increased market penetration in
selected products in the medium- and heavy-duty and farm equipment markets, by
increased market demand in the medium- and heavy-duty truck market and, to a
lesser extent, increased heavy municipal market sales. The Company's increase in
operating income during this period was largely the result of improvements in
industrial products and, to a lesser extent, municipal products. Operating
income attributable to industrial castings increased primarily due to higher
production volume, an improved product mix, improved pricing and increased
efficiency in operating its manufacturing equipment, while operating income
attributable to municipal castings increased primarily due to improved pricing
and the effects of the lightweighted casting program. In addition, the Company's
operating income increased due to increased operating leverage.
33
<PAGE> 37
RESULTS OF OPERATIONS
The following table sets forth for the periods shown certain statement of
income data expressed as a percentage of net sales:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH
31,
-------------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Net sales:
Municipal sales........................................ 43.9% 41.6% 43.1%
Industrial sales....................................... 53.2 55.2 53.4
Hartley Controls sales................................. 2.9 3.2 3.5
----- ----- -----
Total net sales.......................................... 100.0 100.0 100.0
Cost of sales............................................ 75.3 72.9 70.6
----- ----- -----
Gross profit............................................. 24.7 27.1 29.4
Selling, general and administrative...................... 10.4 10.1 10.6
----- ----- -----
Operating income......................................... 14.3% 17.0% 18.8%
===== ===== =====
</TABLE>
COMPARISON OF FISCAL YEAR ENDED MARCH 31, 1997 TO FISCAL YEAR ENDED MARCH 31,
1996
Net Sales. Net sales were $165.4 million for the year ended March 31,
1997, a decrease of $1.6 million, or 0.9%, from $167.0 million for the year
ended March 31, 1996. Net sales of industrial castings decreased $3.9 million,
or 4.2%, to $88.3 million. The decrease in industrial casting sales was
primarily the result of a decision by the Company to discontinue its production
of certain lower margin brake components, which resulted in a 9,600 ton decrease
in tons produced compared to the year earlier period, and, to a lesser extent,
reduced demand for casting products in the medium- and heavy-duty truck market.
Net sales of municipal castings increased $1.9 million, or 2.7%, to $71.3
million, primarily due to increased pricing. Hartley Controls net sales grew
$0.4 million, or 7.4%, to $5.8 million, principally due to increased volume of
equipment sales.
Gross Profit. Gross profit was $48.7 million for the year ended March 31,
1997, an increase of $3.4 million, or 7.5%, from $45.3 million for the year
ended March 31, 1996. Gross profit as a percentage of net sales increased to
29.4% for the year ended March 31, 1997, from 27.1% for the year ended March 31,
1996. The increase in gross profit as a percentage of net sales was due mainly
to improved product mix in the industrial product line and greater overall plant
efficiency. Gross profit percentage also improved due to the continued effect of
the lightweighted municipal casting program.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $17.5 million for the year ended March 31, 1997, an
increase of $0.5 million, or 2.9%, from $17.0 million for the year ended March
31, 1996. As a percentage of net sales, selling, general and administrative
expenses increased to 10.6% for the year ended March 31, 1997, from 10.1% for
the year ended March 31, 1996. Approximately $0.2 million of the increase in
selling, general and administrative expenses was due to a non-recurring
charitable contribution and approximately $0.9 million of the increase was due
to increased compensation and benefits to officers of the Company who resigned
at Closing. Excluding the effects of estimated nonrecurring officer compensation
and benefits and the charitable contribution, selling, general and
administrative expenses, as a percentage of net sales, decreased slightly to
8.3% for the year ended March 31, 1997, from 8.4% for the year ended March 31,
1996.
Operating Income. Operating income increased to $31.1 million for the year
ended March 31, 1997, an increase of $2.8 million or 9.9% from $28.3 million for
the year ended March 31, 1996. As a percentage of net sales, operating income
increased to 18.8% for the year ended March 31, 1997, from 17.0% for the year
ended March 31, 1996. The improvement in operating income was achieved primarily
for the reasons discussed above.
34
<PAGE> 38
COMPARISON OF FISCAL YEAR ENDED MARCH 31, 1996 TO FISCAL YEAR ENDED MARCH 31,
1995
Net sales. Net sales were $167.0 million for the year ended March 31,
1996, an increase of $6.4 million, or 4.0%, from $160.6 million for the year
ended March 31, 1995. Net sales of industrial castings grew $6.6 million, or
7.7%, to $92.2 million. The increase in industrial sales was primarily due to
improved pricing while sales volume remained stable. The improved pricing for
industrial castings was mainly the result of a better industrial product mix as
the Company increased its sales of more complex, value-added industrial
castings. Net sales of municipal castings decreased $1.0 million, or 1.4%, to
$69.4 million, due to a decrease in unit volume, which was partially offset by
improved pricing. The decrease in municipal castings volume was principally due
to artificially high sales in fiscal 1995 resulting from weather conditions.
Fiscal 1995 net sales were affected by poor winter weather in January to March
1994 which resulted in the postponement of certain sales from fiscal 1994 to
fiscal 1995, and mild weather from January to March 1995 which resulted in the
acceleration of sales from fiscal 1996 to fiscal 1995. Total production volume
in tons decreased more significantly than unit volume for municipal sales
because of the effect of the lightweighted casting program. See "-- General."
Hartley Controls net sales grew $0.8 million, or 17.4%, to $5.4 million,
principally due to increased volume of equipment sales.
Gross Profit. Gross profit was $45.3 million for the year ended March 31,
1996, an increase of $5.7 million, or 14.4%, from $39.6 million for the year
ended March 31, 1995. Gross profit as a percentage of net sales increased to
27.1% for the year ended March 31, 1996, from 24.7% for the year ended March 31,
1995. The continued improvement in gross profit, as a percentage of net sales,
was due to the combined effect of margin improvements in both the industrial and
municipal product lines. Industrial castings gross profit percentage improved
due to the shift to a more profitable product mix and improved efficiency in
plant operations. Municipal castings gross profit percentage improved largely
due to the effect of implementing the lightweighted casting program and an
increase in selling prices.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $17.0 million for the year ended March 31, 1996, an
increase of $0.3 million, or 1.8%, from $16.7 million for the year ended March
31, 1995. As a percentage of net sales, selling, general and administrative
expenses decreased slightly to 10.1% for the year ended March 31, 1996, from
10.4% for the year ended March 31, 1995. Approximately $0.1 million of the
increase in selling, general and administrative expense was due to increased
compensation and benefits to officers of the Company who resigned at Closing.
Excluding the effects of estimated nonrecurring executive compensation and
benefits, selling, general and administrative expenses, as a percentage of net
sales, decreased to 8.4% from 8.6% for the year ended March 31, 1995, primarily
due to the spreading of fixed expenses over a greater volume of sales.
Operating Income. Operating income increased to $28.3 million for the year
ended March 31, 1996, an increase of $5.3 million, or 23.0%, from $23.0 million
for the year ended March 31, 1995. As a percentage of net sales, operating
income increased to 17.0% for the year ended March 31, 1996, from 14.3% for the
year ended March 31, 1995. The improvement in operating income was achieved
primarily for the reasons discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs will arise primarily from debt service on
indebtedness incurred in connection with the Transactions and the Refinancing,
working capital needs and the funding of capital expenditures. At March 31,
1997, on a pro forma basis after giving effect to the Transactions, the
Company's consolidated indebtedness would have been approximately $197.7 million
(excluding $0.6 million of outstanding letters of credit), consisting of $150.0
million of the Notes, $47.6 million of the Refinancing Notes (including
unamortized premium of $2.6 million) and $0.1 million of Senior Indebtedness
(consisting of capital lease obligations). As of July 1, 1997, after giving
effect to the Transactions and the Refinancing, and the application of the net
proceeds therefrom, the
35
<PAGE> 39
Company and the Guarantor Subsidiaries would have had outstanding $0.1 million
(excluding $0.6 million of outstanding letters of credit) aggregate principal
amount of Senior Indebtedness (all of which is Secured Indebtedness), $197.6
million aggregate amount of Senior Subordinated Indebtedness including the
indebtedness represented by the Notes and no indebtedness that is subordinate or
junior in right of payment to the indebtedness represented by the Notes. The
degree to which the Company is leveraged could have a significant effect on its
results of operations.
Principal and interest payments under the Revolving Credit Facility, the
Refinancing Notes and the Notes will represent significant liquidity
requirements for the Company. Borrowings under the Revolving Credit Facility
bear interest at variable interest rates and are subject to a borrowing base.
The Credit Agreement for the Senior Bank Facilities imposes restrictions on the
Company's ability to make capital expenditures and both the Credit Agreement and
the Indenture governing the Notes limit the Company's ability to incur
additional indebtedness. Such restrictions, together with the highly leveraged
nature of the Company, could limit the Company's ability to respond to market
conditions, to meet its capital spending program, to provide for unanticipated
capital investments or to take advantage of business opportunities. The
covenants contained in the Credit Agreement also, among other things, restrict
the ability of the Company and its subsidiaries to dispose of assets, incur
guarantee obligations, prepay the Notes or amend the Indenture, pay dividends,
create liens on assets, enter into sale and leaseback transactions, make
investments, loans or advances, make acquisitions, engage in mergers or
consolidations, change the business conducted by the Company, make capital
expenditures or engage in certain transactions with affiliates, and otherwise
restrict corporate activities. The covenants in the Indenture also impose
restrictions on the operations of the Company's businesses. See "Risk
Factors -- Restrictive Loan Covenants." "Description of Notes," and "Description
of Senior Bank Facilities."
For the fiscal years ended March 31, 1995, 1996 and 1997, the Company's
capital expenditures were $3.7 million, $7.3 million and $4.5 million,
respectively. The $3.6 million increase in capital expenditures for the fiscal
year ended March 31, 1996 from the comparable period for 1995 was primarily the
result of the expansion of the cooling capabilities of two of the Company's
production lines. Of the $4.5 million of capital expenditures in 1997, an
estimated $4.0 million was attributable to maintenance of capital equipment. The
Company currently plans to make capital expenditures of approximately $6.0
million in the fiscal year ended March 31, 1998, exclusive of any acquisitions.
While a component of the Company's strategy is to make selective acquisitions in
the foundry industry, it currently has no agreements relating to any
acquisitions.
The Company's principal source of cash to fund its liquidity needs will be
net cash from operating activities and borrowings under the Revolving Credit
Facility. Net cash from operating activities for the year ended March 31, 1997
was $23.5 million, an increase of $1.2 million from $22.3 million for the year
ended March 31, 1996, primarily as a result of an increase in net income. Net
cash from operating activities for the year ended March 31, 1996 of $22.3
million represented a decrease of $1.3 million from $23.6 million in the
comparable period of 1995, primarily as a result of a net increase in working
capital (excluding cash and cash equivalents) during 1996 partially offset by
greater net income in 1996.
At March 31, 1997, on a pro forma basis after giving effect to the
Transactions, the Refinancing, and the application of the proceeds therefrom, as
well as borrowing base limitations and $0.6 million of outstanding letters of
credit, the Company estimates that it would have had the ability to borrow
approximately $24.5 million under the Revolving Credit Facility. Amounts under
the Revolving Credit Facility may be used for working capital and general
corporate and other purposes, subject to certain limitations under the Senior
Bank Facilities. The Company is currently negotiating an amendment to the Senior
Bank Facilities which, if adopted, would (i) increase the borrowings available
under the Revolving Credit Facility to the Company from $30.0 million to $50.0
million and (ii) eliminate all borrowing base limitations from the current
Revolving Credit Facility. See "Summary -- Amendment to Senior Bank Facilities."
The Company believes that cash generated from operations, together with the
amounts available under the Revolving Credit Facility, will be adequate
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<PAGE> 40
to meet its debt service requirements, anticipated capital expenditures and
working capital needs for the foreseeable future, although no assurance can be
given in this regard. The Company also believes that such resources, together
with the potential future use of debt or equity financing, will allow the
Company to pursue its strategic goal of making selective acquisitions. The
Company's future operating performance and ability to service or refinance the
Notes and to extend or refinance the Senior Bank Facilities will be subject to
future economic conditions and to financial, business and other factors, many of
which are beyond the Company's control.
RAW MATERIALS
Although the prices of all raw materials used by the Company vary, the
fluctuations in the price of steel scrap are the most significant to the
Company. The Company has arrangements with most of its industrial customers
which require the Company to adjust industrial casting prices to reflect scrap
price fluctuations. In periods of rapidly rising or falling scrap prices, these
adjustments will lag the current scrap price because they are generally based on
average market prices for prior periods, which periods vary by customer but are
generally no longer than six months. Castings are generally sold to the heavy
municipal market on a bid basis and, after a bid is won, the price for the
municipal casting subject to the bid generally cannot be adjusted for raw
material price increases. However, in most cases the Company has been successful
in obtaining higher municipal casting unit prices in subsequent bids to
compensate for rises in scrap prices in prior periods. Rapidly fluctuating scrap
prices may have a temporary adverse or positive effect on the Company's results
of operations.
INFLATION
The Company does not believe that inflation has had a material impact on
its financial position or results of operations during the three years ended
March 31, 1997.
CYCLICALITY AND SEASONALITY
The Company has historically experienced moderate cyclicality in the heavy
municipal market. Sales of municipal products are influenced by, among other
things, public spending. In the industrial market, the Company has experienced
cyclicality in sales resulting from fluctuations in the medium-and heavy-duty
truck market and the farm equipment market, which are subject to general
economic trends.
The Company experiences seasonality in its municipal business where sales
tend to be higher during the construction season, which occurs during the warmer
months, generally the first and second quarters of the Company's fiscal year.
Seasonal weather can also impact the Company's net sales from year to year, as
warmer weather conditions in the months of January through March of any given
year can allow shipments during that time which would normally occur in the
subsequent fiscal year. The Company maintains level production throughout the
year in anticipation of such seasonality and does not experience production
volume fluctuations as a result. The Company builds inventory in anticipation of
the construction season with such inventories reaching a peak near the end of
its fiscal year in March. The Company has not historically experienced
seasonality in industrial casting sales.
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EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on ; provided, however, that if the Company has
extended the period of time for which the Exchange Offer is open, the term
"Expiration Date" means the latest time and date to which the Exchange Offer is
extended.
As of the date of this Prospectus, $150.0 million aggregate principal
amount of the Old Notes are outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about , to all
holders of Old Notes known to the Company. The Company's obligation to accept
Old Notes for exchange pursuant to the Exchange Offer is subject to certain
conditions as set forth under "-- Certain Conditions to the Exchange Offer"
below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for any exchange of any Old Notes, by giving notice of
such extension to the holders thereof. During any such extension, all Old Notes
previously tendered will remain subject to the Exchange Offer and may be
accepted for exchange by the Company. Any Old Notes not accepted for exchange
for any reason will be returned without expense to the tendering holder thereof
as promptly as practicable after the expiration or termination of the Exchange
Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified below under "-- Certain Conditions to the Exchange Offer." The Company
will give notice of any extension, amendment, non-acceptance or termination to
the holders of the Old Notes as promptly as practicable, such notice in the case
of any extension to be issued no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal, to United States Trust Company of New
York (the "Exchange Agent") at one of the addresses 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
(the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or the holder must comply with the guaranteed delivery
procedures described below. THE METHOD OF DELIVERY OF OLD NOTES, LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE
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<PAGE> 42
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD
BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by registered holder of the Old Notes who has
not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm that is a member or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program or the Stock Exchange Medallion
Program or by an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (collectively, "Eligible Institutions"). If Old
Notes are registered in the name of a person other than a signer of the Letter
of Transmittal, the Old Notes surrendered for exchange must be endorsed by or be
accompanied by a written instrument or instruments of transfer or exchange, in
satisfactory form as determined by the Company in its sole discretion, duly
executed by, the registered holder with the signature thereon guaranteed by an
Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right to waive
any defects or irregularities or conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date. The
interpretation of the terms and conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date (including the
Letter of Transmittal and the instructions thereto) by the Company shall be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Old Notes for exchange must be cured within such
reasonable period of time as the Company shall determine. Neither the Company,
the Exchange Agent nor any other person shall be under any duty to give
notification of any defect or irregularity with respect to any tender of Old
Notes for exchange, nor shall any of them incur any liability for failure to
give such notification. The Exchange Offer is subject to certain customary
conditions relating to compliance with any applicable law, or any applicable
interpretation by any staff of the Commission, or any order of any governmental
agency or court of law. See "--Certain Conditions of the Exchange Offer."
If the Letter of Transmittal or any Old Notes or powers of attorney 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
do so must be submitted.
By tendering, each holder will represent to the Company that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being obtained
in the ordinary course of business of the holder and any beneficial holder, that
neither the holder nor any such beneficial holder has an arrangement or
understanding with any person to participate in the distribution of such New
Notes and that neither the holder nor any such other person is an "affiliate,"
as defined under Rule 405 of the Securities Act, of the Company. If the holder
is a broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer, it must acknowledge that it acquired the Old Notes for its own
account as the result of market-making activities or other trading activities,
and must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes.
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<PAGE> 43
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. For purposes of the Exchange Offer, the Company shall be deemed to
have accepted properly tendered Old Notes for exchange when, as and if the
Company has given oral and written notice thereof to the Exchange Agent.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's accountant the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering holder thereof (or, in the case of Old
Notes tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such non-exchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration of the Exchange Offer.
BOOK-ENTRY TRANSFER
Any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, 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
If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent receives from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile and transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within five New York
Stock Exchange ("NYSE") trading days after the date of execution of the Notice
of Guaranteed Delivery, the certificates for all physically tendered Old Notes,
in proper form for transfer or a confirmation of book-entry transfer of such Old
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility (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 (iii) the certificates for all physically 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 NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
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WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time on the business day prior to the Expiration Date. For a
withdrawal to be effective, a written notice of withdrawal must be received by
the Exchange Agent at one of the addresses set forth below under "Exchange
Agent." Any such notice of withdrawal must specify the 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 number 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
Book-Entry Transfer Facility 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 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
Book-Entry Transfer Facility pursuant to the book entry transfer described
above, such Old Notes will be credited to an account maintained with such
Book-Entry Transfer Facility 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 Old Notes" above at any time on or
prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer if at any time
before the Expiration Date, the Company determines that the Exchange Offer
violates applicable law, any applicable interpretation of the staff of the
Commission or any order of any governmental agency or court of competent
jurisdiction.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its reasonable discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
prior to the Expiration Date any stop order shall be threatened or in effect
with respect to the Registration Statement of which this Prospectus constitutes
a part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended (the "TIA"). In any such event, the Company is required to use
every reasonable effort to obtain the withdrawal of any stop order at the
earliest possible time.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as the Exchange
Agent for the Exchange Offer. All executed Letters of Transmittal should be
directed to the Exchange Agent at the address set forth below. Questions and
requests for assistance, requests for additional copies of
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<PAGE> 45
this Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
United States Trust
Company of New York
114 West 47th Street
New York, NY 10036
Via Facsimile: (212) 852-1626
Confirm by Telephone: (212) 852-1614
For Information: (212) 858-2103
DELIVERY OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or other
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs among others.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
which is the principal amount 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 expenses of the Exchange Offer will be
capitalized for accounting purposes.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
the Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to the exemptions from, or
in transactions not subject to, the registration requirements of, the Securities
Act and applicable state securities law. Old Notes not exchanged pursuant to the
Exchange Offer will continue to accrue interest at 11 1/8% per annum and will
otherwise remain outstanding in accordance with their terms. Holders of Old
Notes do not have any appraisal or dissenters' rights under the Delaware General
Corporation Law in connection with the Exchange Offer. 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. To the extent that Old
Notes are exchanged for New Notes, the market for the Old Notes may be adversely
affected. The Company does not currently anticipate that it will register the
Old Notes under the Securities Act. However, (i) if the Initial Purchasers so
request with respect to Old Notes not eligible to be exchanged for New Notes in
the Exchange Offer and held by them following consummation of the Exchange Offer
or (ii) if any holder of Old Notes is not eligible to
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<PAGE> 46
participate in the Exchange Offer, or, in the case of any holder of Old Notes
that participates in the Exchange Offer, does not receive freely tradable New
Notes in exchange for Old Notes, the Company is obligated to file a Registration
Statement on the appropriate form under the Securities Act relating to the Old
Notes held by such persons.
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, it is the Company's view that New
Notes issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any such holder which
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (ii) any broker-dealer that purchases Notes form the Company
to resell pursuant to Rule 144A or any other available exemption) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business and such holders have no intention, or any arrangement
or understanding with any person, to participate in the distribution of such New
Notes. If any holder has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange 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 a secondary
resale transaction. 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
in connection with any resale of New Notes. Each such broker-dealer that
acquired New Notes as a result of market-making activities or other trading
activities, must acknowledge in the Letter of Transmittal that it will deliver a
prospectus in connection with any resale of such New Notes. See "Plan of
Distribution."
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. The Company has
agreed, pursuant to the Registration Rights Agreement and subject to certain
specified limitations therein, to register or qualify the New Notes for offer or
sale under the securities or blue sky laws of such jurisdictions as any holder
of the Notes reasonably requests in writing.
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<PAGE> 47
BUSINESS
OVERVIEW
The Company, founded in 1872, is one of the largest manufacturers of a wide
range of high quality ductile and gray iron castings for the heavy municipal
market and selected segments of the industrial market. The Company believes it
is the largest manufacturer of heavy municipal iron castings in the United
States with approximately a 19% market share in calendar year 1996. The
Company's broad range of heavy municipal iron castings includes manhole covers
and frames, storm sewer frames and grates, heavy duty airport castings,
specialized trench drain castings, specialty flood control castings and
ornamental tree grates. These municipal castings are sold throughout the United
States to state and local government entities, utility companies, precast
concrete manhole structure producers and contractors for both new construction
and infrastructure replacement. The municipal market generated approximately 43%
of the Company's 1997 net sales. The Company believes it is also a leading
manufacturer of a wide range of complex industrial castings, including castings
for medium- and heavy-duty truck drive line components, a broad range of
castings for the farm equipment industry and specific components for compressors
used in heating, ventilation and air conditioning systems ("HVAC"). The
industrial market generated approximately 53% of the Company's 1997 net sales.
In addition, the Company engineers, manufactures and sells customized sand
control systems and related products, which are an essential part of the casting
process, to other iron foundries. Sales of these sand control systems and
related products represented approximately 4% of the Company's 1997 net sales.
The Company currently operates two modern foundries with an annual
aggregate rated capacity of approximately 187,000 tons at a single site in
Neenah, Wisconsin. Since 1985, the Company has invested approximately $100
million in its production facilities, with approximately $73 million invested in
a major plant modernization program from 1985 to 1990. This plant modernization
program was a critical part of a long-term strategy to produce higher volume,
value-added castings for its existing industrial customers and to penetrate
other selected segments of the industrial market, while preserving its position
as the leader in the heavy municipal market. This modernization program entailed
the closing of the Company's oldest foundry, Plant 1, and the updating of the
Company's other two foundries, Plants 2 and 3, which enabled the Company both to
produce higher volume, complex castings for selected industrial segments and to
improve the Company's cost position in the heavy municipal market. Following the
completion of the modernization program, the Company has steadily decreased its
production of lower margin products such as axle covers and brake drums and
increased the production of higher margin, more complex parts such as
transmission and axle housings. As a result of this strategy, the Company's
ongoing improvements in its manufacturing process and increased demand for
medium- and heavy-duty truck components, net sales and EBITDA (as defined) have
increased substantially. From 1992 to 1997, net sales have grown from $116.5
million to $165.4 million, representing a compound annual growth rate of 7.3%,
and EBITDA has grown from $13.4 million to $38.0 million during the same period,
representing a compound annual growth rate of 23.2%.
INDUSTRY
The United States casting industry includes products made from gray,
malleable and ductile iron, aluminum, steel and various other metals, each with
different underlying structural and performance properties such as strength,
durability and weight. Gray iron, the oldest and most widely used cast iron, is
readily cast into intricate shapes that are easily machined and wear resistant.
Malleable iron, the least used form of iron, is stronger than gray iron and is
more costly than either gray or ductile iron. Ductile iron is also readily cast
into intricate shapes, and due to the addition of alloys during the casting
process, has greater strength and ductility than gray iron. As a result, ductile
iron is used as a higher-strength substitute for gray iron and a lower-cost
substitute
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for malleable iron and, in certain applications, steel. The Company manufactures
both gray and ductile iron which it sells into two broad end markets, the
municipal and industrial markets.
The municipal market consists of the heavy municipal market and the water
works market. The heavy municipal market is composed of "standard" castings
(consisting primarily of storm and sanitary sewer castings including manhole
covers and frames and storm sewer frames and grates), and "specialty" castings
(consisting primarily of heavy duty airport castings, trench drain castings,
flood control castings, special manhole and inlet castings and ornamental tree
grates). The water works market consists of certain pipe fittings, valves and
fire hydrants. The Company competes in the heavy municipal market and does not
participate in the water works market. The industrial market includes segments
such as car/light truck, medium- and heavy-duty truck, farm equipment and HVAC.
Of these, the Company primarily provides parts to the medium- and heavy-duty
truck, farm equipment and, to a lesser extent, HVAC segments. Since 1986, the
industrial market has steadily increased its demand for ductile iron due to its
superior performance properties such as strength, ductility and resistance to
stress and mechanical shock. The heavy municipal market utilizes gray iron for
the overwhelming majority of the parts it requires because gray iron continues
to be the most cost-effective material for most municipal applications.
The United States iron foundry industry is highly fragmented despite
significant consolidation over the past decade. In 1986, there were
approximately 880 foundries engaged in the casting of gray, ductile and
malleable irons, with an aggregate capacity of approximately 15 million tons
according to Stratecasts, Inc. a foundry industry research and consulting
organization. By 1996, the number of iron foundries had decreased to
approximately 730, with an aggregate capacity of approximately 13 million tons,
with further consolidation expected to take place. Many smaller foundries have
closed due to the increasing cost of complying with environmental and other
governmental regulations and their inability to satisfy the increasing demand
for higher quality, more complex castings. Due to capacity achieved through
consolidation and technological advancements, the output per remaining foundry
has risen.
In the heavy municipal market, a significant share of the market is served
by a few large foundries, including the Company. Foreign competition,
particularly from India, which had a strong presence in the heavy municipal
market in the past, has receded over the last 18 months as a result of both
antidumping and countervailing duty litigation and increasingly stringent
emission controls in such countries. Such foreign competition, which continues
to be a factor in the heavy municipal market, is primarily present in the
western and eastern coastal states due in part to the costs associated with
transportation. The industrial market has experienced substantial change over
the last 20 years due to two major initiatives by industrial original equipment
manufacturers and their first tier suppliers. The first, outsourcing, has meant
the closing of automotive and other captive foundries as OEMs and their first
tier suppliers focus on core businesses and take advantage of specialized skills
and lower manufacturing and labor costs of independent foundries. Second, OEMs
and their first tier suppliers are reducing the number of suppliers with whom
they work in an effort to eliminate duplicative overhead at multiple suppliers,
take advantage of economies of scale inherent in volume production and confine
suppliers to those with the resources necessary to satisfy stringent quality and
dependability criteria.
COMPETITIVE ADVANTAGES
The Company believes it benefits from the following competitive advantages,
which have enabled it to increase sales and operating profitability and to
maintain its position as one of the leaders in the iron casting industry.
Leading Market Position. The Company believes it is the largest
manufacturer of heavy municipal iron castings in the United States with
approximately a 19% market share in calendar year 1995. Furthermore, the
Company, which has produced municipal castings for over 70 years has, according
to its estimates, over a 50% market share in nine of the top ten states in which
the
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<PAGE> 49
Company sells heavy municipal castings. Sales in those states represented
approximately 69% of the Company's municipal sales in 1997. The Company believes
it is also one of the largest manufacturers of iron castings for selected
segments of the industrial market, including the medium-and heavy-duty truck and
farm equipment segments. The Company is the sole sourced supplier for over 85%
of the industrial products it produces and has multi-year arrangements with
certain of its largest customers. The Company believes it can continue to
capitalize on its strong market position to generate additional revenues and
realize economies of scale, thereby increasing margins and earnings.
Low Cost Structure. As a result of its size, significant investment in
equipment and technology and focus on improving efficiency, the Company believes
it possesses a highly competitive cost structure. Since 1985, the Company has
invested approximately $100 million in its production facilities, with
approximately $73 million invested in plant modernization and new equipment from
1985 to 1990. These investments, combined with the Company's ongoing
improvements to its manufacturing process, have substantially increased
efficiency and manufacturing productivity. From 1992 to 1997, the Company
reduced its scrap rate from 3.5% to 2.0%, which the Company believes is one of
the lowest scrap rates in the industry. During the same period, the Company
reduced its employee hours per ton by approximately 40% from 14.8 to 9.0, while
improving product quality levels and producing higher margin, more complex
parts.
Broad Product Offering. The Company carries a broad range of products,
offering more than 4,400 patterns that can produce over 20,000 part combinations
for the heavy municipal market, and more than 350 patterns for the industrial
market. The Company believes its municipal catalog offers the largest castings
selection of any foundry serving the heavy municipal market. This extensive
product offering, which includes hundreds of one-of-a-kind specialty items,
enables the Company to compete throughout the United States and provide a
substantial number of the many types of municipal castings required for
individual projects. Heavy municipal castings are manufactured from
Company-owned patterns which have been appraised by independent appraisers to
have a value in excess of $22 million. Additionally, the Company's extensive and
growing offering of complex industrial castings enables it to more effectively
service its customers' increasing needs for highly engineered cast parts and
often positions the Company as the sole source of supply to original equipment
manufacturers ("OEMs") and their first tier suppliers. The Company's broad
industrial product offering and its recognized casting engineering expertise
have become increasingly important as large industrial customers seek to reduce
the number of suppliers with whom they conduct business.
Strong, Diverse Customer Relationships. The Company continually focuses on
establishing and maintaining strong relationships with its customers. In the
heavy municipal market, the Company currently sells to over 17,000 active
customers in all 50 states, with the majority of its sales concentrated in the
midwestern states. The Company believes it has the largest sales and marketing
effort of any foundry serving the heavy municipal market, including 47 Company
employees and 26 commissioned representatives. The Company believes the size of
its marketing effort, the breadth of its product offering and the level of its
technical support provide it with a significant competitive advantage and will
allow it to further strengthen its leading position in the heavy municipal
market. With respect to the industrial market, the Company has established
strong relationships with leading manufacturers of medium- and heavy-duty truck
components, farm equipment and HVAC systems. The Company is the sole sourced
provider for over 85% of the products it currently supplies to its industrial
customer base and has multi-year arrangements with certain of its largest
customers. Furthermore, the average industrial casting typically takes between
12 and 18 months to go from the design phase to full production and has an
average life cycle of approximately 8 to 10 years. This lengthy development
process, in which the Company actively participates, provides the Company with
an inventory of products that cannot be quickly replicated by its competitors.
Historically, the foundry that has originally manufactured an industrial part
has continued to manufacture that part throughout its product life cycle. The
Company's participation in both the heavy municipal and
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<PAGE> 50
industrial markets helps to diversify the Company's business and to reduce the
Company's reliance on individual customers or end-use markets.
High Quality Products and Customer Service. The Company believes it enjoys
a reputation for providing a high level of customer service and is recognized
for its ability to consistently manufacture high-quality, complex products. The
Company believes its manufacturing capabilities and process controls allow it to
manufacture high quality castings which are dimensionally and metallurgically
consistent. In addition to providing high quality products, the Company
emphasizes customer service by providing tooling and engineering development
support to its customers, consistent on-time delivery utilizing its own fleet of
trucks for delivery of many of its municipal products and a small portion of the
Company's industrial products and follow-up through its sales and marketing
team. The Company believes its ability to provide such product quality and
responsive service has fostered customer loyalty and long-term relationships.
Experienced Management Team with Significant Equity Stake. The top seven
members of the Company's senior operating management have an average of
approximately 12 years with the Company and 23 years in the iron foundry
industry. Through an investment in ACP Products, L.L.C., certain members of the
Company's management (the "Management Investors") beneficially own, on a fully
diluted basis, approximately 10% of the common stock of the Company.
BUSINESS STRATEGY
The Company's strategy for achieving continued growth in sales and
profitability includes: (i) increasing the sale of higher margin products, (ii)
selectively entering new markets, (iii) improving operating performance and (iv)
making selective acquisitions.
Increasing the Sale of Higher Margin Products. The Company continually
strives to improve the margins on the parts it produces. In the heavy municipal
market, the Company has historically maintained strong margins by periodically
implementing price increases and introducing new, higher value-added products.
For example, the Company is currently leading the market in the sale of
lightweighted municipal castings, which are less costly to handle and require
less raw material to produce. The Company believes incremental margin
improvements will be realized from the Company's increased production of these
lightweighted products. In the industrial market, the Company increased its
focus on manufacturing complex, highly engineered castings in the early 1990s
following substantial capital investment in the late 1980s. Since 1991, the
Company has steadily increased the volume, array and complexity of the parts it
produces for its industrial customers. The Company intends to continue to pursue
opportunities to produce more complex, higher value-added castings, thereby
continuing to improve product margins.
Selectively Entering New Markets. The Company intends to selectively
expand its presence in both the heavy municipal and industrial markets. In the
heavy municipal market, the Company is considering expanding its product
offering in high volume markets such as New York and Nevada where the Company
already has sales representatives in place and for which the Company has already
invested in certain of the toolings necessary to meet potential product demand.
In addition, the Company is exploring further opportunities in New Jersey, New
Hampshire and Massachusetts. The Company's strategy in its chosen industrial
segments is to continue to increase its penetration of existing customers and to
develop similar relationships with other selected industrial companies which
would value the Company's technical ability and high level of product quality
and customer service. The Company also intends to explore opportunities in
austempering (heat-treating ductile iron) and machining and assembling
sub-components for specific industrial customers.
Improving Operating Performance. The Company operates two modern
foundries, and believes it possesses a highly competitive cost structure. The
Company intends to continue to seek ways to capitalize on and extend its
technological expertise and operating efficiencies, thereby reducing its
operating costs. In contrast to the major investments made from 1985 to 1990,
which significantly improved both manufacturing capacity and efficiency, the
Company's near term capital
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<PAGE> 51
expenditures will be focused primarily on incrementally improving efficiency and
reducing costs through projects such as: (i) sand system optimization, (ii)
material handling improvements and (iii) energy utilization improvements.
Making Selective Acquisitions. The United States iron foundry industry is
highly fragmented despite significant consolidation over the past decade. In
1986, there were approximately 880 foundries engaged in the casting of iron,
with an aggregate capacity of approximately 15 million tons according to
Stratecasts, Inc., a foundry industry research and consulting organization. By
1996, the number of iron foundries decreased to approximately 730, with an
aggregate capacity of approximately 13 million tons. Management believes the
consolidation that has occurred will continue, particularly in the industrial
market, as technical, environmental and quality standards continue to increase.
The Company intends to pursue selective acquisition opportunities that
complement its existing product offering or enable the Company to expand its
presence in selected geographic areas of the heavy municipal market. The Company
believes such acquisitions will provide opportunities for incremental revenue
and cash flow by leveraging the Company's current expertise in manufacturing,
sales and marketing, and product and process engineering.
PRODUCTS, CUSTOMERS AND MARKETS
The Company provides a variety of products to both the heavy municipal and
industrial markets. The following table sets forth certain information regarding
the end-user markets served by the Company, the products produced by the
Company, representative customers in each end-user market and the percentage of
net sales attributable to each of the Company's markets for the years ended
March 31, 1996 and 1997.
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES(1)
-------------------------------
FISCAL YEAR FISCAL YEAR
REPRESENTATIVE ENDED ENDED
MARKET END PRODUCT CUSTOMERS MARCH 31, 1996 MARCH 31, 1997
- ------------------ ------------------------ ---------------- -------------- --------------
<S> <C> <C> <C> <C>
Heavy Municipal Standard castings State and local 42.9% %44.6
including storm and government
sanitary sewer castings, entities,
including manhole covers utility
and frames, storm sewer companies,
frames and grates; precast concrete
Specialty castings structure
including heavy duty producers and
airport castings, contractors(2)
specialized trench drain
castings, specialty
flood control castings
and ornamental tree
grates
Industrial
Medium- and % %(3)
Heavy-Duty Differential carriers Rockwell 42.3 34.3
Truck and cases, brackets, International
cages, calipers, caps, Eaton Corp.
carriers, hubs, Dana Corp.
knuckles, transmission
housings, yokes
Farm Equipment Various gear housings, John Deere 10.7% %16.0
planet carriers, axle New Holland
housings, planting and
harvesting equipment
parts, counterweights
Other Industrial Compressor components, Aisin 4.1% % 5.1
various housing and gear The Trane
cases Company
</TABLE>
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- ---------------
(1) Net sales include sales of Neenah Foundry only.
(2) No municipal customer represented more than 1.2% of Neenah Foundry's net
sales for the fiscal years ended March 31, 1996 or 1997.
(3) Commencing in the second quarter of calendar 1996, the Company decided to
discontinue the production of certain lower margin brake components as part
of its strategy to increase its focus on higher volume, complex parts for
its industrial customers. These brake components accounted for 8.3% of
medium- and heavy-duty truck net sales in fiscal 1996 and 1.0% in fiscal
1997.
Heavy Municipal. Based on industry reported data, the Company believes it
is the largest manufacturer of heavy municipal iron castings in the United
States with an estimated 19% market share in calendar year 1996. The Company's
broad heavy municipal product line consists of two general categories of
castings, "standard" and "specialty" castings. Standard castings principally
consist of storm and sanitary sewer castings which are consistent with
pre-existing dimension and strength specifications established by local
authorities. Standard castings are generally high volume items that are
routinely used in new construction and infrastructure replacement. Specialty
castings are generally lower volume, higher margin products which include
heavy-duty airport castings, trench drain castings, flood control castings,
special manhole and inlet castings and ornamental tree grates. These specialty
items are frequently selected and/or specified from the Company's municipal
product catalog and its tree grate catalog, which together encompass over 4,400
standard and specialty patterns. For many of these specialty products, the
Company believes it is the only manufacturer with existing patterns to produce
such a particular casting, although a competing manufacturer could elect to make
the investment in patterns or equipment necessary to produce such a casting.
The Company's municipal castings are sold to state and local government
entities, utility companies, pre-cast concrete manhole structure producers and
contractors for both new construction and infrastructure replacement. The
Company's 17,000 active municipal customers generally make purchase decisions
based on a number of criteria including acceptability of the product per local
specification, quality, service, price and the customer's relationship with the
foundry. Relative to customers in the industrial market, municipal market
customers are less technically demanding and rely on published product
specifications to ensure product performance.
A key aspect of winning orders in the heavy municipal market is the
specification process in which a local authority or design engineer sets
specific criteria for the casting or castings to be used in a particular
project. Those criteria then become part of the formal plans and specifications
that will govern the acceptability of castings for a particular project. The
Company seeks to be an active participant in the specification process. Its
sales staff makes frequent calls on design engineers as part of a continuous
effort to stay abreast of current specifications and upcoming projects. In these
sales calls, the Company seeks to create opportunities for the selection of
specifications which utilize an existing Company pattern. Although in many cases
the design engineer who sets the specification does not make the purchase
decision, when the Company's specialty product is specified it becomes more
difficult for another manufacturer to provide an alternate part which is
considered acceptable. The Company's professional sales staff and product
engineering department are highly regarded by design engineers and are
frequently consulted during the specification drafting process. The Company
believes its reputation for its product engineering support, consistent quality
and reliable service have made the Company's municipal and tree grate catalogs
two of the most frequently used specification design tools in the municipal
casting industry.
Over the past two years, the Company has begun to introduce what it calls
"lightweighted" parts to the heavy municipal market. These lightweighted parts
have been reengineered in order to reduce both their weight and the amount of
raw materials necessary for their manufacture, while maintaining the high
quality performance characteristics of the heavier version of the casting. This
improvement in the design and manufacture of municipal castings has resulted in
lower material costs and improved margins for this product line. The Company is
able to manufacture lightweighted castings because its manufacturing processes
enable it to refine castings walls down to very narrow
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<PAGE> 53
tolerances, many of which are currently not achievable by the Company's
competitors. While only a portion of the municipal castings the Company sells
are candidates for lightweighting, the Company expects to continue to increase
the number of lightweighted castings which it offers for sale over the next
several years.
Industrial. The Company believes it is a leading manufacturer of a wide
range of complex industrial castings, including castings for medium- and
heavy-duty truck drive line components and farm equipment as well as castings
for specific components for compressors used in HVAC systems. The Company's
industrial castings have increased in complexity since the early 1990's and are
generally produced in higher volumes than municipal castings. Complexity in the
industrial market is determined by the intricacy of a casting's shape, the
thinness of its walls and the amount of processing by a customer required before
a part is suitable for use by it. OEMs and their first tier suppliers have been
demanding higher complexity parts principally to reduce labor costs in their own
production processes by using fewer parts to manufacture the same finished
product or assembly and by using parts which require less preparation before
entering the production process.
The Company's industrial castings are primarily sold to a limited number of
customers with whom the Company has established a close working relationship.
The Company has sold to certain industrial customers for over 20 years and
currently has multi-year arrangements with certain of those customers. These
multi-year arrangements, which accounted for approximately 40% of the Company's
industrial castings business, do not bind the customer to purchase any minimum
amount of the Company's product and are not terminable at will by the customer.
Customers make purchasing decisions based on, among other things, technical
ability, price, service, quality assurance systems, facility capabilities and
reputation. However, as in the municipal market, the Company's assistance in
product engineering plays an important role in winning the award of industrial
castings. The average industrial casting typically takes between 12 and 18
months to go from the design phase to full production and has an average product
life cycle of approximately 8 to 10 years. The patterns for industrial castings,
unlike the patterns for municipal castings, are owned by the Company's customers
rather than the Company, however, such industrial patterns are not readily
transferrable to other foundries without, in most cases, significant additional
investment. Although foundries, including the Company, do not design industrial
castings, a close working relationship between a foundry and the customer during
a product launch is critical to reduce potential production problems and
minimize the customer's risk of incurring lost sales or reputation damage due to
a delayed launch. Involvement by a foundry early in the design process generally
improves the likelihood that the customer will design a casting within the
manufacturing capabilities of such foundry and also improves the likelihood that
such foundry will be awarded the casting for full production.
The Company is the sole sourced supplier of over 85% of the industrial
castings it currently produces. Historically, the Company has retained
approximately 90% of the castings it has been awarded throughout the product
life cycle, which is typical for the industry. The Company believes industrial
customers will continue to seek out foundries with a strong reputation for
performance who are capable of providing a cost-effective combination of
manufacturing technology and quality. The Company's strategy is to further its
relationships with existing customers by participating in the design and
production of more complex industrial castings, while seeking out selected new
customers who would value the Company's performance reputation, technical
ability and high level of quality and service.
In addition to increasing its sales to existing customers and seeking out
new customers, the Company intends to explore opportunities in austempering and
machining and assembling sub-components for specific industrial customers.
Austempering is the process of heat treating a ductile iron casting to increase
its strength, thereby increasing the casting's ability to replace steel in
additional applications. Machining and sub-assembling are value-added processes
often performed by the OEM or third parties. Austempering, machining and
sub-assembly are both processes which generally provide higher margins and
increase a customer's reliance on the manufacturer.
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SALES AND MARKETING
Heavy Municipal. Over its 70 years of heavy municipal market
participation, the Company has emphasized sales and marketing and believes it
has built a strong reputation for customer service. The Company believes it is
one of the leaders in United States heavy municipal casting production and has
strong name recognition. The Company has the largest sales and marketing effort
of any foundry serving the heavy municipal market, including 47 Company
employees and 26 commissioned representatives. The dedicated sales force works
out of regional sales offices to market the Company's municipal castings to
contractors and state and local governmental entities throughout the United
States. The Company operates nine regional distribution and sales centers and
has two other sales offices in Oklahoma City, Oklahoma and Norwood,
Pennsylvania. The Company believes this regional approach enhances its knowledge
of local specifications and its position in the heavy municipal market.
Industrial. The Company employs a dedicated industrial casting sales force
of six people, five based in Neenah, Wisconsin and one based in Mansfield, Ohio.
These six people consist of three account coordinators, who support the ongoing
customer relationships and organize the scheduling and delivery of shipments,
and three major account managers who work with customers' engineers and
procurement representatives, Company engineers, manufacturing management and
quality assurance representatives throughout all stages of the production
process to ensure that the final product consistently meets or exceeds customer
specifications. This team approach between sales, manufacturing, marketing,
engineering and quality assurance is an integral part of the Company's marketing
strategy.
MANUFACTURING PROCESS
The Company operates two modern foundries with an annual rated capacity of
approximately 187,000 tons at a single location in Neenah, Wisconsin. The
Company's foundries manufacture gray and ductile iron and cast it into intricate
shapes according to customer metallurgical and dimensional specifications. Since
1985, the Company has invested approximately $100 million in its production
facilities, with approximately $73 million invested from 1985 to 1990 in plant
modernization and new equipment. The Company also continually invests in the
improvement of process controls and product performance and believes that these
investments and its significant experience in the industry have made it one of
the most efficient manufacturers of industrial and heavy municipal casting
products. During 1997, the Company had a combined scrap rate of 2.0%, which it
believes was one of the lowest in the industry.
The casting process involves using metal, wood or urethane patterns to make
an impression of a casting product in a mold made primarily of sand. Cores, also
made primarily of sand, are used to make the internal cavities and openings in a
casting product. Once the casting impression is made in the mold, the cores are
set into the mold and the mold is closed. Molten metal is then poured into the
mold, fills the mold cavity and takes on the shape of the desired casting
product. Once the iron has solidified and cooled, the mold is shaken from the
casting and the sand is recycled. The selection of the appropriate casting
method, pattern, core making equipment and sand and other raw materials depends
on the final product and its complexity, specifications, and function as well as
intended production volumes. Because the casting process involves many critical
variables, such as choice of raw materials, design and production of tooling,
iron chemistry and metallurgy, and core and molding sand properties, it is
important to monitor the process parameters closely to ensure dimensional
precision and metallurgical consistency. See "-- Quality Assurance."
The Company continually seeks to find ways to expand the capabilities of
existing technology to improve manufacturing processes. An example of this
expansion is the Company's integration of Disamatic molding machines into its
operations. Disamatic molding machines are considered to be among the most
efficient sand molding machines because of their ability to produce high quality
molds at high production rates. Disamatic molding machines are used by most of
the Company's
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<PAGE> 55
direct competitors. Although the Company was not the first foundry to acquire
Disamatic molding machines, it has significantly enhanced the equipment's range
of production by combining it with core-setting capabilities which exceed those
of most foundries. To further improve upon the productivity of the Disamatic
molding machines, the Company has recently increased the length of two of its
cooling lines, making each line among the longest lines in the world for
comparable Disamatic equipment. This extension allows the Company to run its
machines at higher production rates while providing sufficient inmold cooling
time prior to mold shakeout to facilitate the production of high quality
castings. As a result of these and other similar efforts, the Company has been
able to increase productivity as measured in the number of molds per hour.
Additionally, from 1992 to 1997, the Company reduced employee hours per ton from
14.8 to 9.0.
The Company also achieves productivity gains by improving upon the
individual steps of the casting process such as reducing the amount of time
required to make a pattern change to produce a different casting product. The
reduced time permits it to profitably produce castings in medium volume
quantities on high volume, cost-effective equipment such as the Disamatic
molding machines. Additionally, extensive effort in real time process controls
permits the Company to produce a consistent, dimensionally accurate casting
product which requires less time and effort in the final processing stages of
production. This accuracy contributes significantly to the Company's
manufacturing efficiency.
Due to the Company's efforts to improve manufacturing productivity, as well
as increased operating leverage, improved pricing and a shift to higher
value-added industrial products, from fiscal 1992 to 1997 the Company's
operating margins have increased from 5.4% to 18.8%. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
HARTLEY CONTROLS
Hartley Controls, a wholly owned subsidiary of the Company, engineers,
manufactures and sells customized sand control systems, which are an essential
part of the casting process, to other iron foundries. The sand molding media
used in all high production iron foundries is a critical element in determining
the mold quality. Exacting and consistent control of this sand with respect to
moisture and chemical additives is an essential element for process control, and
relates directly to casting quality, scrap rate and the ability to produce
complex molds for highly engineered castings. Hartley Controls is a major United
States supplier of sand control systems, with over 300 installations since 1986.
Hartley Controls has made investments in process technology and has several
patented technologies related to sand systems, including the "Automatic Moisture
Controllers," the "Even-Flo Bin," the "Automatic Compactibility Tester," the
"Automatic Bond Determinator," the "Green Sand Reconditioner" and the "Sandman."
Sales of these sand systems and other products represented approximately 4% of
the Company's net sales for 1997.
In addition, Hartley Controls has recently expanded overseas and after only
three years has become a significant supplier of sand control systems in the
United Kingdom. Hartley Controls is the only manufacturer to supply control
systems in the United Kingdom for all brands of foundry sand mixers. Hartley
Controls also currently exports sand control systems to India, with further
expansion planned through a joint venture scheduled for the second quarter of
calendar 1997. Hartley Controls provides the Company access to the newest
technology in sand control as it becomes available.
QUALITY ASSURANCE
Constant testing and monitoring of the manufacturing process is important
to maintain product quality. The Company has adopted sophisticated quality
assurance techniques and policies for its manufacturing operations. During and
after the casting process, the Company performs numerous tests, including
tensile, proof-load, radiography, ultrasonic, magnetic particle and chemical
analysis. The Company utilizes statistical process controls to measure and
control significant process variables and casting dimensions. The results of
this testing are documented in metallurgical
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certifications which are provided with each shipment to most industrial
customers. The Company strives to maintain systems that provide for continuous
improvement of operations and personnel, emphasize defect prevention and reduce
variation and waste in all areas.
MANUFACTURING FACILITIES, EQUIPMENT AND PROPERTIES
The Company's headquarters and two foundries are located in Neenah,
Wisconsin. The first manufacturing foundry, Plant 2, produces gray and ductile
iron castings and is equipped with one BMD air impulse molding line, two Hydro
slinger cope and drag molding units, and one 2070 Type B Disamatic molding
machine. The annual rated capacity for Plant 2 is 116,000 gst (good salable
tons). The second manufacturing foundry, Plant 3, produces ductile iron castings
and is equipped with one 2013 Mark IV Disamatic molding machine and one 2070
Type B Disamatic molding machine. In July, 1995, the Company completed a program
in Plant 3 to gain efficiencies in material handling, labor utilization and
molding line productivity. The annual rated capacity for Plant 3 is
approximately 71,000 gst. Industrial and municipal castings are produced in both
plants. Rated capacity is based on an assumed product mix and, due to the
Company's current industrial product mix, which includes numerous complex
castings, practical capacity is currently approximately 5% to 6% less than rated
capacity. The Company owns seven and leases six distribution and sales centers.
In early 1994, the Company closed Plant 1, its oldest and lowest capacity plant,
which was primarily producing large castings for HVAC Systems. The Company
closed Plant 1 because of its decision to discontinue the low volume, highly
complex castings produced by Plant 1 and the significant capital expenditures
that would have been necessary to modernize its equipment and facilities.
DISTRIBUTION
The Company sells a substantial amount of its municipal castings through
its network of two warehouses, nine distribution and sales centers and two other
sales offices. Industrial castings are shipped direct to customers from the
Company. For many municipal and a small portion of its industrial customers,
castings are delivered by Neenah Transport, Inc. ("Neenah Transport"), a wholly
owned subsidiary of the Company, which operates a fleet of 29 tractors and 101
trailers that deliver products throughout the Midwest. For sales outside of the
Midwest, increased transportation costs impact the ability of the Company to
compete on a cost basis. Neenah Transport also backhauls raw materials for use
by the Company on return trips. Neenah Transport is staffed with professional
drivers who are trained in service standards and product knowledge as
representatives of the Company. To the Company's knowledge, none of the
Company's major heavy municipal competitors have a captive transportation
subsidiary. The Company believes Neenah Transport's service and drivers provide
another differentiating factor in favor of the Company.
RAW MATERIALS
The primary raw materials used by the Company to manufacture iron castings
are steel scrap, pig iron, metallurgical coke and silica sand. While there are
multiple suppliers for each of these commodities, the Company has single source
arrangements with its suppliers of each of these major raw materials, with the
exception of pig iron. Due to long standing relationships with each of its
suppliers, the Company believes that it will continue to be able to secure raw
materials from its suppliers at competitive prices. The primary energy sources
for the Company's operations, electricity and natural gas, are purchased through
utilities.
Although the prices of all raw materials used by the Company vary, the
fluctuations in the price of steel scrap are the most significant to the
Company. The Company has arrangements with most of its industrial customers
which require the Company to adjust industrial casting prices to reflect scrap
price fluctuations. In periods of rapidly rising or falling scrap prices, these
adjustments will lag the current scrap price because they are generally based on
average market prices for prior periods, which periods vary by customer but are
generally no longer than six months. Castings are
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generally sold to the heavy municipal market on a bid basis and, after a bid is
won, the price for the municipal casting subject to the bid generally cannot be
adjusted for raw material price increases. However, in most cases the Company
has been successful in obtaining higher municipal casting unit prices in
subsequent bids to compensate for rises in scrap prices in prior periods.
Rapidly fluctuating scrap prices may have a temporary adverse or positive effect
on the Company's results of operations. See "Risk Factors -- Raw Materials."
COMPETITION
The markets for the Company's products are highly competitive. Competition
is based not only on price, but also on quality of product, range of capability,
level of service and reliability of delivery. The Company competes with numerous
independent and captive foundries, as well as with a number of foreign iron
foundries, including certain foundries located in India. The Company also
competes with several large domestic manufacturers whose products are made with
materials other than ductile and gray iron, such as steel or aluminum. The
industry consolidation that has occurred over the past 20 years has resulted in
a significant reduction in the number of smaller foundries and a rise in the
share of production by larger foundries, some of which have significantly
greater financial resources than the Company. Competition from India has had a
strong presence in the heavy municipal market and continues to be a factor,
primarily in the western and eastern coastal states, due in part to costs
associated with transportation. Such competition has receded over the past 18
months, primarily as a result of increased enforcement of emission controls. As
a result, Indian import volume has decreased and the price of Indian casting
products has risen. Additionally, foreign companies have been, and continue to
be, subject to antidumping and countervailing duty enforcement litigation which
the Company believes has had a negative effect on foreign companies' ability to
compete in the United States markets. There can be no assurance that these
factors will continue to mitigate the impact of foreign competition, or that the
Company will be able to maintain or improve its competitive position in the
markets in which it competes.
BACKLOG
The Company's industrial business generally involves supplying all or a
portion of a customer's annual requirements for a particular casting. Industrial
customers generally order castings on a monthly basis. Orders for the heavy
municipal market are generally received for specific casting products and cover
a much larger range of castings. The Company's backlog at any given time
consists only of firm industrial and municipal orders. The Company's backlog was
26,750 tons at March 31, 1997 as compared to 25,500 tons at March 31, 1996. The
increase in backlog of approximately 5% was primarily the result of
strengthening in the medium- and heavy-duty truck market. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
EMPLOYEES
As of March 31, 1997, the Company had 910 full time employees, of whom 710
were hourly employees and 200 were salaried employees. Of the 200 salaried
employees, 91 are in manufacturing and engineering, 61 are in sales and
marketing, 44 are in management and administration and four are in
transportation. The Local 121B of the Glass, Molders, Pottery, Plastics and
Allied Workers International Union AFL-CIO is the major bargaining agent for and
representative of 678 of the Company's hourly employees. The collective
bargaining agreement with Local 121B was reached on January 1, 1996 and expires
on December 31, 1998. The Independent Patternmakers Union of Neenah, Wisconsin
is the major bargaining agent for and representative of 32 of the Company's
hourly employees. The collective bargaining agreement with the Independent
Patternmakers Union was reached on January 1, 1995 and expires on December 31,
1997. The Company believes that it has a good relationship with its employees.
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<PAGE> 58
LITIGATION
The Company is involved in routine litigation incidental to its business.
Such litigation is not, in the opinion of management, likely to have a material
adverse effect on the financial condition or results of operation of the
Company.
ENVIRONMENTAL MATTERS
The Company's facilities are subject to federal, state and local laws and
regulations relating to the protection of the environment and worker health and
safety, including those relating to discharges to air, water and land, the
handling and disposal of solid and hazardous waste and the cleanup of properties
affected by hazardous substances. Such laws include the Federal Clean Air Act,
the Clean Water Act, the Resource Conservation and Recovery Act and the
Occupational Health and Safety Act. The Company believes that its operations
have been and are currently in substantial compliance with applicable
environmental laws, and that it has no liabilities arising under such
environmental laws, except as would not be expected to have a material adverse
effect on the Company's operations, financial condition or competitive position.
However, some risk of environmental liability and other costs is inherent in the
nature of the iron foundry business. The Company might in the future incur
significant costs to meet current or more stringent compliance, cleanup or other
obligations pursuant to environmental requirements. Such costs may include
expenditures related to remediation of historical releases or clean-up of
structures prior to demolition.
Under the Federal Clean Air Act Amendments of 1990 ("CAA"), the
Environmental Protection Agency must establish maximum achievable control
technology ("MACT") standards for hazardous air pollutants emitted from iron
foundry operations by the year 2000. In addition, Wisconsin law imposes
requirements on emissions of air toxins from iron foundries and other
industries. Many of the regulations that will implement the CAA and Wisconsin
law have not yet been promulgated. Although it is not possible to estimate the
costs of complying with the regulations until they are issued, iron foundries,
including the Company, can be expected to incur significant costs over time to
comply with these federal and state regulations.
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<PAGE> 59
MANAGEMENT
The following table identifies members of the Board of Directors, key
executive officers and certain other key employees of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- -------------------------------------------------
<S> <C> <C>
James K. Hildebrand................ 60 Chairman of the Board and Chief Executive Officer
William M. Barrett................. 50 Vice President and General Manager
Gary W. LaChey..................... 51 Vice President -- Finance, Treasurer and
Secretary
Charles M. Kurtti.................. 60 Vice President -- Manufacturing and Engineering
John Z. Rader...................... 48 Vice President -- Human Resources
William J. Martin.................. 49 Vice President and General Manager -- Hartley
Controls Corporation
Timothy J. Koller.................. 47 General Sales Manager -- Municipal Castings
Frank C. Headington................ 47 Director -- Product Reliability
David F. Thomas.................... 47 Director
John D. Weber...................... 33 Director
Brenton F. Halsey.................. 69 Director
</TABLE>
Mr. Hildebrand is Chairman of the Board and Chief Executive Officer of the
Company. Mr. Hildebrand has been President and Chief Executive Officer of
Advanced Cast Products, Inc. since 1988, and will continue in that position for
the foreseeable future. Previously, he served as President of the Cast Products
Group of Amcast Industrial Corp. Mr. Hildebrand is also employed by ACP Holding
Company which, following the consummation of the Merger, became the beneficial
owner of all the common equity of both the Company and Advanced Cast Products,
Inc. See "Certain Relationships and Related Transactions." Mr. Hildebrand
devotes substantial time to, and be partially compensated by, Advanced Cast
Products, Inc.
Mr. Barrett is Vice President and General Manager of the Company. Mr.
Barrett joined the Company in 1992 serving as General Sales
Manager -- Industrial Castings. From 1985 to 1992, Mr. Barrett was the Vice
President -- Sales for Harvard Industries Cast Products Group.
Mr. LaChey is Vice President -- Finance, Treasurer and Secretary of the
Company. Mr. LaChey joined the Company in 1971, serving in a variety of
positions of increasing responsibility in the finance department.
Mr. Kurtti is Vice President -- Manufacturing and Engineering, of the
Company, a position he has held since 1991. Mr. Kurtti joined the Company in
1976 as a salesman. Mr. Kurtti has served as Director of Marketing, Director of
Purchasing -- Engineering and Director -- Manufacturing and Engineering.
Mr. Rader is Vice President -- Human Resources, a position he has held
since 1990. Mr. Rader joined the Company in 1987, serving as
Director -- Personnel until 1989 and as Director -- Human Resources until 1990.
Mr. Martin is Vice President and General Manager -- Hartley Controls
Corporation, a wholly owned subsidiary of the Company, a position he has held
since 1996. Previously, Mr. Martin was Territory Sales Manager at Disamatic,
Inc., a molding machine manufacturer, from 1986 to 1996.
Mr. Koller is General Sales Manager -- Municipal Castings for the Company.
Mr. Koller joined the Company in 1978, serving in a variety of positions of
increasing responsibility in the sales and marketing departments.
Mr. Headington is Director -- Product Reliability, a position he has held
since 1991. Mr. Headington joined the Company in 1989 as Manager -- Technical
Services, a position he held until 1991.
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<PAGE> 60
Mr. Thomas is a director of the Company. Mr. Thomas has been a Managing
Director of Citicorp Venture Capital, Ltd. for more than the past five years.
Mr. Thomas is a director of Lifestyles Furnishings International Ltd., Galey &
Lord, Inc., Anvil Knitwear, Inc. and a number of private companies.
Mr. Weber is a director of the Company. Since 1994, Mr. Weber has been a
Vice President at Citicorp Venture Capital, Ltd. Previously, Mr. Weber worked at
Putnam Investments from 1992 through 1994. Mr. Weber is a director of Anvil
Knitwear, Inc. and a number of private companies.
Mr. Halsey is a director of the Company. Mr. Halsey was the founding Chief
Executive Officer and Chairman of the James River Corporation from 1969 to 1990.
He continued as Chairman until 1992 when he became Chairman Emeritus.
Messrs. Hildebrand, Thomas, Weber and Halsey became directors of the
Company on April 30, 1997.
COMPENSATION OF DIRECTORS
Directors of the Company currently do not receive compensation for their
services as directors. Directors of the Company are entitled to reimbursement of
their reasonable out-of-pocket expenses in connection with their travel to and
attendance at meetings of the board of directors or committees thereof.
COMPENSATION OF EXECUTIVE OFFICERS
The compensation of executive officers of the Company will be determined by
the Board of Directors of the Company. The Company's historical benefit or
compensation plans (a supplemental executive retirement plan and a deferred
compensation plan) are not described herein because each were terminated and
replaced by a single compensation plan with respect to the named officers in
connection with the Merger (with the exception of a retirement plan for Mr.
Kurtti). The following table sets forth information concerning compensation
received by the five most highly compensated officers of the Company for
services rendered in 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------------------------
-------------------- OTHER ANNUAL OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION(1) SARS(#) PAYOUTS COMPENSATION
- ------------------------------ -------- ---------- --------------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Edmund W. Aylward, Jr.(2)..... $600,000 $1,157,793 $31,992 -- -- --
Chairman, President and
Chief Executive Officer
Andrew A. Aylward(2).......... 378,000 627,894 25,720 -- -- --
Vice President
Thomas R. Franklin(2)......... 209,750 164,840 49,424 -- -- --
Senior Vice President and
Chief Financial Officer
James P. Keating, Jr.(2)...... 204,000 99,096 32,780 -- -- --
Senior Vice President
Gary W. LaChey................ 138,000 40,000 26,122 -- -- --
Vice President
</TABLE>
57
<PAGE> 61
- ---------------
(1) The named officers have participated in the Company's profit sharing,
Company 401(k) contributions, and excess benefit programs. The aggregate
payments made by the Company pursuant to such programs are listed as Other
Annual Compensation.
(2) Messrs. E.W. Aylward and A.A. Aylward resigned from their current positions
in connection with the consummation of the Transactions. Mr. Keating's
employment listed above terminated on June 30, 1997, though he is available
to serve as a consultant to the Company. Mr. Franklin retired as an officer
of the Company on February 28, 1997.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with James P. Keating,
Jr. that terminated on June 30, 1997. The Company has also entered into a
consulting agreement with Mr. Keating that provides that Mr. Keating will be
available to serve as a consultant to the Company from July 1, 1997 to June 30,
1999. Mr. Keating is paid $16,500 per month under the consulting agreement.
MANAGEMENT INCENTIVE PLAN
The Company intends to provide performance-based compensation awards to
executive officers and key employees for achievement during each year as part of
a bonus plan. Such compensation awards may be a function of individual
performance and consolidated corporate results. The qualitative and quantitative
criteria will be determined from time to time by the Board of Directors of the
Company.
MANAGEMENT EQUITY PARTICIPATION
In connection with the Merger, (a) the Management Investors acquired units
representing membership interests in ACP Products, L.L.C., which represent, in
the aggregate, approximately a ten percent beneficial interest in the Company
(the "Purchased Interests") and (b) the Management Investors and certain other
employees of the Company are expected to be granted, over a five year period,
options (the "Options") to purchase additional Purchased Interests representing,
in the aggregate, approximately a two percent beneficial interest in the
Company. The Options are expected to be granted periodically and to vest and
become exercisable upon (i) certain threshold dates and/or (ii) the satisfaction
of certain financial performance tests.
Upon the termination of employment with the Company, an employee's
Purchased Interests will be subject to certain repurchase provisions exercisable
by ACP Products, L.L.C. or its designees. The Purchased Interests obtainable
upon exercise of the Options are expected to be subject to rights and
restrictions similar to those of the Purchased Interests purchased in connection
with the Closing. The exercise price of the Options will be established by ACP
Products, L.L.C. in consultation with the Board of Directors of the Company or a
compensation committee thereof.
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<PAGE> 62
OWNERSHIP OF SECURITIES
The Company's authorized capital stock consists of 11,000 shares of common
stock, par value $100 per share (the "Common Stock"), 1,000 shares of which are
issued and outstanding and owned by Holdings and are pledged to the Lenders
under the Senior Bank Facilities. Holdings is a wholly-owned subsidiary of ACP
Holdings which in turn is wholly-owned by ACP Products, L.L.C.
The outstanding common units of ACP Products L.L.C. related to the Company
consist of 185,000 Class A-3 Common Units (the "Class A Common Units"), 815,000
Class B-3 Common Units (the "Class B Common Units", and together with the Class
A Common Units, the "Common Units"). Holders of Class A Common Units are
entitled to one vote per Class A Common Unit on all matters to be voted upon by
the holders of Class A Common Units. Holders of Class B Common Units have no
right to vote on any matters to be voted on by holders of Common Units. Holders
of Class B Common Units may elect at any time to convert any or all of such
Units into Class A Common Units, on a Common Unit-for-Common Unit basis.
Set forth below is certain information regarding the beneficial ownership
of Class A Common Units by each person who beneficially owns 5.0% or more of the
outstanding Class A Common Units, each director and named executive officer and
all directors and named executive officers as a group. Except as indicated
below, the address for each of the persons listed below is c/o Neenah Foundry
Company, 2121 Brooks Avenue, Box 729, Neenah, Wisconsin 54927.
<TABLE>
<CAPTION>
NUMBER OF
VOTING PERCENTAGE OF
CLASS A VOTING
COMMON CLASS A
NAME AND ADDRESS OF BENEFICIAL OWNER UNITS COMMON UNITS
----------------------------------------------------------- --------- -------------
<S> <C> <C>
Citicorp Venture Capital, Ltd.(1)(2)....................... 90,000 48.65%
399 Park Avenue
New York, New York
James K. Hildebrand(1)..................................... 20,000 10.81%
William M. Barrett(1)...................................... 13,000 7.03%
Gary W. LaChey(1).......................................... 13,000 7.03%
Charles W. Kurtti(1)....................................... 13,000 7.03%
John Z. Radar(1)........................................... 13,000 7.03%
David F. Thomas(3)......................................... 90,000 48.65%
John D. Weber(3)........................................... 90,000 48.65%
Brenton F. Halsey.......................................... 0 0.00%
Directors and named executive officers as a group.......... 162,000 87.57%
</TABLE>
- ---------------
(1) Such person disclaims beneficial ownership of the Company's Common Stock.
See "Management -- Management Equity Participation."
(2) Citicorp Venture Capital, Ltd. and its affiliates (collectively, "CVC") own
739,821.82 Class B Common Units representing 90.78% of the Class B Common
Units outstanding.
(3) Consists of the Class A Common Units held by CVC, which may be deemed to be
beneficially owned by Messrs. Thomas and Weber. Messrs. Thomas and Weber
disclaim beneficial ownership of shares held by CVC. Mr. Thomas is a
managing director of CVC. Mr. Weber is a vice president of CVC.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH ACP HOLDING COMPANY
ACP Products, L.L.C. holds all of the issued and outstanding shares of
capital stock of ACP Holding Company ("ACP Holdings"). ACP Holdings is the
parent company of Holdings, and thus indirectly owns 100% of the Common Stock of
the Company. James K. Hildebrand, who serves as the Chairman of the Board and
Chief Executive Officer of the Company, currently serves as President and Chief
Executive Officer of ACP Holdings and its principal operating subsidiary,
Advanced Cast Products, Inc. ("Advanced Cast"). Since the Closing, Mr.
Hildebrand has devoted
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<PAGE> 63
substantial time to, and has been partially compensated by, Advanced Cast, in
addition to his role with the Company. Advanced Cast also produces iron castings
for sale to the industrial medium-and heavy-duty truck market, but it has not
competed with the Company in the past in any significant way and the Company
does not anticipate that it will so compete with Advanced Cast in the future.
SHAREHOLDER RELATIONSHIPS
In connection with the Merger, the Management Investors and certain
institutional investors, including Citicorp Venture Capital, Ltd., became
parties to the Third Amended and Restated Limited Liability Agreement of ACP
Products, L.L.C., as amended (the "L.L.C. Agreement"). The L.L.C. Agreement
contains certain provisions with respect to the beneficial equity interests and
corporate governance of the Company. The L.L.C. Agreement provides that the
Investor Group and the Management Investors, as the only members of ACP
Products, L.L.C. holding beneficial interests in the Company, have the right to
direct all actions taken in respect of Holdings and the Company, including,
without limitation, appointing members of the Board of Directors of the Company
and of Holdings.
REGISTRATION RIGHTS AGREEMENT
The Company entered into a registration rights agreement (the "Registration
Rights Agreement") with the Investor Group and the Management Investors.
Pursuant to the terms of the Registration Rights Agreement, certain holders of
the Company's Common Stock have the right to require the Company, at the
Company's sole cost and expense and subject to certain limitations, to register
under the Securities Act or list on any recognized stock exchange all or part of
the Common Stock beneficially owned by such holders (the "Registrable
Securities"). All such holders will be entitled to participate in all
registrations by the Company or other holders, subject to certain limitations.
In connection with all such registrations, the Company agreed to indemnify all
beneficial owners of Registrable Securities against certain liabilities,
including liabilities under the Securities Act and other applicable state or
foreign securities laws. Registrations pursuant to the Registration Rights
Agreement will be made, if applicable, on the appropriate registration form and
may be underwritten registrations.
DESCRIPTION OF SENIOR BANK FACILITIES
On April 30, 1997, the Company entered into a credit agreement (the "Credit
Agreement") with The Chase Manhattan Bank, as administrative agent and
collateral agent (the "Agent") and the lenders named therein (the "Lenders")
that provided term loans (the "Term Loans") of $45.0 million and a Revolving
Credit Facility of $30.0 million. Chase Securities Inc. acted as advisor and
arranger in connection with the Senior Bank Facilities (the "Arranger"). On July
1, 1997, the Company used the proceeds from the issuance of the Refinancing
Notes to pay the Term Loans. The following is a summary description of the
principal terms of the Credit Agreement following payment of the Term Loans. The
Credit Agreement is available upon request from the Company.
Structure. Loans under the Credit Agreement consist of a revolving credit
facility (the "Revolving Credit Facility") in the amount of $30.0 million
subject to a borrowing base formula (of which $15.0 million will be available
for letters of credit). The Company is currently negotiating to amend the Credit
Agreement to (i) increase the borrowing availability under the Revolving Credit
Facility from $30.0 million to $50.0 million and (ii) eliminate all borrowing
base limitations. There can be no assurance, however, that such amendment will
be completed. See "Summary -- Proposed Amendments to Senior Bank Facilities."
The Revolving Credit Facility is being used for general corporate purposes in
the ordinary course of the Company's business and may be used for other
purposes, including the financing of acquisitions.
Security, Guaranty. The obligations of the Company under the Senior Bank
Facilities will be unconditionally and irrevocably guaranteed, jointly and
severally, by Holdings and by each existing
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<PAGE> 64
and subsequently acquired or organized subsidiary of the Company. In addition,
the Senior Bank Facilities and the guarantees thereunder are secured by
substantially all of the assets of the Company and the guarantors (collectively,
the "Collateral"), including but not limited to (i) a first priority pledge of
all the capital stock of the Company and of each existing and subsequently
acquired or organized subsidiary of the Company and (ii) perfected first
priority security interests in, and mortgages on, substantially all tangible and
intangible assets of the Company and the guarantors (including but not limited
to accounts receivable, documents, inventory, equipment, intellectual property,
general intangibles, real property, cash and cash accounts and proceeds of the
foregoing) in each case subject to certain limited exceptions.
Availability. The availability of the Revolving Credit Facility is subject
to various conditions precedent typical of bank loans including, among other
things, the absence of any material adverse change on the part of the Company.
The full amount of the Term Loans was drawn in a single drawing at the Closing
of the Transactions and amounts repaid or prepaid under the Term Loans may not
be reborrowed. Amounts under the Revolving Credit Facility are available on a
revolving basis, subject to a borrowing base comprised of percentages of the
Company's eligible accounts receivable and eligible inventories. As of March 31,
1997, on a pro forma basis after giving effect to the Offering, the other
Transactions, the Refinancing and the application of the proceeds therefrom as
well as such borrowing base limitations and $0.6 million of outstanding letters
of credit, the Company estimates it would have had the ability to borrow
approximately $24.5 million under the Revolving Credit Facility.
Amortization, Interest. The Revolving Credit Facility is a five year
facility and bears interest at a rate per annum equal (at the Company's option)
to: (i) Adjusted LIBOR plus 2.5% or (ii) the Alternate Base Rate plus 1.5%, in
each case subject to certain reductions based on the Company's financial
performance. Amounts under the Revolving Credit Facility not paid when due bear
interest at a default rate equal to 2.0% above the otherwise applicable rate.
Prepayments. The Revolving Credit Facility permits the Company to
permanently reduce revolving credit commitments, in whole or in part, at any
time. Any prepayment of Adjusted LIBOR loans other than at the end of an
interest period will be subject to reimbursement of breakage costs.
Fees. The Company is required to pay the lenders, on a quarterly basis, a
commitment fee equal to 1/2 of 1% per annum on the undrawn portion of the
commitments, subject to reductions based upon the Company's financial
performance. The Company is also required to pay (i) a per annum letter of
credit fee equal to the applicable margin from time to time for Adjusted LIBOR
loans under the Revolving Credit Facility on the aggregate face amount of
outstanding letters of credit under the Revolving Credit Facility, (ii) a
fronting bank fee for the letter of credit issuing bank, (iii) annual
administration fees, and (iv) agent, arrangement and other similar fees.
Covenants. The Revolving Credit Facility contains a number of covenants
that, among other things, restrict the ability of the Company and its
subsidiaries to dispose of assets, incur additional indebtedness, incur
guarantee obligations, prepay other indebtedness or amend other debt
instruments, pay dividends, create liens on assets, enter into sale and
leaseback transactions, make investments, loans or advances, make acquisitions,
engage in mergers or consolidations, change the business conducted by the
Company or its subsidiaries, make capital expenditures, or engage in certain
transactions with affiliates and otherwise restrict certain corporate
activities. In addition, under the Revolving Credit Facility, the Company is
required to comply with a consolidated leverage ratio, a consolidated net worth
test and a consolidated interest coverage ratio.
The Revolving Credit Facility also contains provisions that prohibit any
modification of the Indenture in any manner adverse to the Lenders and that will
limit the Company's ability to refinance or otherwise prepay the Notes without
the consent of such Lenders.
Events of Default. The Revolving Credit Facility contains customary events
of default, including payment defaults, breach of representations and
warranties, covenant defaults, cross-defaults and
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<PAGE> 65
cross-acceleration to certain other indebtedness, certain events of bankruptcy
and insolvency, ERISA events, judgment defaults, actual or asserted invalidity
of any security interest and change of control.
DESCRIPTION OF NOTES
GENERAL
The form and terms of the New Notes are the same as the form and terms of
the Old Notes except that (i) the New Notes will have been registered under the
Securities Act and thus will not bear restrictive legends restricting their
transfer pursuant to the Securities Act and (ii) holders of New Notes will not
be entitled to rights of holders of the Old Notes under the Registration Rights
Agreement which terminate upon the consummation of the Exchange Offer. The Old
Notes have been, and the New Notes are to be, issued under an Indenture, dated
as of (the "Indenture"), among the Company, the Guarantor
Subsidiaries and United States Trust Company of New York, as Trustee (the
"Trustee").
The following summary of the material provisions of the Indenture and the
Notes does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Indenture, including the
definitions of certain terms therein and those terms made a part thereof by the
Trust Indenture Act of 1939, as amended ("TIA"). Capitalized terms used herein
and not otherwise defined have the meanings set forth in the section "-- Certain
Definitions" below.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the
Company in the Borough of Manhattan, the City of New York (which initially shall
be the corporate trust office of the Trustee at 114 West 47th Street, New York,
N.Y. 10036, Attn: Gerard Ganey), except that, at the option of the Company,
payment of interest may be made by check mailed to the registered holders of the
Notes at their registered addresses.
The Notes may be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000. No service charge
will be made for any registration of transfer or exchange of Notes, but the
Company may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection therewith.
TERMS OF THE NOTES
The Notes are unsecured senior subordinated obligations of the Company,
limited to $150.0 million aggregate principal amount, and will mature on May 1,
2007. Each Note will bear interest at a rate per annum shown on the front cover
of this Prospectus from the Issue Date or from the most recent date to which
interest has been paid or provided for, payable semiannually to Holders of
record at the close of business on the April 15 or October 15 immediately
preceding the interest payment date on May 1 and November 1 of each year,
commencing November 1, 1997.
OPTIONAL REDEMPTION
Except as set forth below, the Notes are not redeemable at the option of
the Company prior to May 1, 2002. On and after such date, the Notes will be
redeemable, at the Company's option, in whole or in part, at any time upon not
less than 30 nor more than 60 days' prior notice mailed by first-class mail to
each Holder's registered address, at the following redemption prices (expressed
in percentages of principal amount), plus accrued and unpaid interest, if any,
to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the
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<PAGE> 66
relevant interest payment date that is on or prior to the date of redemption),
if redeemed during the 12-month period commencing on May 1 of the years set
forth below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
----------------------------------------------------------------- ----------
<S> <C>
2002............................................................. 105.5625%
2003............................................................. 103.7083%
2004............................................................. 101.8542%
2005 and thereafter.............................................. 100.0000%
</TABLE>
In addition, at any time and from time to time on or prior to May 1, 2000,
the Company may redeem in the aggregate up to 40% of the original aggregate
principal amount of the Notes with the cash proceeds to it of one or more Public
Equity Offerings following which there is a Public Market, at a redemption price
(expressed as a percentage of principal amount thereof) of 111.125% plus accrued
and unpaid interest, if any, to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date that is on or prior to the date of redemption);
provided, however, that at least 60% of the original aggregate principal amount
of the Notes must remain outstanding after each such redemption.
The Notes will be subject to redemption at the option of the Company, prior
to May 1, 2002, at any time within 180 days after a Change of Control on not
less than 30 nor more than 60 days' prior notice to each Holder of Notes to be
redeemed, in amounts of $1,000 or an integral multiple thereof, at a redemption
price equal to the sum of (i) the principal amount thereof plus (ii) accrued and
unpaid interest, if any, to the redemption date (subject to the right of holders
of record on the relevant record date to receive interest due on the relevant
interest payment date that is on or prior to the date of redemption) plus (iii)
the Applicable Premium. Each Holder of Notes will also have certain rights to
require the Company to purchase such Notes upon the occurrence of a Change of
Control. See "-- Change of Control" below.
SELECTION
In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Note of $1,000 in original principal amount or less
will be redeemed in part. If any Note is to be redeemed in part only, the notice
of redemption relating 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 Holder thereof upon
cancellation of the original Note.
RANKING
The indebtedness evidenced by the Notes is unsecured Senior Subordinated
Indebtedness of the Company. The payment of the principal of, premium (if any)
and interest on the Notes is subordinate in right of payment, as set forth in
the Indenture, to all existing and future Senior Indebtedness of the Company,
ranks pari passu in right of payment with all existing and future Senior
Subordinated Indebtedness of the Company and is senior in right of payment to
all existing and future Subordinated Obligations of the Company. The Notes will
also be effectively subordinated to any Secured Indebtedness of the Company to
the extent of the value of the assets securing such indebtedness. However,
payment from the money or the proceeds of U.S. Government Obligations held in
any defeasance trust described under "Defeasance" below is not subordinated to
any Senior Indebtedness or subject to the restrictions described herein.
The indebtedness evidenced by a Subsidiary Guaranty is unsecured Senior
Subordinated Indebtedness of the Guarantor Subsidiary issuing such Subsidiary
Guaranty. The payment of a Subsidiary Guaranty is subordinate in right of
payment, as set forth in the Indenture, to all existing and future Senior
indebtedness of such Guarantor Subsidiary, ranks pari passu in right of payment
with the existing and
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future Senior Subordinated Indebtedness of such Guarantor Subsidiary and will be
senior in right of payment to all existing and future Subordinated Obligations
of such Guarantor Subsidiary. Each Subsidiary Guaranty is also effectively
subordinated to any Secured Indebtedness of the Guarantor Subsidiary to the
extent of the value of the assets securing such indebtedness.
As of March 31, 1997, after giving pro forma effect to the Transactions,
the Refinancing and the application of the proceeds therefrom, the Company would
have had outstanding $0.1 million of Senior Indebtedness, excluding $0.6 million
of outstanding letters of credit, $197.6 million aggregate amount of Senior
Subordinated Indebtedness including the Indebtedness represented by the Notes,
and no indebtedness that is subordinate and junior in right of payment to the
indebtedness represented by the Notes. As of March 31, 1997, and after giving
effect to the Transactions, the Refinancing and the application of the proceeds
therefrom, as well as borrowing base limitations and $0.6 million of outstanding
letters of credit, the Company estimates it would have had the ability to borrow
approximately $24.5 million under the Revolving Credit Facility. Although the
Indenture contains limitations on the amount of additional Indebtedness that the
Company and its Guarantor Subsidiaries may incur, under certain circumstances
the amount of such Indebtedness could be substantial and, in any case, such
Indebtedness may be Senior Indebtedness of the Company or a Guarantor
Subsidiary, as the case may be. See "Certain Covenants -- Limitation on
Indebtedness" below.
"Senior Indebtedness" of the Company means all principal of, premium (if
any), accrued interest (including interest accruing on or after the filing of
any petition in bankruptcy or for reorganization relating to the Company whether
or not a claim for post-filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and other amounts owing
with respect to all Indebtedness of the Company, and including all Bank
Indebtedness, whether outstanding on the Issue Date or thereafter incurred,
unless in the instrument creating or evidencing the same or pursuant to which
the same is outstanding it is expressly provided that such obligations are not
superior in right of payment to the Notes; provided, however, that Senior
Indebtedness shall not include (1) any obligation of the Company to any
Subsidiary, (2) any liability for federal, foreign, state, local or other taxes
owed or owing by the Company, (3) any accounts payable or other liability to
trade creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities), (4) any Indebtedness or
obligation of the Company which is subordinate or junior in any respect (other
than as a result of the Indebtedness being unsecured) to any other Indebtedness
or obligation of the Company, including any Senior Subordinated Indebtedness and
any Subordinated Obligations, (5) any obligations with respect to any Capital
Stock or (6) any Indebtedness Incurred in violation of the Indenture. "Senior
Indebtedness" of any Guarantor Subsidiary has a correlative meaning.
Only Indebtedness of the Company or a Guarantor Subsidiary that is Senior
Indebtedness will rank senior to the Notes and the relevant Subsidiary Guaranty
in accordance with the provisions of the Indenture. The Notes and each
Subsidiary Guaranty in all respects ranks pari passu with all other Senior
Subordinated Indebtedness of the Company and the relevant Guarantor Subsidiary,
respectively. The Company and each Guarantor Subsidiary has agreed in the
Indenture that it will not incur, directly or indirectly, any Indebtedness which
is subordinate or junior in ranking in any respect to Senior Indebtedness unless
such Indebtedness is Senior Subordinated Indebtedness, or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured
Indebtedness of the Company or a Guarantor Subsidiary is not deemed to be
subordinated or junior to Secured Indebtedness, as the case may be, merely
because it is unsecured.
The Company may not pay principal of, or premium (if any) or interest on,
the Notes or make any deposit pursuant to the provisions described under
"-- Defeasance" below, and may not otherwise purchase, redeem or otherwise
retire any Notes other than from funds held in a defeasance trust pursuant to
the provisions described under "-- Defeasance" below (collectively, "pay the
Notes"), if (i) any Senior Indebtedness of the Company is not paid when due or
(ii) any other default on Senior Indebtedness of the Company occurs and the
maturity of such Senior
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Indebtedness is accelerated in accordance with its terms unless, in either case,
the default has been cured or waived and any such acceleration has been
rescinded or such Senior Indebtedness has been paid in full. However, the
Company may pay the Notes without regard to the foregoing if the Company and the
Trustee receive written notice approving such payment from the Representative of
the holders of the Senior Indebtedness with respect to which either of the
events set forth in clause (i) or (ii) of the immediately preceding sentence has
occurred and is continuing. During the continuance of any default (other than a
default described in clause (i) or (ii) of the second preceding sentence) with
respect to any Designated Senior Indebtedness pursuant to which the maturity
thereof may be accelerated immediately without further notice (except such
notice as may be required to effect such acceleration) or the expiration of any
applicable grace periods, the Company may not pay the Notes for a period (a
"Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to the Company) of written notice (a "Blockage Notice") of such default
from the Representative of the holders of the Designated Senior Indebtedness
specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated (i) by
written notice to the Trustee and the Company from the Person or Persons who
gave such Blockage Notice, (ii) because the default giving rise to such Blockage
Notice is no longer continuing or (iii) because such Designated Senior
Indebtedness has been repaid in full). Notwithstanding the provisions described
in the immediately preceding sentence, unless the holders of such Designated
Senior Indebtedness have, or the Representative of such holders has, accelerated
the maturity of such Designated Senior Indebtedness, the Company may resume
payments on the Notes after the end of such Payment Blockage Period, including
any missed payments. Not more than one Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness during such period. However, if any Blockage
Notice within such 360-day period is given by or on behalf of any holders of
Designated Senior Indebtedness other than the Bank Indebtedness, the
Representative of the Bank Indebtedness may give another Blockage Notice within
such period. In no event, however, may the total number of days during which any
Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate
during any 360 consecutive day period.
Upon any payment or distribution of the assets of the Company upon a total
or partial liquidation or dissolution or reorganization of or similar proceeding
relating to the Company or its property, the holders of Senior Indebtedness of
the Company will be entitled to receive payment in full of the Senior
Indebtedness of the Company before the Noteholders are entitled to receive any
payment and until the Senior Indebtedness of the Company is paid in full, any
payment or distribution to which Noteholders would be entitled but for the
subordination provisions of the Indenture will be made to holders of the Senior
Indebtedness of the Company as their respective interests may appear. If a
payment or distribution is made to Noteholders that due to the subordination
provisions should not have been made to them, such Noteholders are required to
hold such payment or distribution in trust for the holders of Senior
Indebtedness and pay it over to them as their respective interests may appear.
If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness or the Representative of such holders of the acceleration.
The Company may not pay the Notes until five Business Days after such holders or
the Representative of the holders of the Designated Senior Indebtedness receive
notice of such acceleration and, thereafter, may pay the Notes only if the
subordination provisions of the Indenture otherwise permit payment at that time.
The terms of the subordination provisions described above with respect to
the Company's obligations under the Notes apply equally to a Guarantor
Subsidiary and the obligations of such Guarantor Subsidiary under its Subsidiary
Guaranty.
By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company or a Guarantor Subsidiary who
are holders of Senior
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Indebtedness of the Company or a Guarantor Subsidiary, as the case may be, may
recover more, ratably, than the Noteholders, and creditors of the Company who
are not holders of Senior Indebtedness of the Company or of Senior Subordinated
Indebtedness (including the Notes) may recover less, ratably, than holders of
Senior Indebtedness of the Company.
SUBSIDIARY GUARANTIES
Each of Neenah Foundry Company, Hartley Controls Corporation and Neenah
Transport, Inc. (the "Initial Guarantors," and together with all future issuers
of Subsidiary Guaranties, the "Guarantor Subsidiaries") jointly and severally as
primary obligors and not merely as sureties, irrevocably Guarantee on an
unsecured senior subordinated basis the performance and punctual payment when
due, whether at Stated Maturity, by acceleration or otherwise, of all
obligations of the Company under the Indenture and the Notes, whether for
payment of principal of or interest on the Notes, expenses, indemnification or
otherwise (all such obligations fully and unconditionally guaranteed by the
Guarantor Subsidiaries being herein called the "Guaranteed Obligations"). The
Guarantor Subsidiaries have agreed to pay, in addition to the amount stated
above, any and all expenses (including reasonable counsel fees and expenses)
incurred by the Trustee or the Holders in enforcing any rights under the
Subsidiary Guaranties. Each Subsidiary Guaranty is limited in amount to an
amount not to exceed the maximum amount that can be Guaranteed by the applicable
Guarantor Subsidiary without rendering such Subsidiary Guaranty voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally. On or after the Issue
Date, the Company will cause each Restricted Subsidiary which Incurs
Indebtedness to execute and deliver to the Trustee a supplemental indenture
pursuant to which such Restricted Subsidiary will Guarantee payment of the
Notes. See "Certain Covenants -- Future Guarantor Subsidiaries" below.
Each Subsidiary Guaranty is a continuing guarantee and shall (a) remain in
full force and effect until payment in full of all the Guaranteed Obligations,
(b) be binding upon each Guarantor Subsidiary and (c) enure to the benefit of
and be enforceable by the Trustee, the Holders and their successors, transferees
and assigns.
A Subsidiary Guaranty will be released upon the sale of the capital stock,
or all or substantially all of the assets, of the applicable Guarantor
Subsidiary if such sale is made in compliance with the Indenture.
Each of the Company's Guarantor Subsidiaries also Guarantee Indebtedness of
the Company Incurred under the terms of the Senior Bank Facilities. Because the
operations of the Company are conducted through its Subsidiaries, and the
Guaranties issued by the Guarantor Subsidiaries are secured by pledges of
substantially all the assets of the Guarantor Subsidiaries, the Notes
effectively subordinated to creditors of the Company under the Senior Bank
Facilities. See "Risk Factors -- Holding Company Structure."
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder will have the right to require the Company to repurchase
all or any part of such Holder's Notes at a purchase price in cash equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date),
pursuant to the offer described below and the other procedures set forth in the
Indenture; provided, however, that notwithstanding the occurrence of a Change of
Control, the Company shall not be obligated to purchase the Notes pursuant to
this covenant in the event that it has exercised its rights to redeem all of the
Notes as described under "-- Optional Redemption":
(a) prior to the earlier to occur of the first public offering of
Voting Stock of ACP Holdings, Holdings or the Company, the Permitted
Holders cease to be entitled (by "beneficial owner-
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ship" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of
Voting Stock, contract or otherwise) to elect or cause the election of
directors of the Company having a majority of the total voting power of the
Board of Directors of the Company, whether as a result of issuance of
securities of the Company, any merger, consolidation, liquidation or
dissolution of the Company, any direct or indirect transfer of securities
by any Permitted Holder or otherwise (for purposes of this clause (a), the
Permitted Holders shall be deemed to beneficially own any Voting Stock of a
corporation (the "specified corporation") held by any other corporation
(the "parent corporation") so long as one or more of the Permitted Holders
beneficially own (as so defined), directly or indirectly, in the aggregate
a majority of the voting power of the Voting Stock of the parent
corporation);
(b) after the first public offering of Voting Stock of ACP Holdings,
Holdings or the Company, any person or group (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more of
the Permitted Holders, is or becomes the beneficial owner (as defined in
clause (a) above), directly or indirectly, of Voting Stock that represents
more than 40% of the aggregate ordinary voting power of all classes of the
Voting Stock of ACP Holdings, Holdings or the Company voting together as a
single class, and either (x) the Permitted Holders beneficially own (as
defined in clause (a) above), directly or indirectly, in the aggregate
Voting Stock that represents a lesser percentage of the aggregate ordinary
voting power of all classes of the Voting Stock of ACP Holdings, Holdings,
or the Company as the case may be, voting together as a single class, than
such other person or group and are not entitled (by voting power, contract
or otherwise) to elect directors of ACP Holdings, Holdings or the Company
having a majority of the total voting power of the board of directors of
ACP Holdings, Holdings or the Company, as the case may be, or (y) such
other person or group is entitled to elect directors of ACP Holdings,
Holdings or the Company having a majority of the total voting power of the
board of directors of ACP Holdings, Holdings or the Company;
(c) after the first public offering of Voting Stock of ACP Holdings,
Holdings or the Company, during any period of not greater than two
consecutive years beginning after the Issue Date, individuals who at the
beginning of such period constituted the board of directors of ACP
Holdings, Holdings or the Company, as the case may be (together with any
new directors whose election by such board of directors, or whose
nomination for election by shareholders was approved by the Permitted
Holders or by such board of directors, in each case by a vote of a majority
of the directors of ACP Holdings, Holdings or the Company, as the case may
be, then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved), cease for any reason to have a majority of the total voting
power of the board of directors of ACP Holdings, Holdings or the Company,
as the case may be; or
(d) any sale, lease, or other transfer (in one transaction or in a
series of related transactions) is made by the Company or its Restricted
Subsidiaries of all or substantially all of the consolidated assets of the
Company and its Restricted Subsidiaries to any Person.
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee stating, among other things:
(1) that a Change of Control has occurred and that such Holder has the right to
require the Company to purchase all or any portion of such Holder's Notes at a
purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of repurchase (subject to the
right of Holders of record on a record date to receive interest on the relevant
interest payment date); (2) the circumstances and relevant facts and financial
information regarding such Change of Control; (3) the repurchase date (which
shall be no earlier than 30 days nor later than 60 days from the date such
notice is mailed); and (4) the instructions determined by the Company,
consistent with this covenant, that a Holder must follow in order to have its
Notes or any portion thereof purchased.
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The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations described above by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company or Holdings would decide to do so in the future. Subject to the
limitations discussed below, the Company could, in the future, enter into
certain transactions, including acquisitions or other recapitalizations, that
would not constitute a Change of Control under the Indenture, but that could
increase the amount of indebtedness outstanding at such time or otherwise affect
the Company's capital structure or credit ratings.
The occurrence of a Change of Control would constitute a default under the
Senior Bank Facilities. Future Senior Indebtedness of the Company may contain
prohibitions of certain events which would constitute a Change of Control or
require such Senior Indebtedness to be repurchased upon a Change of Control.
Moreover, the exercise by the Holders of their right to require the Company to
repurchase the Notes could cause a default under such Senior Indebtedness, even
if the Change of Control itself does not, due to the financial effect of such
repurchase on the Company. Finally, the Company's ability to pay cash to the
Holders upon a repurchase may be limited by the Company's then existing
financial resources. There can be no assurance that sufficient funds will be
available when necessary to make any repurchases required in connection with a
Change of Control. The Company's failure to purchase the Notes in connection
with a Change of Control would result in a default under the Indenture.
CERTAIN COVENANTS
The Indenture will contain covenants including, among others, the
following:
Limitation on Indebtedness. (a) The Company will not, and will not permit
any Restricted Subsidiary to, Incur any Indebtedness (other than pursuant to the
following paragraph (b)) unless on the date of such Incurrence the Consolidated
Coverage Ratio exceeds 2.00 to 1.
(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness consisting of the Term Loans in an aggregate
principal amount outstanding of up to $45.0 million less (A) the amount of
any scheduled principal payments thereon and (B) the aggregate amount of
all repayments of principal actually made thereunder since the Issue Date
with Net Available Cash from Asset Dispositions pursuant to clause
(a)(iii)(A) of the covenant described under "-- Limitation on Sales of
Assets and Subsidiary Stock");
(ii) Indebtedness consisting of revolving credit, working capital or
letters of credit financing in an aggregate principal amount at any time
outstanding not in excess of the greater of $35.0 million and the Borrowing
Base in effect from time to time (in each case less the aggregate amount of
all repayments of principal actually made thereunder since the Issue Date
with Net Available Cash from Asset Dispositions pursuant to clause
(a)(iii)(A) of the covenant described under "-- Limitation on Sales of
Assets and Subsidiary Stock");
(iii) Indebtedness of the Company owing to and held by any Wholly
Owned Subsidiary or Indebtedness of a Restricted Subsidiary owing to and
held by the Company or any Wholly Owned Subsidiary; provided, however, that
any subsequent issuance or transfer of any Capital Stock or any other event
which results in any such Wholly Owned Subsidiary ceasing to be a Wholly
Owned Subsidiary or any subsequent transfer of any such Indebtedness
(except to the
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Company or a Wholly Owned Subsidiary) will be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the issuer thereof;
(iv) Indebtedness of the Company represented by the Notes;
(v) any Indebtedness of the Company and its Restricted Subsidiaries
(other than the Indebtedness described in clauses (i), (ii) or (iii) above)
outstanding on the Issue Date;
(vi) Indebtedness of the Company and its Restricted Subsidiaries (A)
in respect of judgment, appeal, surety, performance and other like bonds,
bankers' acceptances and letters of credit provided by the Company and its
Restricted Subsidiaries in the ordinary course of their business and which
do not secure other Indebtedness and (B) under Commodity Agreements,
Currency Agreements and Interest Rate Agreements that are designed to
protect the Company and its Restricted Subsidiaries against fluctuations in
commodity prices (for raw materials used by them), interest rates or
currency exchange rates and not for the purposes of speculation;
(vii) Indebtedness represented by Guarantees by the Company of
Indebtedness of a Restricted Subsidiary, or in respect of letters of credit
provided by the Company to support such Indebtedness, or Guarantees by a
Restricted Subsidiary of Indebtedness of the Company or a Restricted
Subsidiary, or in respect of letters of credit provided by a Restricted
Subsidiary to support such Indebtedness; provided, however, that only
Indebtedness that is Incurred in compliance with this covenant may be
guaranteed pursuant to this clause (vii);
(viii) Purchase Money Indebtedness, industrial revenue bonds or
similar Indebtedness and Capitalized Lease Obligations of the Company and
its Restricted Subsidiaries in an aggregate principal amount at any time
outstanding not in excess of 10% of Total Assets;
(ix) Indebtedness of the Company or any Restricted Subsidiary
consisting of guarantees, indemnities or obligations in respect of purchase
price adjustments, in connection with the acquisition or disposition of any
business, assets or Subsidiary of the Company permitted under the
Indenture;
(x) Indebtedness of the Company and its Restricted Subsidiaries, to
the extent the proceeds thereof are immediately used after the Incurrence
thereof to purchase Notes tendered in an offer to purchase made as a result
of a Change of Control;
(xi) Indebtedness of the Company or a Restricted Subsidiary owed to
(including obligations in respect of letters of credit for the benefit of)
any Person in connection with liability insurance provided by such Person
to the Company or such Restricted Subsidiary, pursuant to reimbursement or
indemnification obligations to such Person, in each case Incurred in the
ordinary course of business;
(xii) Indebtedness of the Company consisting of guarantees of up to an
aggregate principal amount of $2.0 million of borrowings by Management
Investors in connection with purchases of Voting Stock of Holdings on or
after the Issue Date and in accordance with "-- Certain
Covenants -- Limitation on Restricted Payments;"
(xiii) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding not in excess of $15.0
million which Indebtedness may be incurred pursuant to clause (ii) above;
and
(xiv) any Refinancing Indebtedness incurred in respect of any
Indebtedness Incurred pursuant to paragraph (a) or pursuant to clause (i),
(ii), (v), (viii), (x) or (xiv) of this paragraph (b).
(c) Notwithstanding the foregoing, the Company may not Incur any
Indebtedness if such Indebtedness is subordinate or junior in ranking in any
respect to any Senior Indebtedness of the Company unless such Indebtedness is
Senior Subordinated Indebtedness or is expressly subordinated in right of
payment to Senior Subordinated Indebtedness of the Company. In addition, the
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Company may not Incur any Secured Indebtedness which is not Senior Indebtedness
of the Company unless contemporaneously therewith effective provision is made to
secure the Notes equally and ratably with (or on a senior basis to, in the case
of Indebtedness subordinated in right of payment to the Notes) such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien. A
Guarantor Subsidiary may not Incur any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Senior Indebtedness of
the Guarantor Subsidiary unless such Indebtedness is Senior Subordinated
Indebtedness of such Guarantor Subsidiary or is expressly subordinated in right
of payment to Senior Subordinated Indebtedness of such Guarantor Subsidiary. In
addition, a Guarantor Subsidiary may not incur any Secured Indebtedness which is
not Senior Indebtedness of such Guarantor Subsidiary unless contemporaneously
therewith effective provision is made to secure the Subsidiary Guaranty equally
and ratably with (or on a senior basis to, in the case of Indebtedness
subordinated in right of payment to such Subsidiary Guaranty) such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien.
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary, directly or indirectly, to:
(i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) except dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock) and except dividends or distributions payable to the Company or
another Restricted Subsidiary (and, if such Restricted Subsidiary has
shareholders other than the Company or other Restricted Subsidiaries, to
its other shareholders on a pro rata basis or on a basis that results in
the receipt by the Company or a Restricted Subsidiary of dividends or
distributions of equal or greater value);
(ii) purchase, redeem, retire or otherwise acquire for value any
Capital Stock of the Company or any Restricted Subsidiary held by Persons
other than the Company or another Restricted Subsidiary;
(iii) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year
of the date of acquisition); or
(iv) make any Investment (other than a Permitted Investment) in any
Person (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement, Investment or payment being
herein referred to as a "Restricted Payment") if at the time the Company or
such Restricted Subsidiary makes such Restricted Payment: (1) a Default
will have occurred and be continuing (or would result therefrom); (2) the
Company could not Incur at least $1.00 of additional Indebtedness under
paragraph (a) of the covenant described under "-- Limitation on
Indebtedness"; or (3) the aggregate amount of such Restricted Payment and
all other Restricted Payments (the amount so expended, if other than in
cash, to be determined in good faith by the Board of Directors, whose
determination will be conclusive and evidenced by a resolution of the Board
of Directors) declared or made subsequent to the Issue Date would exceed
the sum of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the Issue Date to the end of the
most recent fiscal quarter ending at least 45 days prior to the date of
such Restricted Payment (or, in case such Consolidated Net Income will
be a deficit, minus 100% of such deficit);
(B) 100% of the aggregate net proceeds received by the Company
(including the fair market value (as determined in good faith by the
Board of Directors, whose determination
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will be conclusive and evidenced by a resolution of the Board of
Directors) of property received by the Company; provided, however, that
such property is related, ancillary or complementary to any business of
the Company and the Restricted Subsidiaries conducted on the Issue Date)
as a capital contribution or from the issue or sale of Capital Stock
(other than Disqualified Stock) of the Company or Holdings subsequent to
the Issue Date (other than an issuance or sale to a Subsidiary of the
Company or an employee stock ownership plan or other trust established
by the Company or any of its Subsidiaries to the extent the purchase by
such plan or trust is financed by Indebtedness of such plan or trust and
for which the Company or a Subsidiary is liable, directly or indirectly,
as a guarantor or otherwise (including by the making of cash
contributions to such plan or trust which are used to pay interest or
principal on such Indebtedness));
(C) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's balance sheet upon
the conversion or exchange (other than by a Subsidiary) of any
Indebtedness of the Company or its Restricted Subsidiaries issued
subsequent to the Issue Date and convertible or exchangeable for Capital
Stock (other than Disqualified Stock) of the Company (less the amount of
any cash or other property (other than such Capital Stock) distributed
by the Company or any Restricted Subsidiary upon such conversion or
exchange) (including any such exchange pursuant to the exercise of a
conversion right or privilege in connection with which cash is paid in
lieu of the issuance of fractional shares or scrip);
(D) the aggregate Net Cash Proceeds received subsequent to the
Issue Date by the Company or Holdings (other than from any Restricted
Subsidiary) upon the exercise of any options or warrants to purchase
Capital Stock (other than Disqualified Stock) of the Company or
Holdings; and
(E) the amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from (i) payments of dividends,
repayments of the principal of loans, return of capital or advances or
other transfers of assets to the Company or any Restricted Subsidiary
from Unrestricted Subsidiaries or (ii) the redesignation of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided
in the definition of "Investment") or the receipt of proceeds from the
sale or other disposition of any portion of any Investment in an
Unrestricted Subsidiary not to exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made by the Company or
any Restricted Subsidiary in such Unrestricted Subsidiary, which amount
was included in the calculation of the amount of Restricted Payments.
(b) The provisions of the foregoing paragraph (a) will not prohibit:
(i) any purchase, redemption, retirement or other acquisition of
Capital Stock or Subordinated Obligations of the Company made by exchange
for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary or an employee stock ownership
plan or other trust established by the Company or any of its Subsidiaries
to the extent the purchase by such plan or trust is financed by
Indebtedness of such plan or trust and for which the Company or a
Subsidiary is liable, directly or indirectly, as a guarantor or otherwise
(including by the making of cash contributions to such plan or trust which
are used to pay interest or principal on such Indebtedness)); provided,
however, that (A) such purchase, redemption, retirement or other
acquisition will be excluded in the calculation of the amount of Restricted
Payments and (B) the Net Cash Proceeds from such sale to the extent so used
will be excluded from clause (iv)(B) of paragraph (a) above;
(ii) any purchase, defeasance, retirement, redemption or other
acquisition of (A) Subordinated Obligations of the Company made by exchange
for, or out of the proceeds of the substantially concurrent sale of,
Indebtedness of the Company which is permitted to be
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Incurred pursuant to paragraph (b) of the covenant described under
"-- Limitation on Indebtedness" or (B) Subordinated Obligations of a
Restricted Subsidiary made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Indebtedness of any Restricted Subsidiary
or the Company which is permitted to be Incurred pursuant to paragraph (b)
of the covenant described under "-- Limitation of Indebtedness"; provided,
however, that such purchase, defeasance, retirement, redemption or other
acquisition will be excluded in the calculation of the amount of Restricted
Payments;
(iii) any purchase, redemption, retirement or other acquisition of
Disqualified Stock made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Disqualified Stock; provided, however,
that such purchase, redemption, retirement or other acquisition will be
excluded in the calculation of the amount of Restricted Payments;
(iv) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by the covenant described under
"-- Limitation on Sales of Assets and Subsidiary Stock"; provided, however,
that such purchase or redemption will be excluded in the calculation of the
amount of Restricted Payments;
(v) upon the occurrence of a Change of Control and within 60 days
after the completion of the offer to repurchase the Notes pursuant to the
covenant described under "-- Change of Control" above (including the
purchase of all Notes tendered), any purchase, defeasance, retirement,
redemption or other acquisition of Subordinated Obligations required
pursuant to the terms thereof as a result of such Change of Control;
provided, however, that such purchase, defeasance, retirement, redemption
or other acquisition will be included in the calculation of the amount of
Restricted Payments;
(vi) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this covenant; provided, however, that such dividend will be included
in the calculation of the amount of Restricted Payments;
(vii) the repurchase, for cash or notes, of shares of, or options or
warrants to purchase shares of, or payments to Holdings to enable Holdings
to repurchase shares of, or options or warrants to purchase shares of,
Capital Stock of Holdings, the Company or any of the Subsidiaries of the
Company from present or former Management Investors in an amount not in
excess of $2.0 million in any one year and $5.0 million in the aggregate;
provided, however, that the amount of such repurchase will be included in
the calculation of the amount of Restricted Payments;
(viii) payments in lieu of fractional shares in amount not in excess
of $250,000 in the aggregate;
(ix) payments by the Company to Holdings to pay Federal, state and
local taxes to the extent such taxes are attributable to the Company and
its Restricted Subsidiaries; provided, however, that such payments will be
excluded from the calculation of the amount of Restricted Payments;
(x) loans, advances, dividends or distributions by the Company to
Holdings to pay dividends on the common stock of Holdings following a
Public Equity Offering of such stock; but only to the extent that such
loans, advances, dividends or distributions do not exceed 6% per annum of
the net proceeds received by the Company in such Public Equity Offering;
provided, however, that the amount of such loans, advances, dividends or
distributions will be included in the amount of Restricted Payments; or
(xi) in each case to the extent such payments by Holdings are
attributable to the Company and its Restricted Subsidiaries, payments by
the Company to Holdings not to exceed an amount necessary to permit
Holdings to (A) make payments in respect to its indemnification obligations
owing to directors, officers or other Persons under Holding's charter or
by-laws or
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pursuant to written agreements with any such Person, (B) make payments in
respect of its other operational expenses (other than taxes) incurred in
the ordinary course of business, or (C) make payments in respect of
indemnification obligations and costs and expenses incurred by Holdings in
connection with any offering of common stock of Holdings; provided,
however, that all such payments will be included in the calculation of the
amount of Restricted Payments.
Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness owed to the Company, (ii) make any loans or
advances to the Company or (iii) transfer any of its property or assets to the
Company, except:
(1) any encumbrance or restriction pursuant to an agreement in effect
at or entered into on the Issue Date;
(2) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness entered
into prior to the date on which such Restricted Subsidiary was acquired or
designated as a Restricted Subsidiary by the Company (other than as
consideration in, in contemplation of, or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was otherwise acquired by the Company);
(3) any encumbrance or restriction pursuant to (x) an agreement
constituting Refinancing Indebtedness of Indebtedness Incurred pursuant to
an agreement referred to in clause (1) or (2) of this covenant or this
clause (3) or contained in any amendment to an agreement referred to in
clause (1) or (2) of this covenant or this clause (3) or (y) Indebtedness
Incurred pursuant to clause (i) or (ii) of paragraph (b) of the covenant
described above under "-- Limitation on Indebtedness;" provided, however,
that the encumbrances and restrictions contained in (A) any such
refinancing agreement or amendment referred to in clause (x) above are,
collectively, no more restrictive in any material respect than the
encumbrances and restrictions contained in such agreements (as determined
in good faith by the Company) and (B) any instrument relating to any
Indebtedness referred to in clause (y) above, are, collectively, no more
restrictive in any material respect than the encumbrances and restrictions
contained in the Senior Bank Facilities as in effect on the Issue Date (as
determined in good faith by the Company);
(4) in the case of clause (iii) above, any encumbrance or restriction
contained in security agreements or mortgages securing Indebtedness of a
Restricted Subsidiary which are not prohibited by the covenant described
under "-- Limitation on Liens" to the extent such encumbrances or
restrictions restrict the transfer of the property or assets subject to
such security agreements or mortgages;
(5) any encumbrance or restriction existing under or by reason of
applicable law;
(6) customary non-assignment provisions of any licensing agreement or
of any lease;
(7) any encumbrance or restriction contained in contracts for sales of
assets otherwise permitted by the Indenture;
(8) with respect to a Restricted Subsidiary, any encumbrance or
restriction imposed pursuant to an agreement that has been entered into for
the sale of all or substantially all of the Capital Stock of such
Restricted Subsidiary; and
(9) Purchase Money Obligations for property acquired in the ordinary
course of business that impose restrictions of the type referred to in
clause (iii) of this covenant.
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Limitation on Sales of Assets and Subsidiary Stock. (a) The Company will
not, and will not permit any Restricted Subsidiary to, make any Asset
Disposition unless:
(i) the Company or such Restricted Subsidiary receives 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 Disposition at least equal to the fair market value, as may
be determined (and shall be determined, to the extent an Asset Disposition
(or a series of related Asset Dispositions) involves a fair market value
greater than $1.0 million) in good faith by the Board of Directors, whose
determination will be conclusive and evidenced by a resolution of the Board
of Directors (including as to the value of all non-cash consideration), of
the shares and assets subject to such Asset Disposition;
(ii) in the case of an Asset Disposition (or a series of related Asset
Dispositions) having a fair market value of $1.0 million or more, at least
80% (or 100% in the case of lease payments) of the consideration thereof
received by the Company or such Restricted Subsidiary is in the form of
cash or cash equivalents; and
(iii) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or such Restricted Subsidiary,
as the case may be) (A) first, to the extent the Company or such Restricted
Subsidiary elects (or is required by the terms of any Senior Indebtedness),
to prepay, repay or purchase Senior Indebtedness of the Company or a Wholly
Owned Subsidiary or, in the case of a sale by a Restricted Subsidiary which
is not a Wholly Owned Subsidiary, to prepay, repay or purchase Senior
Indebtedness of such Restricted Subsidiary (in each case other than
Indebtedness owed to the Company or an Affiliate of the Company) within 365
days after the later of the date of such Asset Disposition or the receipt
of such Net Available Cash; (B) second, to the extent of the balance of Net
Available Cash after application in accordance with clause (A), to the
extent the Company or such Restricted Subsidiary elects, to reinvest (or
enter into a binding contract to do so) in Additional Assets (including by
means of an Investment in Additional Assets by a Restricted Subsidiary with
Net Available Cash received by the Company or another Restricted
Subsidiary), within 365 days from the later of such Asset Disposition or
the receipt of such Net Available Cash; (C) third, to the extent of the
balance of such Net Available Cash after application in accordance with
clauses (A) and (B), to make an Offer (as defined below) to purchase Notes
pursuant to and subject to the conditions set forth in section (b) of this
covenant and (D) fourth, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A), (B) and (C), to fund
(to the extent consistent with any other applicable provision of the
Indenture) any corporate purpose; provided, however, that in connection
with any prepayment, repayment or purchase of Indebtedness pursuant to
clause (A) above, the Company or such Restricted Subsidiary will retire
such Indebtedness and will cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased. Notwithstanding the foregoing provisions of this
covenant, the Company and its Restricted Subsidiaries will not be required
to apply any Net Available Cash in accordance with this covenant except to
the extent that the aggregate Net Available Cash from all Asset
Dispositions in any year which are not applied in accordance with this
covenant exceed $5.0 million in such year.
For the purposes of clause (ii) of this covenant, the following are deemed
to be cash: (w) the assumption of Indebtedness of the Company (other than
Disqualified Stock of the Company) or any Restricted Subsidiary and the release
of the Company or such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Disposition, (x) securities received
by the Company or any Restricted Subsidiary from the transferee that are
promptly converted by the Company or such Restricted Subsidiary into cash, (y)
Indebtedness of any Restricted Subsidiary that is no longer a Restricted
Subsidiary as a result of such Asset Disposition, to the extent that the Company
and each other Restricted Subsidiary is released from any Guarantee of such
Indebted-
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ness in connection with such Asset Disposition, and (z) consideration consisting
of Indebtedness of the Company or any Restricted Subsidiary.
(b) In the event of an Asset Disposition that requires the purchase of
Notes pursuant to clause (a)(iii)(C) of this covenant, the Company will be
required to purchase Notes tendered pursuant to an offer, commenced within 30
days following the expiration of the 365 day period referred to in clause
(a)(iii)(B) of this covenant (or, if the Company so elects, at any time within
such 365 day period), by the Company for the Notes (the "Offer") at a purchase
price of 100% of their principal amount plus accrued and unpaid interest, if
any, to the date of purchase in accordance with the procedures (including
prorationing in the event of oversubscription) set forth in the Indenture. If
the aggregate purchase price of Notes tendered pursuant to the Offer is less
than the Net Available Cash allotted to the purchase of the Notes, the Company
will apply the remaining Net Available Cash in accordance with clause
(a)(iii)(D) of this covenant and upon completion of the purchase of the Notes
tendered pursuant to the Offer, the remaining amount of Net Available Cash, if
any, will be reset at zero. The Company will not be required to make an Offer
for Notes pursuant to this covenant if the Net Available Cash available therefor
(after application of the proceeds as provided in clauses (A) and (B) of section
(a)(iii) of this covenant) is less than $5.0 million (which lesser amount will
be carried forward for purposes of determining whether an Offer is required with
respect to the Net Available Cash from any subsequent Asset Disposition).
(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this covenant by virtue thereof.
Limitation on Transactions with Affiliates. (a) The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, enter into
or conduct any transaction (including the purchase, sale, lease or exchange of
any property or the rendering of any service) with any Affiliate of the Company
(an "Affiliate Transaction") on terms (i) that are less favorable to the Company
or such Restricted Subsidiary, as the case may be, than those that could be
obtained at the time of such transaction in arm's-length dealings with a Person
who is not such an Affiliate and (ii) that , in the event such Affiliate
Transaction involves an aggregate amount in excess of $1.0 million, are not in
writing and have not been approved by a majority of the members of the Board of
Directors having no material direct or indirect financial interest in or with
respect to such Affiliate Transaction. In addition, if such Affiliate
Transaction involves an amount in excess of $5.0 million, a fairness opinion
must be obtained from a nationally recognized appraisal or investment banking
firm.
(b) The provisions of the foregoing paragraph (a) will not prohibit (i) any
Restricted Payment or Permitted Investment permitted to be made pursuant to the
covenant described under "-- Limitation on Restricted Payments," (ii) fees,
compensation or employee benefit arrangements paid to, and any indemnity
provided for the benefit of, directors, officers or employees of the Company,
Holdings or any Subsidiary of the Company in the ordinary course of business or
any Indebtedness permitted to be Incurred pursuant to clause (xiii) of paragraph
(b) of the covenant described under "-- Limitation on Indebtedness," or any
payments in respect thereof, (iii) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans
approved by the Board of Directors, (iv) transactions pursuant to agreements
entered into or in effect on the Issue Date, including amendments thereto
entered into after the Issue Date, provided that the terms of any such amendment
are not, in the aggregate, less favorable to the Company or such Restricted
Subsidiary than the terms of such agreement prior to such amendment, (v) loans
or advances to employees that are Affiliates of the Company in the ordinary
course of business, but in any event not to exceed $2.0 million in the aggregate
outstanding at any one time, (vi) any transaction between the Company and a
Restricted Subsidiary or between Restricted Subsidiaries (so long as the other
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stockholders of any participating Restricted Subsidiaries which are not Wholly
Owned Subsidiaries are not themselves Affiliates of the Company) or (vii)
payments with respect to Indebtedness Incurred pursuant to clause (ix) of
paragraph (b) of the covenant described under "-- Limitation on Indebtedness."
Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries. The Company will not sell any shares of Capital Stock of a
Restricted Subsidiary, and will not permit any Restricted Subsidiary, directly
or indirectly, to issue or sell any shares of its Capital Stock, except (i) to
the Company or a Wholly Owned Subsidiary, (ii) if, immediately after giving
effect to such issuance or sale, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary, (iii) directors' qualifying shares or (iv)
in a Public Equity Offering as a result of or after which a Public Market
exists. The proceeds of any sale of such Capital Stock permitted by clause (ii)
must be treated as Net Available Cash from an Asset Disposition and must be
applied in accordance with the terms of the covenant described under
"-- Limitation on Sales of Assets and Subsidiary Stock."
Limitation on Liens. (a) The Company will not, and will not permit any
Guarantor Subsidiary to, directly or indirectly, create or permit to exist any
Lien (the "Initial Lien") on any of its property or assets (including Capital
Stock), whether owned on the Issue Date or thereafter acquired, securing any
Indebtedness other than Senior Indebtedness of the Company, in the case of the
Company, or Senior Indebtedness of a Guarantor Subsidiary, in the case of a
Guarantor Subsidiary, unless contemporaneously therewith effective provision is
made to secure the Notes and, in respect of Liens on any Guarantor Subsidiary's
property or assets, the Subsidiary Guaranty of such Guarantor Subsidiary equally
and ratably with (or on a senior basis to, in the case of Indebtedness expressly
subordinated in right of payment to the Notes and such Subsidiary Guaranty) such
obligation for so long as such obligation is so secured. The preceding sentence
will not require the Company or any Restricted Subsidiary to equally and ratably
secure the Notes if the Initial Lien consists of Permitted Liens.
(b) Any Lien created for the benefit of the Holders of the Notes pursuant
to the foregoing paragraph (a) shall provide by its terms that such Lien shall
be automatically and unconditionally released and discharged upon the release
and discharge of the Initial Lien.
SEC Reports. Notwithstanding that the Company may not be required to be or
remain subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company will file with the Commission (after the date the
Exchange Offer or Shelf Registration Statement described under "-- Exchange and
Registration Rights Agreement" below becomes effective), and provide (both prior
to and after such effective date) the Trustee and Noteholders and prospective
Noteholders (upon request) with the annual reports and the information,
documents and other reports which are specified in Sections 13 and 15(d) of the
Exchange Act. The Company also will comply with the other provisions of TIA Sec.
314(a).
Future Guarantor Subsidiaries. The Company will cause (a) each Restricted
Subsidiary that is a Domestic Subsidiary which Incurs Indebtedness and (b) each
Restricted Subsidiary that is not a Domestic Subsidiary and that after the Issue
Date enters into a Guarantee of any of the obligations of the Company, Holdings
or any of the Company's Subsidiaries pursuant to the Senior Bank Facilities to
execute and deliver to the Trustee a supplemental indenture pursuant to which
such Subsidiary will Guarantee payment of the Notes; provided, however, that
such Subsidiary shall not be required to execute and deliver a supplemental
indenture pursuant to this section in the event that such Subsidiary is a party
to the Indenture or the Supplemental Indenture at the time of such Incurrence of
Indebtedness. Each Subsidiary Guaranty will be limited to an amount not to
exceed the maximum amount that can be Guaranteed by that Subsidiary without
rendering the Subsidiary Guaranty, as it relates to such Subsidiary, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
Limitation on Lines of Business. The Company will not, and will not permit
any Restricted Subsidiary to, engage in any business other than (i) a Related
Business and (ii) the making of
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Permitted Investments and the operations of any business that is part of a
Permitted Investment. Holdings will not engage in any business other than
managing its investment in the Company.
Limitation on Sale/Leaseback Transactions. The Company will not, and will
not permit any Restricted Subsidiary to, enter into any Sale/Leaseback
Transaction with respect to any property unless (i) the Company or such
Restricted Subsidiary would be entitled to Incur Indebtedness in an amount equal
to the Attributable Debt with respect to such Sale/Leaseback Transaction
pursuant to the covenant described under "-- Limitation on Indebtedness" and
(ii) the net cash proceeds received by the Company or any Restricted Subsidiary
in connection with such Sale/Leaseback Transaction are at least equal to the
fair market value (in the case of Sale/Leaseback Transactions involving amounts
in excess of $1.0 million, as determined by the Board of Directors, whose
determination will be conclusive and evidenced by a resolution of the Board of
Directors) of such property and (iii) the transfer of such property is permitted
by, and the Company applies the proceeds of such transaction in compliance with,
the covenant described under "-- Limitation on Sale of Assets and Subsidiary
Stock."
MERGER AND CONSOLIDATION
The Company will not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor Company") will
be a corporation, limited liability company, limited partnership or business
trust organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia and the Successor Company (if not the
Company) will expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Notes and the Indenture; (ii) immediately
after giving effect to such transaction (and treating any Indebtedness which
becomes an obligation of the Successor Company or any Restricted Subsidiary as a
result of such transaction as having been Incurred by the Successor Company or
such Restricted Subsidiary at the time of such transaction), no Default will
have occurred and be continuing; (iii) except in the case of a merger the sole
purpose of which is to change the Company's jurisdiction of incorporation,
immediately after giving effect to such transaction, the Successor Company would
be able to Incur an additional $1.00 of Indebtedness under paragraph (a) of the
covenant described under "-- Limitation on Indebtedness"; (iv) immediately after
giving effect to such transaction, the Successor Company will have Consolidated
Net Worth in an amount which is not less than the Consolidated Net Worth of the
Company immediately prior to such transaction and (v) the Company will have
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such supplemental
indenture (if any) comply with the Indenture.
Notwithstanding the foregoing clauses (ii), (iii) and (iv), any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, but the
predecessor Company in the case of a conveyance, transfer or lease of all or
substantially all its assets will not be released from the obligation to pay the
principal of and interest on the Notes.
DEFAULTS
An Event of Default is defined in the Indenture as:
(i) a default in any payment of interest on any Note when due (whether
or not such payment is prohibited by the provisions described under
"Ranking" above), continued for 30 days;
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(ii) a default in the payment of principal of any Note when due at its
Stated Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise (whether or not such payment is prohibited by the
provisions described under "Ranking" above);
(iii) the failure by the Company to comply with its obligations under
the covenant described under "Merger and Consolidation" above;
(iv) the failure by the Company to comply for 30 days after notice
with any of its obligations under the covenants described under "Change of
Control" or "Certain Covenants" above (in each case, other than a failure
to purchase Notes);
(v) the failure by the Company or any Guarantor Subsidiary to comply
for 60 days after notice with its other agreements contained in the Notes
or the Indenture;
(vi) the failure by the Company or any Significant Subsidiary to pay
any Indebtedness within any applicable grace period after final maturity or
the acceleration of any such Indebtedness by the holders thereof because of
a default, if the total amount of such Indebtedness unpaid or accelerated
exceeds $5.0 million or its foreign currency equivalent (the "cross
acceleration provision");
(vii) certain events of bankruptcy, insolvency or reorganization of
the Company or a Restricted Subsidiary (the "bankruptcy provisions");
(viii) the rendering of any judgment or decree in excess of $5.0
million or its foreign currency equivalent (net of amounts paid within 30
days of any such judgment or decree under any insurance, indemnity, bond,
surety or similar instrument) against the Company or a Restricted
Subsidiary by a court or other adjudicatory authority of competent
jurisdiction for which the Company or the Restricted Subsidiary, as
applicable, is not fully insured by a third Person and (A) an enforcement
proceeding is commenced with respect to such judgment or decree or (B) such
judgment or decree remains outstanding the later of (i) the day which is
the sixtieth day after the judgment is rendered and (ii) the day on which
any right to appeal expires (the "judgment default provision"); or
(ix) any Subsidiary Guaranty ceases to be in full force and effect
(except as contemplated by the terms thereof) or any Guarantor Subsidiary
denies or disaffirms its obligations under the Indenture or any Subsidiary
Guaranty and such Default continues for 10 days.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
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.
However, a default under clauses (iv) or (v) will not constitute an Event
of Default until the Trustee or the Holders of 25% in principal amount of the
outstanding Notes notify the Company of the default and the Company does not
cure such default within the time specified in clauses (iv) and (v) hereof after
receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the outstanding Notes by notice to the
Company may declare the principal of and accrued but unpaid interest on all the
Notes to be due and payable. Upon such a declaration, such principal and
interest will be due and payable immediately. If an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of the Company occurs
and is continuing, the principal of and interest on all the Notes will become
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders. Under certain circumstances, the Holders of a
majority in principal amount of the outstanding Notes may rescind any such
acceleration with respect to the Notes and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such
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Holders have offered to the Trustee reasonable indemnity or security against any
loss, liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such Holder has
previously given the Trustee notice that an Event of Default is continuing, (ii)
Holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such Holders have offered the
Trustee reasonable security or indemnity against any loss, liability or expense,
(iv) the Trustee has not complied with such request within 60 days after the
receipt of the request and the offer of security or indemnity and (v) the
Holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction inconsistent with such request within such 60-day
period. Subject to certain restrictions, the Holders of a majority in principal
amount of the outstanding Notes are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other Holder or that would involve the Trustee in personal liability. Prior
to taking any action under the Indenture, the Trustee will be entitled to
indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder notice of the Default
within the earlier of 90 days after it occurs or 30 days after it is known to a
Trust Officer or written notice of it is received by the Trustee. Except in the
case of a Default in the payment of principal of, premium (if any) or interest
on any Note, the Trustee may withhold notice if and so long as a committee of
its Trust Officers in good faith determines that withholding notice is in the
interests of the Noteholders. In addition, the Company is required to deliver to
the Trustee, within 120 days after the end of each fiscal year, a certificate
indicating whether the signers thereof know of any Default that occurred during
the previous year. The Company also is required to deliver to the Trustee,
within 30 days after the occurrence thereof, written notice of any event which
would constitute certain Defaults, their status and what action the Company is
taking or proposes to take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding and any past default and its consequences or compliance with any
provisions may be waived with the consent of the Holders of a majority in
principal amount of the Notes then outstanding. However, without the consent of
each Holder of an outstanding Note affected, no amendment may (i) reduce the
amount of Notes whose Holders must consent to an amendment or waiver, (ii)
reduce the rate of or extend the time for payment of interest on any Note, (iii)
reduce the principal of or extend the Stated Maturity of any Note, (iv) reduce
the premium payable upon the redemption of any Note or change the time at which
any Note may be redeemed as described under "Optional Redemption" above, (v)
make any Note payable in money other than that stated in the Note, (vi) impair
the right of any Holder to receive payment of principal of and interest on such
Holder's Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Notes, (vii) make
any change in the amendment provisions which require each Holder's consent or in
the waiver provisions or (viii) make any change in any Subsidiary Guaranty that
would adversely affect the Noteholders.
Without the consent of any Holder, the Company and Trustee may amend the
Indenture to cure any ambiguity, omission, defect or inconsistency, to provide
for the assumption by a successor corporation of the obligations of the Company
under the Indenture, to provide for uncertificated Notes in addition to or in
place of certificated Notes (provided that the uncertificated Notes are issued
in registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated Notes are described in Section 163(f)(2)(B) of the
Code), to add further Guaranties
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with respect to the Notes, to release Guarantor Subsidiaries when permitted by
the Indenture, to secure the Notes, to add to the covenants of the Company for
the benefit of the Noteholders or to surrender any right or power conferred upon
the Company, to make any change that does not adversely affect the rights of any
Holder or to comply with any requirement of the Commission in connection with
the qualification of the Indenture under the TIA.
The consent of the Noteholders is not necessary under the Indenture to
approve the particular form of any proposed amendment. It is sufficient if such
consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to Noteholders a notice briefly describing such amendment.
However, the failure to give such notice to all Noteholders, or any defect
therein, will not impair or affect the validity of the amendment.
TRANSFER AND EXCHANGE
A Noteholder may transfer or exchange Notes in accordance with the
Indenture. Upon any transfer or exchange, 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
required by law or permitted by the Indenture. The Company is not required to
transfer or exchange any Note selected for redemption or to transfer or exchange
any Note for a period of 15 days prior to a selection of Notes to be redeemed.
The Notes will be issued in registered form and the registered holder of a Note
will be treated as the owner of such Note for all purposes.
DEFEASANCE
The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under the covenants
described under "Certain Covenants," the operation of the cross acceleration
provision, the bankruptcy default provisions with respect to Subsidiaries and
the judgment default provision described under "Defaults" above and the
limitations contained in clauses (iii) and (iv) under "Merger and Consolidation"
above ("covenant defeasance"). If the Company exercises its legal defeasance
option or its covenant defeasance option, each Guarantor Subsidiary will be
released from all of its obligations with respect to its Subsidiary Guaranty.
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (vi), (vii) (with respect to
Restricted Subsidiaries only), (viii) (with respect to Significant Subsidiaries
only), (ix) or (x) under "Defaults" above or because of the failure of the
Company to comply with clause (iii) or (iv) under "Merger and Consolidation"
above.
Defeasance options with respect to the Notes may be exercised to any
redemption date or the applicable maturity date. In order to exercise either
defeasance option, the Company must irrevocably deposit in trust (the
"defeasance trust") with the Trustee money or U.S. Government Obligations for
the payment of principal, premium (if any) and interest on the Notes to
redemption or maturity, as the case may be, and must comply with certain other
conditions, including delivery to the Trustee of an Opinion of Counsel to the
effect that holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance and will
be subject to Federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred (and, in
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the case of legal defeasance only, such Opinion of Counsel must be based on a
ruling of the Internal Revenue Service or other change in applicable Federal
income tax law).
CONCERNING THE TRUSTEE
United States Trust Company of New York is to be the Trustee under the
Indenture and has been appointed by the Company as Registrar and Paying Agent
with regard to the Notes.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"ACP Holdings" means ACP Holding Company, a Delaware corporation.
"ACP Products, L.L.C." means ACP Products, L.L.C., a Delaware limited
liability company.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock), including improvements to existing assets, to
be used by the Company or a Restricted Subsidiary in a Related Business; (ii)
the Capital Stock of a Person that becomes a Restricted Subsidiary as a result
of the acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary; provided, however, that, in
the case of clauses (ii) and (iii), such Restricted Subsidiary is primarily
engaged in a Related Business.
"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 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; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the provisions described under "-- Certain Covenants -- Limitation
on Transactions with Affiliates" only, "Affiliate" shall also mean any
beneficial owner of shares representing 5% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of the Company or of rights or
warrants to purchase such Voting Stock (whether or not currently exercisable)
and any Person who would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.
"Applicable Premium" means, with respect to a Note, the greater of (i) 1.0%
of the then outstanding principal amount of such Note and (ii) the excess of (A)
the present value of all remaining required interest and principal payments due
on such Note, computed using a discount rate equal to the Treasury Rate plus 75
basis points, over (B) the then outstanding principal amount of such Note.
"Asset Disposition" means any sale, lease, transfer or other disposition of
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares), property or assets (each referred to for the purposes of
this definition as a "disposition") by the Company or any of its Restricted
Subsidiaries (including any disposition by means of a merger, consolidation or
similar transaction) other than (i) a disposition by a Restricted Subsidiary to
the Company or by the Company or a Restricted Subsidiary to a Restricted
Subsidiary; (ii) a disposition of inventory, in the ordinary course of business
consistent with past practices of the Company and its Subsidiaries; (iii)
dispositions with a fair market value of less than $500,000 in the aggregate in
any fiscal year; (iv) a disposition of properties and assets that is governed by
the provisions under the first paragraph of "-- Merger and Consolidation" above;
and (v) for purposes of the provisions described under "-- Certain
Covenants -- Limitation on Sales of Assets and Subsidiary Stock" only, a
disposition subject to the covenant described under "-- Certain
Covenants -- Limitation on Restricted Payments."
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"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
assumed in making calculations in accordance with FAS 13) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
scheduled redemption or similar payment with respect to such Preferred Stock
multiplied by the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in respect
of the Senior Bank Facilities or any refinancing or replacements thereof
including principal, premium (if any), interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Company whether or not a claim for post-filing interest is allowed in
such proceeding), fees, charges, expenses, reimbursement obligations, guarantees
and all other amounts payable thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Borrowing Base" means, as of the date of determination, an amount equal to
the sum, without duplication, of (i) 80% of the net book value of the Company's
accounts receivable at such date and (ii) 50% of the net book value of the
Company's inventories at such date. Net book value shall be determined in
accordance with GAAP and shall be that reflected on the most recent available
balance sheet (it being understood that the accounts receivable and inventories
of an acquired business may be included if such acquisition has been completed
on or prior to the date of determination).
"Business Day" means a day other than a Saturday, Sunday or other day on
which banking institutions in New York State are authorized or required by law
to close.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP. The amount of Indebtedness represented by a
Capitalized Lease Obligation shall be the capitalized amount of such obligation
determined in accordance with GAAP, and the Stated Maturity thereof shall be the
date of the last scheduled payment of rent or any other amount due under the
relevant lease.
"Citicorp" means Citicorp, a Delaware corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Agreement" means one or more of the following agreements entered
into by a Person and one or more financial institutions: commodity future
contracts, forward contracts, options or other similar arrangements or
agreements designed to protect against fluctuations in the price of, or the
shortage of supply of, commodities from time to time.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at least 45 days prior to the date of
such determination (determined, for the four fiscal quarters ending prior to the
Issue Date, or any thereof, on a pro forma basis to give effect to the Neenah
Merger as if it had occurred at the beginning of such period) to (ii)
Consolidated Interest Expense for such four fiscal quarters (determined, for the
four fiscal quarters ending prior to the
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Issue Date, or any thereof, on a pro forma basis to give effect to the Neenah
Merger as if it had occurred at the beginning of such period); provided,
however, that:
(1) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding on such
date of determination or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Indebtedness and the application of the
proceeds thereof as if such Indebtedness had been Incurred on the first day of
such period and the discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new Indebtedness as
if such discharge had occurred on the first day of such period (except that in
the case of Indebtedness to finance seasonal fluctuations in working capital
needs Incurred under a revolving credit or similar arrangement, the amount
thereof shall be deemed to be the average daily balance of such Indebtedness
during such four quarter period);
(2) if since the beginning of such period the Company or any Restricted
Subsidiary shall have disposed of any assets constituting all or substantially
all of the assets of an operating unit of a business (a "Disposal"), (x) the
EBITDA for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of such
Disposal for such period or increased by an amount equal to the EBITDA (if
negative) directly attributable thereto for such period and (y) Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Disposal for such period (or, if the
Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest
Expense for such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent the Company and its continuing Restricted
Subsidiaries are no longer liable for such Indebtedness after such sale);
(3) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or
an acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of the assets of an operating unit of a
business, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto (including the Incurrence of
any Indebtedness in connection therewith) as if such Investment or acquisition
occurred on the first day of such period; and
(4) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such period) shall have made any
Disposal or any Investment or acquisition of assets that would have required an
adjustment pursuant to clause (2) or (3) above if made by the Company or a
Restricted Subsidiary during such period, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto as if such Disposal, Investment or acquisition of assets occurred on the
first day of such period.
For purposes of this definition, whenever pro forma effect is to be given
to an acquisition of assets, the amount of income or earnings relating thereto
and the amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest expense on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term as at the date of determination in excess of 12 months). If any
Indebtedness bears, at the option of the Company or a Restricted Subsidiary, a
fixed or floating rate of interest and is being
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given pro forma effect, then (i) if any interest had accrued on such
Indebtedness prior to the date of determination, the interest expense on such
Indebtedness shall be computed by applying a fixed or floating rate of interest
as selected by the Company or such Restricted Subsidiary for the interest period
immediately preceding such determination or (ii) if no interest accrued on such
Indebtedness prior to the date of determination, the interest expense on such
Indebtedness shall be computed by applying, at the option of the Company or such
Restricted Subsidiary, either a fixed or floating rate. If any Indebtedness
which is being given pro forma effect was Incurred under a revolving credit
facility that was in effect throughout the applicable period, the interest
expense on such Indebtedness shall be computed based upon the average daily
balance of such Indebtedness during the applicable period.
"Consolidated Interest Expense" means, for any period, the total
consolidated interest expense of the Company and its Restricted Subsidiaries for
such period, plus, to the extent Incurred by the Company and its Restricted
Subsidiaries in such period but not included in such interest expense, (i)
interest expense attributable to Capitalized Lease Obligations and Attributable
Debt, (ii) amortization of debt discount, (iii) capitalized interest, (iv)
noncash interest expense, (v) commissions, discounts and other fees and charges
with respect to letters of credit and bankers' acceptance financing, (vi) net
costs associated with Interest Rate Agreements, (vii) the interest portion of
any deferred payment obligation for goods or services, (viii) interest actually
paid by the Company or any Restricted Subsidiary on any Indebtedness of any
other Person that is Guaranteed by the Company or any Restricted Subsidiary,
(ix) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company or a Wholly Owned
Subsidiary) in connection with Indebtedness Incurred by such plan or trust and
(x) the earned discount or yield with respect to the sale of receivables
(without duplication of amounts included in Consolidated Net Income); but in no
event shall include (i) amortization of debt issuance costs, (ii) Preferred
Stock dividends in respect of all Preferred Stock of Subsidiaries of the Company
and Disqualified Stock of the Company held by Persons other than the Company or
a Wholly Owned Subsidiary, or (iii) interest Incurred in connection with
Investments in discontinued operations.
"Consolidated Net Income" means, for any period, the consolidated net
income (loss) of the Company and its Subsidiaries for such period; provided,
however, that there shall not be included in such Consolidated Net Income: (i)
any net income (loss) of any Person if such Person is not a Restricted
Subsidiary, except that (A) subject to the limitations contained in clause (iv)
below, the Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (iii) below) and (B) the Company's equity in a
net loss of any such Person (other than an Unrestricted Subsidiary) for such
period shall be included in determining such Consolidated Net Income, (ii) for
purposes of subclause (a)(3)(A) of the covenant described under "Limitation on
Restricted Payments" only, any net income (loss) of any person acquired by the
Company or a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition, (iii) any net income (loss) of any
Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Company, except that (A)
subject to the limitations contained in (iv) below, the Company's equity in the
net income of any such Restricted Subsidiary for such period shall be included
in such Consolidated Net Income up to the aggregate amount of cash that could
have been distributed by such Restricted Subsidiary during such period to the
Company or another Restricted Subsidiary as a dividend (subject, in the case of
a dividend that could have been made to another Restricted Subsidiary, to the
limitation contained in this clause) and (B) the Company's equity in a net loss
of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income, (iv) any gain (or loss) realized upon
the sale or other disposition of any asset of the Company or its Consolidated
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Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which is not
sold or otherwise disposed of in the ordinary course of business and any gain
(or loss) realized upon the sale or other disposition of any Capital Stock of
any Person, (v) any extraordinary gain or loss, and (vi) the cumulative effect
of a change in accounting principles after the Issue Date. Notwithstanding the
foregoing, for the purpose of the covenant described under "Certain
Covenants -- Limitation on Restricted Payments" only, there shall be excluded
from Consolidated Net Income any dividends, repayments of loans or advances or
other transfers of assets from Unrestricted Subsidiaries to the Company or a
Restricted Subsidiary to the extent such dividends, repayments or transfers
increase the amount of Restricted Payments permitted under such covenant
pursuant to clause (a)(3)(D) thereof. Notwithstanding anything to the contrary
in the covenant described under "Certain Covenants -- Limitations on Restricted
Payments," all amounts paid to Holdings pursuant to clause (b)(xi)(B) of such
covenant shall be deducted in computing Consolidated Net Income.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and the Restricted Subsidiaries, determined on a
Consolidated basis, as of the end of the most recent fiscal quarter of the
Company ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"Consolidated Non-Cash Charges" of any Person means, for any period, the
aggregate depreciation, amortization and other non-cash charges of such Person
and its Consolidated Subsidiaries for such period, on a Consolidated basis, as
determined in accordance with GAAP (excluding any such other non-cash charge
which consists of an accrual or reserve for cash charges for any future period).
"Consolidation" means the consolidation of the accounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary will
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Currency Agreement" means with respect to any Person any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement as
to which such Person is a party or a beneficiary.
"CVC" means Citicorp Venture Capital, Ltd., a New York corporation.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii)
any other Senior Indebtedness of the Company which, at the date of
determination, has an aggregate principal amount outstanding of, or under which,
at the date of determination, the holders thereof are committed to lend at least
$25.0 million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of the Indenture.
"Disqualified Stock" means, with respect to any Person, 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 exercisable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to ninety-one days after the
Stated Maturity of the Notes. Disqualified Stock shall not include any Capital
Stock that is not otherwise Disqualified Stock if by its terms the holders have
the right to require the issuer to repurchase such stock upon a Change of
Control (or upon events substantially similar to a Change of Control).
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"Domestic Subsidiary" means a Subsidiary that is incorporated or organized
under the laws of the United States of America, any State thereof or the
District of Columbia.
"EBITDA" for any period means the Consolidated Net Income for such period,
plus the following to the extent deducted in calculating such Consolidated Net
Income: (i) income tax expense, (ii) Consolidated Interest Expense and (iii)
Consolidated Non-Cash Charges, in each case for such period. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization of, a Subsidiary of the Company shall be added to
Consolidated Net Income to compute EBITDA only to the extent (and in the same
proportion) that the net income (loss) of such Subsidiary was included in
calculating Consolidated Net Income.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, in statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession.
All ratios and computations based on GAAP contained in the Indenture shall be
computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person through
an agreement enforceable by or for the benefit of the holder of such
Indebtedness and any such obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation of such other
Person (whether arising to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for purposes of assuring in any other manner the obligee of such
Indebtedness or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part); provided,
however, that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Guarantor Subsidiary" means any Person that has issued a Subsidiary
Guaranty. Upon consummation of the Neenah Merger and execution and delivery of
the Supplemental Indenture, the term "Guarantor Subsidiary" shall include each
of the Initial Guarantors.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Commodity Agreement, Interest Rate Agreement or Currency
Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Holdings" means NFC Castings, Inc., a Delaware corporation, any Person
succeeding to its ownership, and successors thereto.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such person becomes a Restricted Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such person at the time it becomes a Restricted Subsidiary; provided further,
however, that in the case of a discount security, the accretion of original
issue discount on such security shall not be considered an Incurrence of
Indebtedness if (but only if) at the time of issuance of such security, the
Company elects to treat the whole face amount of such security as Incurred at
such time (and such Incurrence is then permitted in accordance with the terms of
the Indenture).
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of indebtedness of such
Person for borrowed money; (ii) the principal of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments;
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(iii) all obligations of such Person in respect of letters of credit or other
similar instruments (including reimbursement obligations with respect thereto)
other than letters of credit or similar instruments supporting Trade Payables
entered into in the ordinary course of business of such Person to the extent
that such letters of credit are not drawn upon or, if and to the extent drawn
upon, such drawing is reimbursed not later than the third business day following
such drawing; (iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables), which purchase
price is due more than twelve months after the date of placing such property in
service or taking delivery and title thereto or the completion of such services;
(v) all Capitalized Lease Obligations and all Attributable Debt of such Person;
(vi) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or, with
respect to any Subsidiary of the Company, any Preferred Stock (but excluding, in
each case, any accrued dividends); (vii) all Indebtedness of other Persons
secured by a Lien on any asset of such Person, whether or not such Indebtedness
is assumed by such Person; provided, however, that the amount of Indebtedness of
such Person shall be the lesser of (A) the fair market value of such asset at
such date of determination and (B) the amount of such Indebtedness of such other
Persons; (viii) all Indebtedness of other Persons to the extent Guaranteed by
such Person; and (ix) to the extent not otherwise included in this definition,
Hedging Obligations of such Person. The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation, of any contingent obligations at
such date.
"Initial Guarantors" means Neenah Foundry Company, Hartley Controls
Corporation and Neenah Transport, Inc., each a Wisconsin corporation.
"Interest Rate Agreement" means, with respect to any Person, any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance or loan
(other than advances or loans to customers or suppliers in the ordinary course
of business that are recorded as accounts receivable on the balance sheet of the
Person making such loan or advance) or other extension of credit (including by
way of Guarantee or similar arrangement) or capital contribution to (by means of
any transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such Person.
For purposes of the definition of "Unrestricted Subsidiary" and the covenant
described under "-- Certain Covenants -- Limitation on Restricted Payments,"
only (i) "Investment" shall include the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net assets
of any Subsidiary of the Company at the time that such Subsidiary is designated
an Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if
positive) equal to (x) the Company's "Investment" in such Subsidiary at the time
of such redesignation less (y) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net assets
of such Subsidiary at the time of such redesignation; and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined in good
faith by the Board of Directors.
"Issue Date" means the date on which the Notes were originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
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"Management Investors" means the officers and employees of ACP Holdings,
ACP Products, L.L.C., Holdings, the Company or a Subsidiary of the Company who
acquire Voting Stock of ACP Holdings, ACP Products, L.L.C., Holdings or the
Company on or after the Issue Date.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"NC Merger" means NC Merger Company, a Wisconsin corporation.
"Neenah Merger" means the merger of NC Merger Company with and into the
Company under the terms of the Agreement and Plan of Reorganization (as amended)
by and among Holdings, the Company and NC Merger Company and dated November 20,
1996.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or from an escrow account or
otherwise, in each case only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring person of
Indebtedness or other obligations relating to the properties or assets that are
the subject of such Asset Disposition or received in any other non-cash form)
therefrom, in each case net of (i) all legal, title and recording expenses,
commissions and other expenses (including fees and expenses of counsel and
investment bankers) incurred, and all Federal, state, provincial, foreign and
local taxes required to be paid or accrued as a liability under GAAP, as a
consequence of such Asset Disposition, (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition,
in accordance with the terms of any Lien upon such assets, or which must by its
terms, or in order to obtain a necessary consent to such asset disposition, or
by applicable law, be repaid out of the proceeds from such Asset Disposition,
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition and (iv) appropriate amounts to be provided by the party or parties
making such Asset Disposition as a reserve, in accordance with GAAP, against any
liabilities associated with the assets disposed of in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Disposition.
"Net Cash Proceeds" with respect to any issuance or sale of Capital Stock,
means the proceeds of such issuance or sale in the form of cash, including
payments in respect of deferred payment obligations when received in form of, or
stock or other assets when disposed for, cash, net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, filing and registration fees, trustee's fees,
consultant and other fees actually incurred in connection with such issuance or
sale and net of taxes paid or payable as a result thereof.
"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.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Permitted Holders" means (i) CVC and its Affiliates and Permitted
Transferees and (ii) the Management Investors and their Permitted Transferees.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in (i) the Company, (ii) a Restricted Subsidiary or a Person which
will, upon the making of such Investment, become a Restricted Subsidiary;
provided, however, that the primary business of such Restricted Subsidiary is a
Related Business; (iii) another Person if as a result of such Investment such
other Person is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
(iv) Temporary Cash Investments; (v) receivables owing
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to the Company or any Restricted Subsidiary, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances; (vi) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vii) loans or advances to employees made in the ordinary
course of business and not exceeding $1.0 million in the aggregate outstanding
at any one time; (viii) stock, obligations or securities received in settlement
of debts created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary or in satisfaction of judgments; (ix) securities
received as consideration in sales of assets made in compliance with the
covenant described under "-- Limitation on Sales of Assets and Subsidiary
Stock"; (x) other Investments, of any type, provided that the amount of such
Investments made after the Issue Date in reliance on this clause (x) and
outstanding at any time does not exceed 7.5% of Total Assets; or (xi) Guarantees
relating to Indebtedness which is permitted to be Incurred under the covenant
described under "-- Limitation on Indebtedness."
"Permitted Liens" means with respect to any Person:
(a) Liens to secure Indebtedness permitted under the provisions
described under clause (b)(i) or (ii) under "Certain
Covenants -- Limitation on Indebtedness";
(b) pledges or deposits made or other Liens granted by (1) such Person
under workmen's compensation laws, unemployment insurance laws or similar
legislation, (2) in connection with bids, tenders, contracts (other than
for the payment of Indebtedness) or leases to which such Person is a party,
or (3) to secure public or statutory obligations of such Person or deposits
of cash or United States government bonds to secure surety or appeal bonds
to which such Person is a party, or deposits as security for contested
taxes or import duties or for the payment of rent, in each case Incurred in
the ordinary course of business;
(c) Liens imposed by law, such as carriers', warehousemen's,
mechanics', employees' and other like Liens, in each case for sums not yet
due or being contested in good faith by appropriate proceedings or other
Liens arising out of judgments, awards, decrees or orders of any court or
other governmental authority against such Person with respect to which such
Person shall then be proceeding with an appeal or other proceedings for
review;
(d) Liens for property taxes not yet due or payable or subject to
penalties for non-payment or which are being contested in good faith and by
appropriate proceedings;
(e) Liens in favor of issuers of surety, performance, judgment, appeal
and other like bonds or letters of credit issued pursuant to the request of
and for the account of such Person in the ordinary course of its business;
(f) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar purposes,
or zoning provisions, carveouts, conditional waivers or other restrictions
as to the use of real properties or minor irregularities of title (and with
respect to leasehold interests, mortgages, obligations, Liens and other
encumbrances incurred, created, assumed or permitted to exist and arising
by, through or under a landlord or owner of the leased property, with or
without consent of the lessee) or Liens incidental to the conduct of the
business of such Person or to the ownership of its properties which were
not Incurred in connection with Indebtedness and which do not in the
aggregate materially impair the use of such properties in the operation of
the business of such Person;
(g) Liens existing or provided for under written arrangements existing
on the Issue Date;
(h) Liens securing Indebtedness or other obligations of a Subsidiary
of such Person owing to such Person or a wholly owned Subsidiary of such
Person;
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(i) Liens securing Hedging Obligations so long as the related
Indebtedness is, and is permitted to be under the Indenture, secured by a
Lien on the same property securing such Hedging Obligations;
(j) Liens to secure any refinancing, refunding, replacement, renewal,
repayment or extension (or successive refinancings, refundings,
replacements, renewals, repayments or extensions) as a whole, or in part,
of any Indebtedness secured by any Lien referred to in clause (g), (i),
(l), (m) or (n); provided, however, that (x) such new Lien shall be limited
to all or part of the same property that secured the original Lien (plus
improvements on such property) and (y) the Indebtedness secured by such
Lien at such time is not increased to any amount greater than the sum of
(A) the outstanding principal amount or, if greater, committed amount of
the Indebtedness described under clauses (g), (i), (l), (m) and (n) at the
time the original Lien became a Permitted Lien and (B) an amount necessary
to pay any fees and expenses, including premiums, related to such
refinancing, refunding, replacement, renewal, repayment or extension;
(k)(i) mortgages, liens, security interests, restrictions or
encumbrances that have been placed by any developer, landlord or other
third party on property over which the Company or any Restricted Subsidiary
or the Company has easement rights or on any real property leased by the
Company and subordination or similar agreements relating thereto and (ii)
any condemnation or eminent domain proceedings affecting any real property;
(l) Liens on property, assets or shares of stock of a Person at the
time such Person becomes a Subsidiary; provided, however, such Liens are
not created, Incurred or assumed by such Person in connection with, or in
contemplation of, such other Person becoming such a Subsidiary; provided
further, however, that such Liens may not extend to any other property
owned by the Company or any Restricted Subsidiary;
(m) Liens on property or assets at the time the Company or a
Restricted Subsidiary acquired the property or assets, including any
acquisition by means of a merger or consolidation with or into the Company
or a Restricted Subsidiary; provided, however, that such Liens are not
created in connection with, or in contemplation of, such acquisition;
provided further, however, that the Liens may not extend to any other
property owned by the Company or any Restricted Subsidiary; and
(n) any Lien on stock or other securities of an Unrestricted
Subsidiary that secures Indebtedness of such Unrestricted Subsidiary.
"Permitted Transferee" means (a) with respect to CVC (i) Citicorp, any
direct or indirect wholly owned subsidiary of Citicorp, and any officer,
director or employee of CVC, Citicorp or any wholly owned subsidiary of
Citicorp, (ii) any spouse or lineal descendant (including by adoption and
stepchildren) of the officers, directors and employees to in clause (a)(i) above
or (iii) any trust, corporation or partnership 100% in interest of the
beneficiaries, stockholders or partners of which consists of one or more of the
persons described in clause (a)(i) or (ii) above and (b) with respect to any
officer or employee of ACP Products, L.L.C., ACP Holdings, Holdings, the Company
or a Subsidiary of the Company (i) any spouse or lineal descendant (including by
adoption and stepchildren) of such officer or employee and (ii) any trust,
corporation or partnership 100% in interest of the beneficiaries, stockholders
or partners of which consists of such officer or employee, any of the persons
described in clause (b)(i) above or any combination thereof.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
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"Public Equity Offering" means an underwritten public offering of common
stock of ACP Holdings, the Company or Holdings (or, for purposes of the covenant
described under "-- Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries," any Restricted Subsidiary) pursuant to an effective
registration statement (other than a registration statement on Form S-4, S-8 or
any successor or similar forms) under the Securities Act (whether alone or in
conjunction with any secondary public offering); provided, however, that if any
such offering is an offering of the common stock of ACP Holdings, only the net
proceeds thereof that are contributed to the Company shall be taken into
consideration for the purposes of this definition.
"Public Market" means any time after (x) a Public Equity Offering has been
consummated and (y) at least 15% of the total issued and outstanding common
stock of ACP Holdings, the Company or Holdings (or, for purposes of the covenant
described under "-- Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries," any Restricted Subsidiary) has been distributed by
means of an effective registration statement under the Securities Act.
"Purchase Money Indebtedness" means Indebtedness (i) consisting of the
deferred purchase price of an asset or assets (including Capital Stock and the
assets of an ongoing business) including additions and improvements, any
conditional sale obligation, any obligation under any title retention agreement
or any other purchase money obligation, or (ii) incurred to finance the
acquisition by the Company or a Restricted Subsidiary of an asset or assets
(including Capital Stock and the assets of a Related Business) including
additions and improvements; provided in the case of clause (i) that the Average
Life of such Indebtedness is less than the anticipated useful life of assets
having an aggregate fair market value representing more than 50% of the
aggregate fair market value of all assets so acquired and that in the case of
clauses (i) and (ii) such Indebtedness is incurred within 180 days after the
acquisition by the Company or Restricted Subsidiary of such asset or assets, or
is in existence with respect to any asset or other property at the time such
asset or property is acquired.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay or extend (including pursuant to any defeasance
or discharge mechanism) (collectively, "refinances" and "refinanced" shall have
a correlative meaning) any Indebtedness existing on the Issue Date or Incurred
in compliance with the Indenture (including Indebtedness of the Company that
refinances Indebtedness of any Restricted Subsidiary (to the extent permitted in
the Indenture) and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of that or another Restricted Subsidiary of the Company), including
Indebtedness that refinances Refinancing Indebtedness; provided, however, that
(i) the Refinancing Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Indebtedness being refinanced, (ii) the Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being refinanced, (iii) such Refinancing Indebtedness is Incurred in an
aggregate principal amount (or, if issued with original issue discount, an
aggregate issue price) that is equal to or less than the aggregate principal
amount (or, if issued with original issue discount, the aggregate accreted
value) then outstanding of the Indebtedness being refinanced plus the amount of
any premium reasonably determined by the Company or such Restricted Subsidiary,
as applicable, as necessary at the time of such refinancing to accomplish such
refinancing or required pursuant to the terms thereof, plus the amount of
expenses of the Company or such Restricted Subsidiary, as applicable, Incurred
in connection with such refinancing and (iv) if the Indebtedness being
refinanced is subordinated in right of payment to the Notes, such Refinancing
Indebtedness is subordinated in right of payment to the Notes to the extent of
the Indebtedness being refinanced provided further, however, that Refinancing
Indebtedness shall not include Indebtedness of the Company or a Restricted
Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary.
"Related Business" means any business of the Company and the Restricted
Subsidiaries as conducted on the Issue Date and any business related, ancillary
or complementary thereto.
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"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"S&P" means Standard and Poor's Ratings Group, a division of McGraw-Hill,
Inc. and its successors.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired by the Company or a Restricted Subsidiary whereby
the Company or such Restricted Subsidiary transfers such property to a Person
and the Company or such Restricted Subsidiary leases it from such Person, other
than leases between the Company and a Wholly Owned Subsidiary or between Wholly
Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien. "Secured Indebtedness" of any Guarantor Subsidiary has a correlative
meaning.
"Senior Bank Facilities" means the credit agreement dated as of the Issue
Date, as amended, waived or otherwise modified from time to time, among
Holdings, the Company, the lenders party thereto from time to time and The Chase
Manhattan Bank, a New York banking corporation, as agent (except to the extent
that any such amendment, waiver or other modification thereto would be
prohibited by the terms of the Indenture).
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu with the Notes and is not subordinated by its terms to any
Indebtedness or other obligation of the Company which is not Senior
Indebtedness. "Senior Subordinated Indebtedness" of any Guarantor Subsidiary has
a correlative meaning.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of clause (w)(1) or
(2) of Rule 1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the purchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is expressly
subordinate in right of payment to the Notes pursuant to a written agreement.
"Subordinated Obligation" of any Guarantor Subsidiary shall have a correlative
meaning.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers, trustees or members of any other governing body
thereof is at the time owned or controlled, directly or indirectly, by (i) such
Person or (ii) one or more Subsidiaries of such Person.
"Subsidiary Guaranty" means any Guarantee of the Notes which may from time
to time be executed and delivered pursuant to the terms of the Indenture. Each
such Subsidiary Guaranty shall be in the form prescribed in the Indenture.
"Temporary Cash Investments" means any of the following: (i) any investment
in direct obligations (x) of the United States of America or any agency thereof
or obligations Guaranteed by the United States of America or any agency thereof
or (y) of any foreign country recognized by the United States of America rated
at least "A" by S&P or "A-1" by Moody's, (ii) investments in time deposit
accounts, certificates of deposit and money market deposits maturing within 365
days of the date of acquisition thereof issued by a bank or trust company which
is organized under the laws of
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the United States of America, any state thereof or any foreign country
recognized by the United States of America having capital and surplus in excess
of $250.0 million (or the foreign currency equivalent thereof) and whose
long-term debt is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act), (iii) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in clause
(i) above entered into with a bank meeting the qualifications described in
clause (ii) above, (iv) investments in commercial paper, maturing not more than
365 days after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P,
(v) investments in securities with maturities of six months or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's, (vi)
any money market deposit accounts issued or offered by a domestic commercial
bank or a commercial bank organized and located in a country recognized by the
United States of America, in each case, having capital and surplus in excess of
$250.0 million (or the foreign currency equivalent thereof), or investments in
money market funds complying with the risk limiting conditions of Rule 2a-7 (or
any successor rule) of the Commission under the Investment Company Act of 1940,
as amended, and (vii) similar investments approved by the Board of Directors in
the ordinary course of business.
"Term Loans" means the Tranche A Term Loans and the Tranche B Term Loans
made pursuant to the Senior Bank Facilities.
"Total Assets" means, at any date of determination, the total consolidated
assets of the Company and its Restricted Subsidiaries, as set forth on the
Company's then most recent consolidated balance sheet.
"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled by, and
published in, the most recent Federal Reserve Statistical Release H.15(519)
which has become publicly available at least two Business Days prior to the date
fixed for redemption of the Notes following a Change of Control (or, if such
Statistical Release is no longer published, any publicly available source of
similar market data)) most nearly equal to the then remaining Average Life to
Stated Maturity of the Notes; provided, however, that if the Average Life to
Stated Maturity of the Notes is not equal to the constant maturity of a United
States Treasury security for which a weekly average yield is given, the Treasury
Rate shall be obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the Average Life to
Stated Maturity of the Notes is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.
"Trustee" means the party named as such in the Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly
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formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of,
or owns or holds any Lien on any property of, the Company or any other
Restricted Subsidiary of the Company that is not a Subsidiary of the Subsidiary
to be so designated; provided, however, that either (A) the Subsidiary to be so
designated has total Consolidated assets of $1,000 or less or (B) if such
Subsidiary has Consolidated assets greater than $1,000, then such designation
would be permitted under the covenant entitled "Limitation on Restricted
Payments." The Board of Directors may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; provided, however, that immediately after giving
effect to such designation (x) the Company could Incur $1.00 of additional
Indebtedness under paragraph (a) of the covenant described under "Limitation on
Indebtedness" and (y) no Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares and, to the extent
required by local ownership laws in foreign countries, shares owned by foreign
shareholders) is owned by the Company or another Wholly Owned Subsidiary
(including shares held of record by a nominee for the benefit of the Company or
another Wholly Owned Subsidiary).
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion (including the opinion of counsel described below)
is based upon current provisions of the Internal Revenue Code of 1986, as
amended, applicable Treasury regulations, judicial authority and administrative
rulings and practice. There can be no assurance that the Internal Revenue
Service (the "Service") will not take a contrary view, and no ruling from the
Service has been or will be sought. Legislative, judicial or administrative
changes or interpretations may be forthcoming that could alter or modify the
statements and conditions set forth herein. Any such changes or interpretations
may or may not be retroactive and could affect the tax consequences to holders.
Certain holders (including insurance companies, tax-exempt organizations,
financial institutions, broker-dealers, foreign corporations and persons who are
not citizens or residents of the United States) may be subject to special rules
not discussed below. The Company recommends that each holder consult such
holder's own tax advisor as to the particular tax consequences of exchanging
such holder's Old Notes for New Notes, including the applicability and effect of
any state, local or foreign tax laws.
Kirkland & Ellis, counsel to the Company, has advised the Company that in
its opinion, the exchange of the Old Notes for New Notes pursuant to the
Exchange Offer will not be treated as an "exchange" for federal income tax
purposes because the New Notes will not be considered to differ materially in
kind or extent from the Old Notes. Rather, the New Notes received by a holder
will be treated as a continuation of the Old Notes in the hands of such holder.
As a result, there will be no federal income tax consequences to holders
exchanging Old Notes for New Notes pursuant to the Exchange Offer.
95
<PAGE> 99
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. Each of the Company and the Guarantor Subsidiaries has
agreed that, for a period of 180 days after the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer to
use in connection with any such resale. In addition, until , 1997
(90 days after the date of this Prospectus), all dealers effecting transactions
in the New Notes may be required to deliver a prospectus.
Neither the Company nor the Guarantor Subsidiaries will receive any
proceeds from any sale of New Notes by broker-dealers. New Notes received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New 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 or the purchasers of any such New Notes.
Any broker-dealer that resells New Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company and each of the Guarantor Subsidiaries
has jointly and severally agreed to pay all expenses incident to the Exchange
Offer (including the expenses of one counsel for the holders of the Old Notes)
other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the Old Notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Notes offered hereunder will be passed upon for the
Company and the Guarantor Subsidiaries by Kirkland & Ellis, New York, New York.
Cravath, Swaine & Moore, New York, New York has acted as counsel for the Initial
Purchasers.
EXPERTS
The consolidated financial statements of the Company at March 31, 1996 and
1997, and for each of the three years in the period ended March 31, 1997,
appearing in this Prospectus and in the Registration Statement, and the
financial statement schedule included in the Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing elsewhere herein and in the Registration Statement,
and are included herein in reliance upon such reports given upon the authority
of such firm as experts in accounting and auditing.
96
<PAGE> 100
CHANGE IN INDEPENDENT AUDITORS
The Company's consolidated financial statements at March 31, 1995, 1996 and
1997 and for the years ended March 31, 1994, 1995, 1996 and 1997 were audited by
Ernst & Young LLP. The consolidated financial statements at March 31, 1993 and
1994 and for the year ended March 31, 1993 were audited by Schenck & Associates
SC. During the two most recent years preceding the change in independent
auditors, there were no disagreements with Schenck & Associates SC on any matter
of accounting principles or practices, financial statement disclosures or
auditing scope or procedure, which disagreements if not resolved to the
satisfaction of Schenck & Associates SC would have caused them to make reference
thereto in their report on the consolidated financial statements for such years.
97
<PAGE> 101
NEENAH FOUNDRY COMPANY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors..................................... F-2
Consolidated Balance Sheets as of March 31, 1996 and 1997............................. F-3
Consolidated Statements of Income for the years ended March 31, 1995, 1996 and 1997... F-4
Consolidated Statements of Changes in Stockholders' Equity for the years ended March
31, 1995, 1996 and 1997............................................................. F-5
Consolidated Statements of Cash Flows for the years ended March 31, 1995, 1996 and
1997................................................................................ F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE> 102
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors
Neenah Foundry Company (formerly Neenah Corporation -- see Note 1)
We have audited the accompanying consolidated balance sheets of Neenah
Foundry Company (the Company) as of March 31, 1996 and 1997, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the three years in the period ended March 31, 1997. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company as of March 31, 1996 and 1997, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
March 31, 1997, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
April 29, 1997, except for Notes 1 and 10
as to which the date is July 1, 1997
F-2
<PAGE> 103
NEENAH FOUNDRY COMPANY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31,
---------------------
1996 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................... $ 10,126 $ 22,403
Accounts receivable, less allowance for doubtful accounts of $386
at March 31, 1996 and 1997...................................... 20,831 21,423
Inventories........................................................ 13,324 13,956
Other current assets............................................... -- 401
Deferred income taxes.............................................. 2,253 2,325
-------- --------
Total current assets....................................... 46,534 60,508
Property, plant and equipment:
Land............................................................... 847 847
Buildings and improvements......................................... 14,972 15,063
Machinery and equipment............................................ 97,749 101,655
-------- --------
113,568 117,565
Less accumulated depreciation...................................... 79,840 86,186
-------- --------
33,728 31,379
Other assets....................................................... 2,695 1,982
-------- --------
$ 82,957 $ 93,869
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................... $ 8,124 $ 8,497
Dividends payable.................................................. 2,220 --
Income taxes payable............................................... 517 573
Accrued wages and employee benefits................................ 5,516 5,545
Other accrued liabilities.......................................... 1,937 2,052
Current portion of long-term debt.................................. 107 134
-------- --------
Total current liabilities.................................. 18,421 16,801
Long-term debt....................................................... 134 --
Pension obligations.................................................. 1,737 --
Postretirement benefit obligations................................... 5,300 5,667
Deferred income taxes................................................ 2,575 2,544
-------- --------
Total liabilities.......................................... 28,167 25,012
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock, par value $100 per share:
Authorized 3,000 shares; no shares issued and outstanding....... -- --
Common stock, par value $100 per share:
Class A (voting):
Authorized 1,000 shares; issued and outstanding, 620 shares... 62 62
Class B (nonvoting):
Authorized 10,000 shares; issued and outstanding, 3,820
shares....................................................... 382 382
Retained earnings.................................................. 57,268 71,335
Notes receivable from owners to finance stock purchase............. (2,922) (2,922)
-------- --------
Total stockholders' equity................................. 54,790 68,857
-------- --------
$ 82,957 $ 93,869
======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 104
NEENAH FOUNDRY COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Net sales............................................... $160,621 $166,951 $165,426
Cost of sales........................................... 120,981 121,631 116,736
-------- -------- --------
Gross profit............................................ 39,640 45,320 48,690
Selling, general and administrative expenses............ 16,673 16,983 17,547
-------- -------- --------
Operating income........................................ 22,967 28,337 31,143
Net interest income (expense)........................... (397) 481 1,162
-------- -------- --------
Income before income taxes.............................. 22,570 28,818 32,305
Provision for income taxes.............................. 8,866 11,676 12,467
-------- -------- --------
Net income.............................................. $ 13,704 $ 17,142 $ 19,838
======== ======== ========
</TABLE>
See accompanying notes.
F-4
<PAGE> 105
NEENAH FOUNDRY COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------------
NOTES RECEIVABLE
PREFERRED STOCK CLASS A CLASS B FROM OWNERS
--------------- --------------- --------------- RETAINED TO FINANCE STOCK
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT EARNINGS PURCHASE TOTAL
------ ------ ------ ------ ------ ------ -------- ---------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at April
1, 1994........ 1,468 $ 147 719 $ 72 4,920 $ 492 $40,140 $ (2,922) $37,929
Redemption and
retirement of
stock........ (1,468) (147) (99) (10) (1,100) (110) (5,932) -- (6,199)
Dividends
declared:
Preferred --
$4.50 per
share...... -- -- -- -- -- -- (5) -- (5)
Common --
$475 per
share...... -- -- -- -- -- -- (2,231) -- (2,231)
Net income..... -- -- -- -- -- -- 13,704 -- 13,704
---- --- --- ------ ---- ------- ------- -------
Balance at March
31, 1995....... -- -- 620 62 3,820 382 45,676 (2,922) 43,198
Common
dividends
declared --
$1,250 per
share........ -- -- -- -- -- -- (5,550) -- (5,550)
Net income..... -- -- -- -- -- -- 17,142 -- 17,142
---- --- --- ------ ---- ------- ------- -------
Balance at March
31, 1996....... -- -- 620 62 3,820 382 57,268 (2,922) 54,790
Common
dividends
declared
-- $1,300 per
share........ -- -- -- -- -- -- (5,771) -- (5,771)
Net income..... -- -- -- -- -- -- 19,838 -- 19,838
---- --- --- ------ ---- ------- ------- -------
Balance at March
31, 1997....... -- $ -- 620 $ 62 3,820 $ 382 $71,335 $ (2,922) $68,857
==== === === ====== ==== ======= ======= =======
</TABLE>
See accompanying notes.
F-5
<PAGE> 106
NEENAH FOUNDRY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.............................................. $ 13,704 $ 17,142 $ 19,838
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation....................................... 6,842 6,776 6,881
Deferred income taxes.............................. 2,862 1,863 (103)
Other.............................................. (274) 48 (103)
Changes in operating assets and liabilities:
Accounts receivable.............................. (3,384) 439 (592)
Inventories...................................... (142) (603) (632)
Other current assets............................. 186 27 (401)
Accounts payable................................. 684 (2,653) 373
Income taxes payable............................. 526 (585) 56
Accrued liabilities.............................. 1,388 (1,261) 144
Pension obligations.............................. 900 859 (2,349)
Postretirement benefit obligations............... 289 221 367
-------- -------- --------
Net cash provided by operating activities..... 23,581 22,273 23,479
INVESTING ACTIVITIES
Purchase of property, plant and equipment............. (3,665) (7,275) (4,546)
Proceeds from life insurance policy................... -- -- 1,439
Other................................................. 253 (24) 3
-------- -------- --------
Net cash used in investing activities......... (3,412) (7,299) (3,104)
FINANCING ACTIVITIES
Dividends paid........................................ (1,411) (4,440) (7,991)
Redemption of stock................................... (6,199) -- --
Proceeds from long-term debt.......................... 70,529 16,370 --
Payments on long-term debt............................ (82,968) (17,016) (107)
-------- -------- --------
Net cash used in financing activities......... (20,049) (5,086) (8,098)
-------- -------- --------
Increase in cash and cash equivalents................... 120 9,888 12,277
Cash and cash equivalents at beginning of year.......... 118 238 10,126
-------- -------- --------
Cash and cash equivalents at end of year................ $ 238 $ 10,126 $ 22,403
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid for:
Interest........................................... $ 624 $ 84 $ 39
Income taxes....................................... 5,478 10,398 12,515
</TABLE>
See accompanying notes.
F-6
<PAGE> 107
NEENAH FOUNDRY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1995, 1996 AND 1997
(IN THOUSANDS)
1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Prior to July 1, 1997, Neenah Foundry Company was one of three wholly owned
subsidiaries of Neenah Corporation, a holding company with no significant assets
or operations other than its holdings in the common stock of its subsidiaries.
On July 1, 1997, Neenah Foundry Company merged into Neenah Corporation and the
surviving company changed its name to Neenah Foundry Company (the Company).
The Company operates in one business segment for financial reporting
purposes: the manufacture of gray and ductile iron castings. The Company
manufactures castings sold directly to industrial and municipal customers
throughout the United States and several foreign countries either directly or
through representatives. Industrial castings are custom-engineered and are
produced for customers in several industries, with a concentration in the medium
and heavy-duty truck components, farm equipment, and heating, ventilation, and
air-conditioning industries. Heavy municipal castings include manhole covers and
frames, storm sewer frames and grates, trench drain systems, tree grates and
specialty castings for a variety of applications.
Industrial castings are generally sold to large, well-established
companies, with two customers accounting for 18% and 15% of net sales in fiscal
1995, 17% and 9% of net sales in fiscal 1996, and 16% and 10% of net sales in
fiscal 1997. Combined receivables from these two customers totaled $4,974 and
$6,651 at March 31, 1996 and 1997, respectively. Municipal castings are sold to
a large number of customers. The Company's accounts receivable generally are
unsecured.
The Company has two wholly owned subsidiaries -- Neenah Transport, Inc.
(Transport) and Hartley Controls Corporation (Hartley). Transport is a common
and contract carrier licensed to operate in the continental United States. The
majority of Transport's revenues are derived from transport services provided to
the Company. Hartley designs and manufactures customized sand control systems
for the foundry industry, which are sold and serviced throughout the United
States and several foreign countries. Hartley and Transport each account for
less than 10% of consolidated net sales, net income and total assets.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries, Transport and Hartley. All significant
intercompany accounts and transactions have been eliminated in consolidation.
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 CASH EQUIVALENTS
For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid investments with a maturity of three months or less
when purchased to be cash equivalents.
F-7
<PAGE> 108
NEENAH FOUNDRY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Cash equivalents, consisting principally of investments in commercial paper,
totaled $11,598 and $23,028 at March 31, 1996 and 1997, respectively. The cost
of these debt securities, which are considered as "available for sale" for
financial reporting purposes, approximates fair value at both March 31, 1996 and
1997. There were no realized gains or losses recognized on these securities
during any of the three years in the period ended March 31, 1997.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined
on the last-in, first-out (LIFO) method for substantially all inventories except
for supplies, for which cost is determined on the first-in, first-out (FIFO)
method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Expenditures for
additions and improvements are capitalized while replacements, maintenance and
repairs which do not improve or extend the lives of the respective assets are
expensed as incurred.
Depreciation for financial reporting purposes is provided over the
estimated useful lives of the respective assets, using accelerated and
straight-line methods. Depreciation expense includes amortization of machinery
and equipment recorded under capitalized leases.
REVENUE RECOGNITION
Revenue from the sale of castings and sand control systems is recognized
upon shipment to the customer.
ADVERTISING COSTS
Advertising costs are expensed as incurred, and amounted to $467, $527 and
$524 for the years ended March 31, 1995, 1996 and 1997, respectively.
INCOME TAXES
Deferred income taxes are provided for temporary differences between the
financial reporting and income tax basis of the Company's assets and liabilities
and are measured using currently enacted tax rates and laws.
FINANCIAL INSTRUMENTS
The Company has a number of financial instruments, none of which are held
for trading purposes. The Company estimates that the fair value of all financial
instruments at March 31, 1996 and 1997 does not differ materially from the
carrying value of such instruments recorded in the accompanying consolidated
balance sheets, as follows:
<TABLE>
<CAPTION>
MARCH 31,
-------------------
1996 1997
------- -------
<S> <C> <C>
Cash and cash equivalents...................................... $10,126 $22,403
Accounts receivable............................................ 20,831 21,423
Accounts payable............................................... (8,124) (8,497)
Long-term debt................................................. (241) (134)
</TABLE>
F-8
<PAGE> 109
NEENAH FOUNDRY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NEW ACCOUNTING STANDARDS
The Company adopted FASB Statement of Financial Accounting Standards (SFAS)
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Assets to
Be Disposed Of," and SFAS No. 123, "Accounting for Stock-Based Compensation," on
April 1, 1996 and SFAS No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," on January 1, 1997. The
adoption of these standards did not have any effect on the Company's
consolidated financial statements. In accordance with SFAS No. 121, the Company
records impairment losses on long-lived assets used in operations when events
and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amounts of those assets. The Company is required to adopt AICPA
Statement of Position 96-1, "Environmental Remediation Liabilities," on April 1,
1997. The pending adoption of this standard is not expected to have a material
impact on the Company's consolidated financial statements.
2. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
MARCH 31,
-------------------
1996 1997
------- -------
<S> <C> <C>
Raw materials.................................................. $ 2,214 $ 2,017
Work in process and finished goods............................. 13,957 14,324
Supplies....................................................... 4,886 4,860
------- -------
Inventories at FIFO cost....................................... 21,057 21,201
Excess of FIFO cost over LIFO cost............................. (7,733) (7,245)
------- -------
$13,324 $13,956
======= =======
</TABLE>
3. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
MARCH 31,
-------------
1996 1997
---- ----
<S> <C> <C>
Capital lease obligations............................................ $241 $134
Less current portion................................................. 107 134
---- ----
$134 $ --
==== ====
</TABLE>
The Company has a revolving credit agreement (the Agreement) with a bank
that provides for borrowings up to $25,000 through July 31, 1998. Interest is
payable monthly on outstanding borrowings at the bank's Reference Rate (8.25% at
March 31, 1997). The Agreement contains an option that allows the Company to
designate a portion (minimum of $2,000) of the borrowings to bear a fixed rate
of interest for a specified period of time. Borrowings under the Agreement are
unsecured and a quarterly fee is charged by the bank on the unused portion of
the facility.
The capital lease obligations consist of leases for a propane system and
semi-tractors and trailers. Included in machinery and equipment is $567 and
$397, and included in accumulated depreciation is $272 and $179 at March 31,
1996 and 1997, respectively, related to these capital leases.
F-9
<PAGE> 110
NEENAH FOUNDRY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. NOTES RECEIVABLE FROM OWNERS
The notes receivable from owners of $2,922 are due April 1, 1999, with
interest adjusted annually to the Company's borrowing rate plus .1%. The
proceeds of the notes receivable were used to purchase 1,461 shares of Company
Class B common stock from other shareholders, and are secured by such common
stock. These notes were repaid by the owners prior to the consummation of the
plan of reorganization described in Note 10.
5. COMMITMENTS AND CONTINGENCIES
The Company leases warehouse space, machinery and equipment, office
equipment and vehicles under operating leases. Rent expense under these
operating leases for the years ended March 31, 1995, 1996 and 1997 amounted to
$850, $996 and $1,088, respectively. Minimum rental payments due under these
operating leases for subsequent fiscal years are as follows:
<TABLE>
<S> <C>
1998........................................................................ $ 736
1999........................................................................ 586
2000........................................................................ 287
2001........................................................................ 115
------
$1,724
======
</TABLE>
The Company is involved in a number of product liability claims, none of
which, in the opinion of management, is expected to have a material adverse
effect on the consolidated financial statements.
The Company is partially self-insured for workers compensation claims. An
accrued liability is recorded for claims incurred but not yet paid or reported,
with such accrual based on current and historical claim information. The accrual
may ultimately be settled for an amount greater or lesser than the recorded
amount. Adjustments of the accrual are recorded in the period in which they are
determined.
As of March 31, 1997, the Company had outstanding letters of credit in the
aggregate amount of $595, which secure certain workers compensation and other
obligations.
6. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------
1995 1996 1997
------ ------- -------
<S> <C> <C> <C>
Current:
Federal............................................ $5,556 $ 9,147 $11,554
State.............................................. 448 666 1,016
------ ------- -------
6,004.. 9,813 12,570
Deferred............................................. 2,862 1,863 (103)
------ ------- -------
$8,866 $11,676 $12,467
====== ======= =======
</TABLE>
F-10
<PAGE> 111
NEENAH FOUNDRY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The difference between the provision for income taxes and income taxes
computed using the statutory U.S. federal income tax rate of 35% is as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------
1995 1996 1997
------ ------- -------
<S> <C> <C> <C>
Provision at statutory rate.......................... $7,900 $10,086 $11,307
State income taxes, net of federal tax benefit....... 801 1,126 1,318
Other................................................ 165 464 (158)
------ ------- -------
Provision for income taxes........................... $8,866 $11,676 $12,467
====== ======= =======
</TABLE>
The components of the Company's deferred income tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
MARCH 31,
-------------------
1996 1997
------- -------
<S> <C> <C>
Deferred income tax liabilities:
Tax depreciation in excess of book depreciation.............. $(5,621) $(5,156)
Employee benefit plans....................................... (602) (441)
Other........................................................ (437) (127)
------- -------
(6,660) (5,724)
Deferred income tax assets:
Inventories.................................................. 560 560
Employee benefit plans....................................... 3,316 3,128
Accrued vacation............................................. 825 855
Other accrued liabilities.................................... 672 790
State tax credit carryforwards............................... 676 --
Other........................................................ 289 172
------- -------
6,338 5,505
------- -------
Net deferred income tax liability.............................. $ (322) $ (219)
======= =======
Included in the consolidated balance sheets as:
Current deferred income tax asset............................ $ 2,253 $ 2,325
Noncurrent deferred income tax liability..................... (2,575) (2,544)
------- -------
$ (322) $ (219)
======= =======
</TABLE>
The Company has not recorded a valuation allowance with respect to any
deferred tax assets at March 31, 1996 or 1997.
7. EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT PENSION PLANS
The Company sponsors two defined benefit pension plans covering
substantially all hourly employees and previously sponsored a defined benefit
supplemental executive retirement plan (SERP) which covered certain salaried
employees. During the year ended March 31, 1997, the Company purchased
nonparticipating annuity contracts to settle the vested benefit obligations
under the SERP. Retirement benefits for the pension plans are based on years of
credited service and defined benefit rates while retirement benefits for the
SERP were based on compensation levels. The Company funds the pension plans
based on an actuarially determined cost method allowable under Internal Revenue
Service regulations. The SERP was unfunded.
F-11
<PAGE> 112
NEENAH FOUNDRY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table reconciles the funded status of the plans, as of
December 31, 1995 and 1996 (the Company uses a measurement date as of December
31), to the amounts included in the consolidated balance sheets at March 31,
1996 and 1997:
<TABLE>
<CAPTION>
1996 1997
------------------------- -------------------------
UNDERFUNDED OVERFUNDED UNDERFUNDED OVERFUNDED
PLANS PLAN PLAN PLAN
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Accumulated benefit obligations............ $(3,944) $(19,805) $(845) $(20,150)
Effect of assumed increases in compensation
on SERP.................................. (2,593) -- -- --
------- -------- ----- --------
Projected benefit obligations.............. (6,537) (19,805) (845) (20,150)
Plan assets at fair value (consisting
principally of pooled investment funds
and an investment contract with an
insurance company)....................... 697 21,110 735 22,169
------- -------- ----- --------
Projected benefit obligations less than (in
excess of) plan assets................... (5,840) 1,305 (110) 2,019
Unrecognized net loss (gain)............... 2,055 (1,940) (8) (2,966)
Unrecognized prior service cost............ 259 4,833 160 4,452
Unrecognized net transition obligation
(asset).................................. 782 (2,695) (21) (2,411)
Adjustment to recognize additional minimum
liability................................ (503) -- (131) --
------- -------- ----- --------
Prepaid (accrued) pension obligation, at
December 31, 1995 and December 31, 1996,
respectively............................. (3,247) 1,503 (110) 1,094
Contributions between January 1 and March
31, 1996 and 1997, respectively.......... 7 -- -- --
------- -------- ----- --------
Prepaid (accrued) pension obligations...... $(3,240) $ 1,503 $(110) $ 1,094
======= ======== ===== ========
Net pension asset (obligation) included in
the consolidated balance sheets.......... $(1,737) $ 984
======= =====
</TABLE>
Components of net periodic pension cost are as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Service cost -- benefits earned during the year..... $ 822 $ 880 $ 820
Interest cost on projected benefit obligations...... 1,437 1,545 1,742
Actual return on plan assets........................ (1,412) (1,450) (1,531)
Net amortization and deferral....................... 217 203 220
------- ------- -------
$ 1,064 $ 1,178 $ 1,251
======= ======= =======
</TABLE>
As a result of the settlement of the SERP, the Company recognized a
curtailment gain of $1,317 and a settlement loss of $878 during the year ended
March 31, 1997. The discount rate used in estimating the projected benefit
obligations and in determining the interest component of pension expense for the
following year for all plans was 7.5% for all years. The annual rate of
compensation increase assumed for the SERP in estimating the projected benefit
obligations was 6.5% for all years. The assumed long-term rate of return on plan
assets used in determining pension expense was 7.5% for all years.
F-12
<PAGE> 113
NEENAH FOUNDRY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PROFIT-SHARING AND SAVINGS RETIREMENT PLAN
The Company sponsors a Profit-Sharing and Savings Retirement Plan covering
substantially all salaried employees. The plan allows participants to make
401(k) contributions in an amount from 1% to 5% of their compensation. The
Company matches 50% of the participants contributions. The Company may make
additional voluntary contributions to the plan as determined annually by the
Board of Directors. Total Company contributions amounted to $859, $891 and $915
for the years ended March 31, 1995, 1996 and 1997, respectively.
POSTRETIREMENT BENEFITS
The Company sponsors defined benefit postretirement health care plans
covering substantially all salaried employees and their dependents. Benefits are
provided from the date of retirement for the duration of the employee's life up
to a maximum of $1 million per individual. Retirees' contributions to the plans
are based on years of service and age at retirement. The Company funds benefits
as incurred.
The following table reconciles the funded status of the postretirement
benefit plans to the amounts included in the consolidated balance sheets at
March 31:
<TABLE>
<CAPTION>
1996 1997
------ ------
<S> <C> <C>
Accumulated postretirement benefit obligations:
Retirees....................................................... $2,047 $1,830
Fully eligible active participants............................. 654 810
Other active participants...................................... 2,534 2,784
------ ------
5,235 5,424
Plan assets...................................................... -- --
------ ------
5,235 5,424
Unrecognized net gain............................................ 65 243
------ ------
Accrued postretirement benefit obligations....................... $5,300 $5,667
====== ======
</TABLE>
Components of net periodic postretirement benefit cost are as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Service cost................................................ $164 $176 $193
Interest cost on accumulated postretirement benefit
obligations............................................... 340 361 370
Net amortization and deferral............................... (4) (4) (5)
---- ---- ----
$500 $533 $558
==== ==== ====
</TABLE>
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligations for both plans was 7.5% for all years, and
the healthcare cost trend rate was projected to have annual increases of 8.5%.
The healthcare cost trend rate assumption has a significant effect on the
amounts reported. Increasing the healthcare cost trend rate by one percentage
point would increase the accumulated postretirement benefit obligations as of
March 31, 1997 by $1,014 and would increase postretirement benefit expense for
the year ended March 31, 1997 by $131.
F-13
<PAGE> 114
NEENAH FOUNDRY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. STOCKHOLDERS' EQUITY
The Company has a Restrictive Stock Transfer Agreement with certain of its
stockholders which permits the transfer of its stock held by such stockholders
to permitted transferees, as defined. In the event a stockholder wishes to sell
stock to a third party who is not a permitted transferee, the stock must first
be offered for sale to the Company. If the Company accepts the offer of sale,
the purchase price is based on a formula, as defined. The purchase price will be
financed by a promissory note payable in ten equal annual installments with
interest at the prime rate less 1%. The Restrictive Stock Transfer Agreement was
terminated concurrently with the consummation of the plan of reorganization
described in Note 10.
9. UNAUDITED QUARTERLY RESULTS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1996
------------------------------------------------------
QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales............................ $ 46,277 $ 44,454 $ 39,015 $ 37,205
Gross profit......................... 12,976 12,243 10,199 9,902
Net income........................... 5,325 5,024 3,839 2,954
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1997
------------------------------------------------------
QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales............................ $ 44,309 $ 45,430 $ 37,815 $ 37,872
Gross profit......................... 13,140 13,613 10,825 11,112
Net income........................... 5,178 5,558 4,635 4,467
</TABLE>
10. SUBSEQUENT EVENTS
On April 30, 1997, pursuant to an Agreement and Plan of Reorganization with
NC Merger Company and NFC Castings, Inc., Neenah Corporation was acquired by NFC
Castings, Inc. using (i) $45,000 of cash equity contributed by NFC Castings,
Inc., (ii) $45,000 of term loans borrowed under Senior Bank Facilities, (iii)
proceeds from the issuance of $150,000 of unsecured Senior Subordinated Notes in
a Rule 144A private placement and (iv) Company cash. The consideration for the
acquisition is subject to a closing date net worth adjustment.
On July 1, 1997 the Company issued $45 million principal amount of Senior
Subordinated Notes and used the proceeds to pay the term loans borrowed under
the Senior Bank Facilities.
As described in Note 1, on July 1, 1997, Neenah Foundry Company, the
principal operating subsidiary of Neenah Corporation, merged into Neenah
Corporation. Transport and Hartley, wholly owned subsidiaries of the Company,
fully, unconditionally, jointly and severally guarantee the Senior Subordinated
Notes issued in the private placement discussed above. The following is
summarized combined financial information of the wholly owned subsidiaries. Net
sales includes net sales to Neenah Foundry Company of $4,181, $4,090 and $4,012
for the years ended March 31, 1995, 1996 and 1997, respectively. Separate
financial statements of the guarantor subsidiaries are not sepa-
F-14
<PAGE> 115
NEENAH FOUNDRY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
rately presented because, in the opinion of management, such financial
statements are not material to investors.
<TABLE>
<CAPTION>
MARCH 31,
---------------------
1996 1997
------ ------
<S> <C> <C>
Current assets............................................. $1,494 $1,867
Noncurrent assets.......................................... 1,661 1,918
Current liabilities........................................ 941 1,006
Noncurrent liabilities..................................... 401 453
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Net sales................................................. $9,131 $9,795 $9,971
Gross profit.............................................. 2,719 3,165 3,247
Net income................................................ 501 651 513
</TABLE>
F-15
<PAGE> 116
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE 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 THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
TO WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.
- ------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information................ 2
Prospectus Summary................... 3
Risk Factors......................... 16
Use of Proceeds...................... 21
Capitalization....................... 22
Selected Consolidated Financial and
Other Data......................... 23
Unaudited Pro Forma Consolidated
Financial Information.............. 26
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 33
Exchange Offer....................... 38
Business............................. 44
Management........................... 56
Ownership of Securities.............. 59
Certain Relationships and Related
Transactions....................... 59
Description of Senior Bank
Facilities......................... 60
Description of Notes................. 62
Certain United States Federal Income
Tax Considerations................. 95
Plan of Distribution................. 96
Legal Matters........................ 96
Experts.............................. 96
Change in Independent Auditors....... 97
Index to Consolidated Financial
Statements......................... F-1
</TABLE>
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THE DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING
AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
LOGO
--------------------
PROSPECTUS
--------------------
OFFER TO EXCHANGE ITS
11 1/8% SERIES B SENIOR SUBORDINATED
NOTES DUE 2007 FOR
11 1/8% SERIES A SENIOR SUBORDINATED
NOTES DUE 2007
, 1997
<PAGE> 117
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION+.
<TABLE>
<S> <C>
SEC Registration Fee...................................................... $51,724
Blue Sky Fees and Expenses................................................ *
Printing Expenses......................................................... *
Accounting Fees and Expenses.............................................. *
Legal Fees and Expenses................................................... *
Trustee's Fees and Expenses............................................... *
Miscellaneous............................................................. *
--------
Total........................................................... $ --
========
</TABLE>
- ---------------
+ Estimated
* To be completed by amendment.
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 180.0850 to 180.0859 of the Wisconsin Statutes require a
corporation to indemnify any director or officer who is a party to any
threatened, pending or completed civil, criminal, administrative or
investigative action, suit, arbitration or other proceeding, whether formal or
informal, which involves foreign, federal, state or local law and which is
brought by or in the right of the corporation or by any other person. A
corporation's obligation to indemnify any such person includes the obligation to
pay any judgment, settlement, penalty, assessment, forfeiture or fine, including
any excise tax assessed with respect to an employee benefit plan, and all
reasonable expenses including fees, costs, charges, disbursements, attorney's
and other expenses except in those cases in which liability was incurred as a
result of the breach or failure to perform a duty which the director or officer
owes to the corporation and the breach or failure to perform constitutes: (i) a
willful failure to deal fairly with the corporation or its shareholders in
connection with a matter in which the director or officer has a material
conflict of interest; (ii) a violation of criminal law, unless the person has
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful; (iii) a transaction from which the person
derived an improper personal profit; or (iv) willful misconduct.
Unless otherwise provided in a corporation's articles of incorporation or
by-laws or by written agreement, an officer or director seeking indemnification
is entitled to indemnification if approved in any of the following manners: (i)
by majority vote of a disinterested quorum of the board of directors, or if such
quorum of disinterested directors cannot be obtained, by a majority vote of a
committee or two or more disinterested directors; (ii) by independent legal
counsel; (iii) by a panel of three arbitrators; (iv) by affirmative vote of
shareholders; (v) by a court; or (vi) with respect to any additional right to
indemnification granted by any other method permitted in Section 180.0859 of the
Wisconsin Statutes.
Reasonable expenses incurred by a director or officer who is a party to a
proceeding may be reimbursed by a corporation at such time as the director or
officer furnishes to the corporation written affirmation of his good faith
belief that he has not breached or failed to perform his duties and a written
undertaking to repay any amounts advanced if it is determined that
indemnification by the corporation is not required.
The indemnification provisions of Sections 180.0850 to 180.0859 are not
exclusive. A corporation may expand an officer's or director's right to
indemnification (i) in its articles of incorporation or
II-1
<PAGE> 118
by-laws; (ii) by written agreement, (iii) by resolution of its board of
directors; or (iv) by resolution of a majority of all of the corporation's
voting shares then issued and outstanding.
As permitted by Section 180.0859, the Registrant has adopted
indemnification provisions in its By-Laws which closely track the statutory
indemnification provisions with certain exceptions. In particular, Article VIII
of the Registrant's By-Laws provides that payment or reimbursement of expenses,
subject to certain limitations, will be mandatory rather than permissive.
The Registrant maintains and has in effect insurance policies covering all
of their respective directors and officers against certain liabilities for
actions taken in such capacities, including liabilities under the Securities Act
of 1933.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
See Exhibit Index
(b) Financial Statement Schedules.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(5) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not
be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
II-2
<PAGE> 119
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described under
Item 20 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 Securities 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
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(6) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(7) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(8) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date
of the registration statement through the date of responding to the
request.
(9) 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> 120
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Neenah,
State of Wisconsin, on July 25, 1997.
NEENAH FOUNDRY COMPANY
By: /s/ JAMES K. HILDEBRAND
------------------------------------
Name: James K. Hildebrand
Title: Chairman and Chief
Executive Officer
POWER OF ATTORNEY
The undersigned hereby severally constitute and appoint Gary W. LaChey for
the undersigned in any and all capacities, with the power of substitution, to
sign any amendment to this Registration Statement, and to file the same with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his substitutes, may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------- ------------------------------------- ---------------
<C> <S> <C>
/s/ JAMES K. HILDEBRAND Chairman of the Board and Chief July 25, 1997
- ------------------------------------- Executive Officer
James K. Hildebrand
/s/ WILLIAM M. BARRETT Vice President and General Manager July 25, 1997
- -------------------------------------
William M. Barrett
/s/ GARY W. LACHEY Vice President -- Finance, Treasurer July 25, 1997
- ------------------------------------- and Secretary
Gary W. LaChey
/s/ CHARLES M. KURTTI Vice President -- Manufacturing and July 25, 1997
- ------------------------------------- Engineering
Charles M. Kurtti
/s/ DAVID F. THOMAS Director July 25, 1997
- -------------------------------------
David F. Thomas
/s/ JOHN D. WEBER Director July 25, 1997
- -------------------------------------
John D. Weber
/s/ BRENTON F. HALSEY Director July 25, 1997
- -------------------------------------
Brenton F. Halsey
</TABLE>
II-4
<PAGE> 121
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Neeneh,
State of Wisconsin, on July 25, 1997.
Hartley Controls Corporation
By: /s/ JAMES K. HILDEBRAND
------------------------------------
Name: James K. Hildebrand
Title: Chairman and President
POWER OF ATTORNEY
The undersigned hereby severally constitute and appoint Gary W. LaChey for
the undersigned in any and all capacities, with the power of substitution, to
sign any amendment to this Registration Statement, and to file the same with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his substitute, may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------- --------------------------------------- --------------
<S> <C> <C>
/s/ JAMES K. HILDEBRAND Chairman and President July 25, 1997
- -------------------------------------
James K. Hildebrand
/s/ WILLIAM J. MARTIN Vice President and General Manager July 25, 1997
- -------------------------------------
William J. Martin
/s/ GARY W. LACHEY Vice President -- Finance, Treasurer July 25, 1997
- ------------------------------------- and Secretary
Gary W. LaChey
/s/ JOHN Z. RADER Vice President -- Human Resources July 25, 1997
- -------------------------------------
John Z. Rader
/s/ JOHN D. WEBER Director and Vice President and July 25, 1997
- ------------------------------------- Assistant Secretary
John D. Weber
/s/ DAVID F. THOMAS Director July 25, 1997
- -------------------------------------
David F. Thomas
/s/ BRENTON F. HALSEY Director July 25, 1997
- -------------------------------------
Brenton F. Halsey
</TABLE>
II-5
<PAGE> 122
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Neenah,
State of Wisconsin, on July 25, 1997.
NEENAH TRANSPORT, INC.
By: /s/ JAMES K. HILDEBRAND
------------------------------------
Name: James K. Hildebrand
Title: Chairman and President
POWER OF ATTORNEY
The undersigned hereby severally constitute and appoint Gary W. LaChey for
the undersigned in any and all capacities, with the power of substitution, to
sign any amendment to this Registration Statement, and to file the same with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his substitute or substitutes, may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------------ ----------------------------------- --------------
<C> <S> <C>
/s/ JAMES K. HILDEBRAND Chairman and President July 25, 1997
- ------------------------------------------
James K. Hildebrand
/s/ GARY W. LACHEY Vice President -- Finance, July 25, 1997
- ------------------------------------------ Treasurer and Secretary
Gary W. LaChey
/s/ JOHN Z. RADER Vice President -- Human Resources July 25, 1997
- ------------------------------------------
John Z. Rader
/s/ JOHN D. WEBER Director and Vice President and July 25, 1997
- ------------------------------------------ Assistant Secretary
John D. Weber
/s/ DAVID F. THOMAS Director July 25, 1997
- ------------------------------------------
David F. Thomas
/s/ BRENTON F. HALSEY Director July 25, 1997
- ------------------------------------------
Brenton F. Halsey
</TABLE>
II-6
<PAGE> 123
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <S>
2.1 Agreement and Plan of Reorganization, dated November 20, 1996, by and among NFC
Castings, Inc., NC Merger Company and Neenah Corporation.**
2.2 First Amendment to Agreement and Plan of Reorganization, dated as of January 13,
1997, by and among NFC Castings, Inc., NC Merger Company and Neenah Corporation.*
2.3 Second Amendment to Agreement and Plan of Reorganization, dated as of February 21,
1997, by and among NFC Castings, Inc., NC Merger Company and Neenah Corporation.*
2.4 Third Amendment to Agreement and Plan of Reorganization, dated as of April 3, 1997,
by and among NFC Castings, Inc., NC Merger Company and Neenah Corporation.*
2.5 Merger Agreement, made as of July 1, 1997, by and between Neenah Corporation and
Neenah Foundry Company.*
3.1 Restated Articles of Incorporation of Neenah Foundry Company.**
3.2 By-laws of Neenah Foundry Company.**
3.3 [Intentionally omitted].
3.4 [Intentionally omitted].
3.5 Restated Articles of Incorporation of Hartley Controls Corporation.**
3.6 By-laws of Hartley Controls Corporation.+
3.7 Restated Articles of Incorporation of Neenah Transport, Inc.
3.8 By-laws of Neenah Transport, Inc.+
4.1 Indenture dated as of April 30, 1997 among NC Merger Company and United States Trust
Company of New York.*
4.2 Purchase Agreement dated as of April 23, 1997 among NC Merger Company, Chase
Securities Inc. and Morgan Stanley & Co. Incorporated.*
4.3 Exchange and Registration Rights Agreement dated as of April 30, 1994 among Neenah
Corporation, Neenah Foundry Company, Hartley Controls Corporation, Neenah Transport,
Inc. and Chase Securities, Inc.*
4.4 First Supplemental Indenture, dated as of April 30, 1997 among Neenah Corporation,
Neenah Foundry Company, Neenah Transport, Inc. and Hartley Controls Corporation and
United States Trust Company of New York.*
4.5 Letter Agreement, dated as of April 30, 1997 among Neenah Corporation, Neenah
Foundry Company, Hartley Controls Corporation and Neenah Transport, Inc. and Chase
Securities Inc. and Morgan Stanley & Co. Incorporated.*
4.6 Form of Global Note related to the Indenture dated as of April 23, 1997.*
4.7 Indenture dated as of July 1, 1997 among Neenah Corporation, Neenah Foundry Company,
Neenah Transport, Inc., Hartley Controls Corporation and United States Trust Company
of New York.*
4.8 Purchase Agreement dated as of June 26, 1997 among Neenah Corporation, Neenah
Foundry Company, Hartley Controls Corporation, Neenah Transport, Inc. and Chase
Securities Inc.*
4.9 Exchange and Registration Rights Agreement dated as of July 1, 1997 by and between
Neenah Corporation, Neenah Foundry Company, Hartley Controls Corporation, Neenah
Transport, Inc. and Chase Securities, Inc.*
4.10 Form of Global Note related to the Indenture dated as of July 1, 1997.*
5.1 Opinion of Kirkland & Ellis.*
8.1 Opinion of Kirkland & Ellis as to federal income tax consequences.*
10.1 Master Lease Agreement between Neenah Foundry Company and Bank One Leasing
Corporation dated December 14, 1992.+
</TABLE>
<PAGE> 124
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <S>
10.2 Agreement between Neenah Foundry Company and Rockwell International Corporation
effective April 1, 1995. (Subject to request for confidential treatment)*
10.3 Letter Agreement between Neenah Foundry Company and Eaton Corporation dated April 4,
1996. (Subject to request for confidential treatment)*
10.4 [Intentionally omitted].
10.5 1996-1998 Collective Bargaining Agreement between Neenah Foundry Company and Local
121B Glass, Molders, Pottery, Plastics and Allied Workers International Union
AFL-CIO-CLC.*
10.6 1995-1997 Collective Bargaining Agreement between Neenah Foundry Company and The
Independent Patternmakers Union of Neenah, Wisconsin.*
10.7 Credit Agreement, dated as of April 30, 1997 among Chase Manhattan Bank, N.A., NFC
Castings, Inc. and NC Merger Company.*
10.8 Employment Agreement dated September 9, 1994 between the Neenah Corporation Neenah
Foundry Company, Hartley Controls Corporation, Neenah Transport, Inc. and James P.
Keating, Jr.**
10.9 Consulting Agreement dated September 9, 1994 between the Neenah Foundry Company and
the Guarantors and James P. Keating, Jr.**
10.10 First Amendment to Employment Agreement, dated September 9, 1994, between Neenah
Foundry Company, Neenah Corporation, Hartley Controls Corporation and James P.
Keating, Jr.*
10.11 Pledge Agreement dated as of April 30, 1997, among NC Merger Company, a Wisconsin
corporation, NFC Castings, Inc., a Delaware corporation.*
10.12 Subsidiary Guarantee Agreement dated as of April 30, 1997, among each of the
subsidiaries listed of NC Merger Company, a Wisconsin corporation, and The Chase
Manhattan Bank, a New York banking corporation, as collateral agent for the secured
parties.*
10.13 Parent Guarantee Agreement dated as of April 30, 1997, between NFC Castings, Inc., a
Delaware corporation and The Chase Manhattan Bank, a New York banking corporation,
as collateral agent for the secured parties.*
10.14 Security Agreement dated as of April 30, 1997, among NC Merger Company, a Wisconsin
corporation, each subsidiary of the borrower and The Chase Manhattan Bank, a New
York banking corporation, as collateral agent for the secured parties.*
10.15 Form of Mortgage.*
12.1 Statement Regarding Computation of Ratios of Earnings to Fixed Charges.*
21.1 Subsidiaries of the Registrant.*
23.1 Consent of Ernst & Young LLP.*
23.3 Consent of Kirkland & Ellis (included in Exhibit 5.1).
24.1 Powers of Attorney (included in signature page).**
25.1 Statement of Eligibility of Trustee on Form T-1.*
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Tender Instructions.*
</TABLE>
- ---------------
* Filed herewith
** Previously filed
+ To be filed by amendment
<PAGE> 1
Exhibit 2.2
FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This First Amendment to Agreement and Plan of Reorganization is dated
as of January 13, 1997 by and among NFC Castings, Inc., a Delaware corporation
("Parent"), NC Merger Company, a Wisconsin corporation ("Newco"), and Neenah
Corporation, a Wisconsin corporation (the "Company").
RECITALS
Parent, Newco and the Company entered into an Agreement and Plan of
Reorganization dated as of November 20, 1996 ("Agreement") pursuant to which
they agreed to consummate a transaction in which Parent would acquire the
Company for cash through a reverse triangular merger of Newco with and into the
Company, whereby all of the outstanding shares of the capital stock of the
Company would be converted into the right to receive cash and all of the
outstanding shares of the capital stock of Newco would be converted into shares
of the capital stock of the Company, upon the terms and subject to the
conditions set forth in the Agreement. The parties desire to amend certain
provisions of the Agreement in the manner and to the extent set forth herein, to
extend the closing date and the outside date for such transaction.
Accordingly, in consideration of the premises and of the mutual
agreements, provisions and covenants herein contained, the parties hereto hereby
agree as follows:
1. AMENDMENT OF THE AGREEMENT.
1.1 Closing Date. Sections 2.2, 9.1(b)(ii) and 9.1(c)(ii) of the
Agreement are amended by substituting the date "February 20, 1997" for the date
"January 31, 1997" each place it appears.
1.2 Outside Date. Sections 9.1(b)(iii) and 9.1(c)(iii) of the Agreement
are amended by substituting the date "February 21, 1997" for the date "February
15, 1997" each place it appears.
2. RATIFICATION.
Except as expressly amended by this Amendment, all of the terms and
conditions of the Agreement shall remain in full force and effect. The
Agreement, as amended hereby, and all rights and powers created thereby and
thereunder are in all respects ratified and confirmed.
3. COUNTERPARTS.
This Amendment may be signed in any number of counterparts, all of
which taken together shall constitute one fully-executed agreement.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
NFC CASTINGS, INC.
/s/ NFC Castings, Inc.
By:________________________________
Title:_____________________________
NC MERGER COMPANY
/s/ NC Merger Company
By:________________________________
Title:_____________________________
NEENAH CORPORATION
/s/ Neenah Corporation
By:________________________________
Title:_____________________________
-2-
<PAGE> 1
Exhibit 2.3
SECOND AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This Second Amendment to Agreement and Plan of Reorganization (the
"Second Amendment") is dated as of February 21, 1997 by and among NFC Castings,
Inc., a Delaware corporation ("Parent"), NC Merger Company, a Wisconsin
corporation ("Newco"), and Neenah Corporation, a Wisconsin corporation (the
"Company").
RECITALS
Parent, Newco and the Company entered into an Agreement and Plan of
Reorganization dated as of November 20, 1996 ("Agreement and Plan of
Reorganization") pursuant to which they agreed to consummate a transaction in
which Parent would acquire the Company for cash through a reverse triangular
merger of Newco with and into the Company, whereby all of the outstanding shares
of the capital stock of the Company would be converted into the right to receive
cash and all of the outstanding shares of the capital stock of Newco would be
converted into shares of the capital stock of the Company, upon the terms and
subject to the conditions set forth in the Agreement and Plan of Reorganization.
Parent, Newco and the Company entered into a First Amendment to Agreement and
Plan of Reorganization dated as of January 13, 1997 ("First Amendment") pursuant
to which they agreed to amend certain provisions of the Agreement and Plan of
Reorganization. (The Agreement and Plan of Reorganization, as amended by the
First Amendment, is referred to herein as the "Agreement".) The parties desire
to further amend certain provisions of the Agreement in the manner and to the
extent set forth herein.
Accordingly, in consideration of the premises and of the mutual
agreements, provisions and covenants herein contained, the parties hereto hereby
agree as follows:
1. AMENDMENT OF THE AGREEMENT.
1.1 Closing Date. Sections 2.2, 9.1(b)(ii) and 9.1(c)(ii) of the
Agreement are amended by substituting the date "April 11, 1997" for the date
"February 20, 1997" each place it appears.
1.2 Outside Date. Sections 9.1(b)(iii) and 9.1(c)(iii) of the Agreement
are amended by substituting the date "April 11, 1997" for the date "February 21,
1997" each place it appears.
1.3 Definitions. Section 1.1 of the Agreement is amended by amending
the definitions of "Merger Price" and "Merger Price Per Share" to read in their
entirety as follows:
"Merger Price" shall mean the sum of $240,000,000.00 less an
amount equal to the Settlement Adjustment Amount, to be delivered
by Newco pursuant to Article II of this Agreement, subject to later
<PAGE> 2
adjustment as provided in Section 2.6(e) of this Agreement.
"Merger Price Per Share" shall mean the quotient determined
by dividing the Merger Price to be delivered by Newco at Closing by
the total number of shares of the Company Common Stock issued and
outstanding immediately prior to the Effective Time. (For
illustration purposes only, based on the total issued and
outstanding shares of Company Common Stock set forth in Section
3.1(c) of this Agreement, the Merger Price Per Share would equal
$54,060.14 less the amount determined by dividing the Settlement
Adjustment Amount by the number 4439.50.)
1.4 Definitions. Section 1.1 of the Agreement is amended by adding
thereto the following additional defined terms:
"Former Shareholder" shall mean any former holder of any
shares of capital stock of the Company, whose shares of capital
stock were repurchased by the Company at any time prior to the date
of this Agreement.
"Former Shareholder Claim" shall mean any claim, demand,
cause of action, suit, obligation or liability whatsoever, in law
or equity, known or unknown, whether or not asserted or assertable,
and whether or not paid or settled, that any Former Shareholder
(and such Former Shareholder's directors, officers, employees,
stockholders, heirs, successors, assigns and agents) had, has or
may have against, or that has been, might have been or may be
asserted against, the Company, any of the Subsidiaries or any of
the Company Shareholders, or any of the respective directors,
officers, employees, stockholders, heirs, successors, assigns or
agents of the Company, any of the Subsidiaries or any of the
Company Shareholders, including without limitation any claim,
demand, cause of action, suit, obligation or liability arising from
or in connection with any sale or conveyance of any of such Former
Shareholder's or any other Person's shares of the capital stock of
the Company, including any claim, demand, cause of action, suit,
obligation or liability based upon an allegation that such Former
Shareholder did not receive fair value for his or her shares of the
capital stock of the Company at the time such shares were
repurchased by the Company or any other allegation in connection
with such repurchase or in connection with the transactions
contemplated by this Agreement.
"Former Shareholder Release" shall mean a Confidential
Settlement Agreement and Release substantially in the form of
Exhibit H attached to this Agreement and otherwise in substance and
amount reasonably acceptable to Parent and the Company.
-2-
<PAGE> 3
"Recent Former Shareholder" shall mean any of the following
Former Shareholders: James P. Keating, Jr., Mary K. and James H.
Russell, Jr., Katherine K. Wilson, Dan E. Johnson and the Neenah
Foundry Foundation, Inc.
"Recent Former Shareholder Claim" shall mean any claim,
demand, cause of action, suit, obligation or liability whatsoever,
in law or equity, known or unknown, whether or not asserted or
assertable, and whether or not paid or settled, that any Recent
Former Shareholder (and such Recent Former Shareholder's directors,
officers, employees, stockholders, heirs, successors, assigns and
agents) had, has or may have against, or that has been, might have
been or may be asserted against, the Company, any of the
Subsidiaries or any of the Company Shareholders, or any of the
respective directors, officers, employees, stockholders, heirs,
successors, assigns or agents of the Company, any of the
Subsidiaries or any of the Company Shareholders, arising from or in
connection with any sale or conveyance of any of such Recent Former
Shareholder's or any other Person's shares of the capital stock of
the Company, including any claim, demand, cause of action, suit,
obligation or liability based upon an allegation that such Recent
Former Shareholder did not receive fair value for his or her shares
of the capital stock of the Company at the time such shares were
repurchased by the Company or any other allegation in connection
with such repurchase or in connection with the transactions
contemplated by this Agreement.
"Settlement Adjustment Amount" shall mean one-half (1/2) of
the aggregate amount actually paid by Parent or Newco to the Recent
Former Shareholders in exchange for obtaining Former Shareholder
Releases from them, provided, however, that in no event shall the
Settlement Adjustment Amount exceed $2,000,000.00.
1.5 Payments to Recent Former Shareholders. Article II of the Agreement
is amended by adding thereto, after Section 2.3 thereof, the following
additional Section 2.3A:
2.3A Payments by Parent or Newco to Recent Former
Shareholders. At the Closing, Parent or Newco shall pay to each of
the Recent Former Shareholders the settlement amount recited in the
Former Shareholder Release applicable to such Recent Former
Shareholder.
1.6 Escrow Deposit. Section 2.5(a) of the Agreement is amended to read
in its entirety as follows:
(a) Immediately after the Effective Time, the Paying Agent
shall deposit or shall cause to be deposited with the Escrow Agent
by wire transfer of
-3-
<PAGE> 4
immediately available funds, a portion of the Merger Price equal to
$12,000,000.00 less an amount equal to the Settlement Adjustment
Amount (the "Escrow Deposit"), to be held by the Escrow Agent in
accordance with Section 8.2 of this Agreement and in accordance
with the Escrow Agreement.
1.7 Post-Closing Adjustment. Section 2.6(a) of the Agreement is amended
by replacing the period at the end of clause (ii) thereof with a semi-colon and
adding thereto the following additional clauses (iii), (iv) and (v):
(iii) no reserves, accruals or other liabilities for any Former
Shareholder Claims shall be established with respect to the
Company or any Subsidiary, and the Closing Date Balance
Sheet and the Final Closing Date Balance Sheet shall contain
no such reserves, accruals or liabilities; and
(iv) no expense for any accrual or payment of any portion of any
Former Shareholder Claims, whether in settlement thereof or
otherwise, shall be allowed or taken into account in
computing the net income of the Company for the interim
period ending immediately prior to the Effective Time on the
Closing Date; and
(v) no reduction or decrease shall be made in any asset account
of the Company or any Subsidiary for any payments made to
the Recent Former Shareholders pursuant to Section 2.3A of
this Agreement to the extent any such payments are
considered or deemed to have been made by the Company or any
Subsidiary.
1.8 Approval of Supplemental Disclosures. Section 5.7(b) of the
Agreement is amended by adding the following sentence to the end thereof:
Notwithstanding the immediately preceding sentence, for purposes of
this Agreement, including without limitation Section 6.1 of this
Agreement, Parent hereby consents to all of the updates and
supplements to the Disclosure Schedule set forth in the First
Addendum to Disclosure Schedule to Agreement and Plan of
Reorganization dated as of January 28, 1997 (except for the matter
regarding the Recent Former Shareholders disclosed as new Item 7
under Section 3.10) and in the Second Addendum to Disclosure
Schedule to Agreement and Plan of Reorganization dated as of
February 7, 1997, and accordingly such updates and supplements
(except for such matter regarding the Recent Former Shareholders
disclosed as new Item 7 under Section 3.10) shall be taken into
account for purposes of Section 6.1 of this Agreement.
-4-
<PAGE> 5
1.9 Minimum Cash on Hand. Section 6.17 of the Agreement is amended to
read in its entirety as follows:
6.17 Minimum Cash on Hand. The Company and its Subsidiaries
on a consolidated basis shall have at least $18,000,000 cash and
cash equivalents on hand at Closing (net of checks issued but not
yet presented), less the amount of any payments made to the Recent
Former Shareholders pursuant to Section 2.3A of this Agreement to
the extent any such payments are considered or deemed to have been
made by the Company or any Subsidiary.
1.10 Conditions Precedent to Parent's and Newco's Obligations. Article
VI of the Agreement is amended by adding thereto the following additional
Section 6.18:
6.18 Former Shareholder Releases. Parent shall have received
an irrevocable, duly executed Former Shareholder Release from each
of the Recent Former Shareholders, the continued effectiveness of
each of which as to the applicable Recent Former Shareholder is
conditioned only upon payment to such Recent Former Shareholder at
or before the Closing of the settlement amount recited in the
Former Shareholder Release applicable to such Recent Former
Shareholder.
1.11 Conditions Precedent to Company's Obligations. Article VII of the
Agreement is amended by adding thereto the following additional Section 7.10:
7.10 Former Shareholder Releases. Parent shall have
received, and Parent shall have delivered to the Company
Representative a true and correct copy of, an irrevocable, duly
executed Former Shareholder Release from each of the Recent Former
Shareholders, the continued effectiveness of each of which as to
the applicable Recent Former Shareholder is conditioned only upon
payment to such Recent Former Shareholder at or before the Closing
of the settlement amount recited in the Former Shareholder Release
applicable to such Recent Former Shareholder.
1.12 Indemnification on Behalf of Company Shareholders -- Limitations.
Section 8.2(b) of the Agreement is amended by replacing the period at the end of
clause (xiii) thereof with "; and" and adding thereto the following additional
clause (xiv):
(xiv) for any Recent Former Shareholder Claims or Losses
attributable thereto.
1.13 Termination of Agreement. Section 9.1(b) of the Agreement is
amended by adding thereto the following additional clause (iv):
-5-
<PAGE> 6
(iv) the condition provided for in Section 6.18 of this
Agreement has not been satisfied, or waived by Parent or
Newco in writing, by March 14, 1997; or
1.14 Termination of Agreement. Section 9.1(c) of the Agreement is
amended by replacing the period at the end of clause (iv) thereof with "; or"
and adding thereto the following additional clause (v):
(v) the condition provided for in Section 7.10 of this
Agreement has not been satisfied, or waived by the Company
in writing, by March 14, 1997.
1.15 Exhibits. The Agreement is amended by adding thereto as Exhibit H
the form of Confidential Settlement Agreement and Release attached hereto as
Exhibit H, and the schedule of Exhibits is modified accordingly.
1.16 Exhibits and Schedules. Prior to Closing, the exhibits and
schedules to the Agreement shall be amended to the extent necessary to reflect
the amendments to the Agreement set forth in this Second Amendment.
2. RATIFICATION.
Except as expressly amended by this Second Amendment, all of the terms
and conditions of the Agreement shall remain in full force and effect. The
Agreement, as amended hereby, and all rights and powers created thereby and
thereunder are in all respects ratified and confirmed.
3. COUNTERPARTS.
This Second Amendment may be signed in any number of counterparts, all
of which taken together shall constitute one fully-executed agreement.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed as of the day and year first above written.
NFC CASTINGS, INC.
/s/ NFC Castings, Inc.
By:________________________________
Title:_____________________________
NC MERGER COMPANY
/s/ NC Merger Company
By:________________________________
Title:_____________________________
NEENAH CORPORATION
/s/ Neenah Corporation
By:________________________________
Title:_____________________________
-7-
<PAGE> 1
Exhibit 2.4
THIRD AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This Third Amendment to Agreement and Plan of Reorganization (the
"Third Amendment") is dated as of April 3, 1997 by and among NFC Castings, Inc.,
a Delaware corporation ("Parent"), NC Merger Company, a Wisconsin corporation
("Newco"), and Neenah Corporation, a Wisconsin corporation (the "Company").
RECITALS
Parent, Newco and the Company entered into an Agreement and Plan of
Reorganization dated as of November 20, 1996 ("Agreement and Plan of
Reorganization") pursuant to which they agreed to consummate a transaction in
which Parent would acquire the Company for cash through a reverse triangular
merger of Newco with and into the Company, whereby all of the outstanding shares
of the capital stock of the Company would be converted into the right to receive
cash and all of the outstanding shares of the capital stock of Newco would be
converted into shares of the capital stock of the Company, upon the terms and
subject to the conditions set forth in the Agreement and Plan of Reorganization.
Parent, Newco and the Company entered into a First Amendment to Agreement and
Plan of Reorganization dated as of January 13, 1997 ("First Amendment") pursuant
to which they agreed to amend certain provisions of the Agreement and Plan of
Reorganization and a Second Amendment to Agreement and Plan of Reorganization
dated as of February 21, 1997 ("Second Amendment") pursuant to which they agreed
to amend certain provisions of the Agreement and Plan of Reorganization and the
First Amendment. (The Agreement and Plan of Reorganization, as amended by the
First Amendment and the Second Amendment, is referred to herein as the
"Agreement".) The parties desire to further amend certain provisions of the
Agreement in the manner and to the extent set forth herein.
Accordingly, in consideration of the premises and of the mutual
agreements, provisions and covenants herein contained, the parties hereto hereby
agree as follows:
1. AMENDMENT OF THE AGREEMENT.
1.1 Closing Date. Sections 2.2, 9.1(b)(ii) and 9.1(c)(ii) of the
Agreement are amended by substituting the date "May 2, 1997" for the date "April
11, 1997" each place it appears.
1.2 Outside Date. Sections 9.1(b)(iii) and 9.1(c)(iii) of the Agreement
are amended by substituting the date "May 2, 1997" for the date "April 11, 1997"
each place it appears.
1.3 Definitions. Section 1.1 of the Agreement is amended by amending
the definition of "Settlement Adjustment Amount" to read in its entirety as
follows:
<PAGE> 2
"Settlement Adjustment Amount" shall mean an amount equal to
the sum of (i) one-half (1/2) of the aggregate amount actually paid
or to be paid at Closing by Parent or Newco to the Recent Former
Shareholders (other than the Neenah Foundry Foundation, Inc.) in
exchange for obtaining Former Shareholder Releases from them plus
(ii) the total amount actually paid or to be paid at Closing by
Parent or Newco to Neenah Foundry Foundation, Inc. as a Recent
Former Shareholder in exchange for obtaining a Former Shareholder
Release from it, provided, however, that in no event shall the
aggregate Settlement Adjustment Amount exceed $3,159,785.
1.4 Termination of Agreement. Section 9.1(b) of the Agreement is
amended by amending clause (iv) thereof to read in its entirety as follows:
(iv) the condition provided for in Section 6.18 of this
Agreement has not been satisfied, or waived by Parent or
Newco in writing, by April 15, 1997; or
1.5 Termination of Agreement. Section 9.1(c) of the Agreement is
amended by amending clause (v) thereof to read in its entirety as follows:
(v) the condition provided for in Section 7.10 of this
Agreement has not been satisfied, or waived by the Company
in writing, by April 15, 1997.
1.6 Exhibits and Schedules. Prior to Closing, the exhibits and
schedules to the Agreement shall be amended to the extent necessary to reflect
the amendments to the Agreement set forth in this Third Amendment.
2. RATIFICATION.
Except as expressly amended by this Third Amendment, all of the terms
and conditions of the Agreement shall remain in full force and effect. The
Agreement, as amended hereby, and all rights and powers created thereby and
thereunder are in all respects ratified and confirmed.
3. COUNTERPARTS.
This Third Amendment may be signed in any number of counterparts, all
of which taken together shall constitute one fully-executed agreement.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be duly executed as of the day and year first above written.
NFC CASTINGS, INC.
/s/ NFC Cashings, Inc.
By:________________________________
Title:_____________________________
NC MERGER COMPANY
/s/ NC Merger Company
By:________________________________
Title:_____________________________
NEENAH CORPORATION
/s/ Neenah Corporation
By:________________________________
Title:_____________________________
-3-
<PAGE> 1
EXHIBIT 2.5
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Merger Agreement") is made as of
July 1, 1997, by and between NEENAH CORPORATION ("Neenah"), a Wisconsin
corporation, and NEENAH FOUNDRY COMPANY ("NFC"), a Wisconsin corporation and the
wholly owned subsidiary of Neenah.
RECITALS
A. The respective boards of directors of NFC and Neenah have
determined that the Merger is advisable and generally to the advantage of NFC
and Neenah and the respective shareholders of NFC and Neenah, and, by
resolutions duly adopted, have approved the Merger, including this Merger
Agreement.
B. The respective shareholders of NFC and the Neenah, by
resolutions duly adopted have approved the Merger, including this Merger
Agreement.
NOW, THEREFORE, in consideration of the Recitals and of the
mutual provisions, agreements and covenants herein contained, NFC and Neenah
hereby agree as follows:
1. The Merger. At the Effective Time, NFC shall be merged with
and into Neenah which shall be the surviving corporation pursuant to the
provisions of the Wisconsin Business Corporation Law (the "Surviving
Corporation").
2. Effective Time. Upon the filing of the Articles of Merger
with the Wisconsin Department of Financial Institutions, the Merger shall be
effective and the date and time of the filing of the Articles of Merger shall be
the "Effective Time" as that term is used herein.
3. Effect of Merger. At the Effective Time, the corporate
identity, existence, purposes, powers, franchises, rights and immunities of
Neenah shall continue in the Surviving Corporation unaffected and unimpaired by
the Merger and the corporate identity, existence, purposes, powers, franchises,
rights and immunities of NFC shall be merged into the Surviving Corporation and
the Surviving Corporation shall be fully vested therewith. The separate
existence of NFC, except insofar as otherwise specifically provided by law,
shall cease at the Effective Time whereupon NFC and the Surviving Corporation
shall be and become one single corporation.
4. Directors and Officers. The officers and directors of
Neenah in office immediately prior to the Effective Time shall be the officers
and directors of the Surviving Corporation and shall hold their respective
positions from and after the Effective Time until their successors have been
appointed or elected and qualified.
<PAGE> 2
5. Articles of Incorporation; Bylaws. The Articles of
Incorporation and Bylaws of Neenah in effect immediately prior to the Effective
Time shall be the Articles of Incorporation and Bylaws of the Surviving
Corporation except that Article I of the Articles of Incorporation of the
Surviving Corporation shall be amended to read as follows:
"The name of the corporation shall be Neenah
Foundry Company."
After the Effective Time, the Articles of Incorporation and Bylaws of the
Surviving Corporation may be amended in accordance with their terms and as
provided by applicable law.
6. Effect on Shares. The issued shares of NFC shall not be
converted in any manner, but each said share which is issued immediately prior
to the Effective Time shall, at the Effective Time, be surrendered and
extinguished.
7. Tax Consequences. The merger of NFC into Neenah is intended
to qualify as a tax-free liquidation under Section 332 of the Internal Revenue
Code of 1986, as amended.
8. Abandonment. The Merger may be abandoned at any time prior
to the Effective Time in which case this Merger Agreement shall be void and of
no further force and effect.
9. Miscellaneous. This Merger Agreement shall be governed by
and construed in accordance with the internal laws of the State of Wisconsin.
This Merger Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which counterparts together
constitute a single instrument.
-2-
<PAGE> 3
IN WITNESS WHEREOF, this Merger Agreement has been executed by
duly authorized officers of the parties hereto on the date first above written.
NEENAH CORPORATION
By:
-------------------------------------
Name:
Title:
Attest:
----------------------------------
--------------------, Secretary
NEENAH FOUNDRY COMPANY
By:
--------------------------------------
Name:
Title:
Attest:
----------------------------------
--------------------, Secretary
-3-
<PAGE> 1
EXHIBIT 4.1
EXECUTION COPY
================================================================================
NC MERGER COMPANY
11-1/8% Senior Subordinated Notes due 2007
Obligations to be assumed by Neenah Corporation and
guaranteed by Neenah Foundry Company, Neenah Transport, Inc.
and Hartley Controls Corporation
--------------------------------------
INDENTURE
Dated as of April 30, 1997
--------------------------------------
Trustee,
United States Trust Company of New York
================================================================================
<PAGE> 2
1
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.............................................. 1
SECTION 1.02. Other Definitions........................................ 28
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act.......................................... 29
SECTION 1.04. Rules of Construction.................................... 29
ARTICLE II
The Securities
SECTION 2.01. Form and Dating.......................................... 30
SECTION 2.02. Execution and Authentication............................. 31
SECTION 2.03. Registrar and Paying Agent............................... 32
SECTION 2.04. Paying Agent To Hold Money in Trust...................... 33
SECTION 2.05. Securityholder Lists..................................... 34
SECTION 2.06. Transfer and Exchange.................................... 34
SECTION 2.07. Replacement Securities................................... 35
SECTION 2.08. Outstanding Securities................................... 36
SECTION 2.09. Temporary Securities..................................... 36
SECTION 2.10. Cancelation.............................................. 36
SECTION 2.11. Defaulted Interest....................................... 37
SECTION 2.12. CUSIP Numbers............................................ 37
SECTION 2.13. Book-Entry Provisions for U.S. Global
Security................................................. 37
SECTION 2.14. Special Transfer Provisions.............................. 39
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee....................................... 44
SECTION 3.02. Selection of Securities
to be Redeemed......................................... 44
SECTION 3.03. Notice of Redemption..................................... 45
<PAGE> 3
2
SECTION 3.04. Effect of Notice of Redemption........................... 46
SECTION 3.05. Deposit of Redemption Price.............................. 47
SECTION 3.06. Securities Redeemed in Part.............................. 47
SECTION 3.07. Optional Redemption...................................... 47
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities.................................... 48
SECTION 4.02. SEC Reports.............................................. 48
SECTION 4.03. Limitation on Indebtedness............................... 49
SECTION 4.04. Limitation on Restricted Payments........................ 52
SECTION 4.05. Limitation on Restrictions on
Distributions from Subsidiaries........................ 56
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock....................................... 58
SECTION 4.07. Limitation on Transactions with
Affiliates............................................. 62
SECTION 4.08. Change of Control........................................ 63
SECTION 4.09. Compliance Certificate................................... 64
SECTION 4.10. Further Instruments and Acts............................. 65
SECTION 4.11. Limitation on the Sale or Issuance of
Capital Stock of Restricted
Subsidiaries........................................... 65
SECTION 4.12. Limitation on Liens...................................... 65
SECTION 4.13. Limitation on Sale/Leaseback
Transactions........................................... 66
SECTION 4.14. Limitation on Lines of Business.......................... 66
SECTION 4.15. Future Guarantor Subsidiaries............................ 66
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets................................................. 67
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default........................................ 68
SECTION 6.02. Acceleration............................................. 70
SECTION 6.03. Other Remedies........................................... 71
<PAGE> 4
3
SECTION 6.04. Waiver of Past Defaults.................................. 71
SECTION 6.05. Control by Majority...................................... 71
SECTION 6.06. Limitation on Suits...................................... 72
SECTION 6.07. Rights of Holders to
Receive Payment........................................ 72
SECTION 6.08. Collection Suit by Trustee............................... 72
SECTION 6.09. Trustee May File Proofs of Claim......................... 72
SECTION 6.10. Priorities............................................... 73
SECTION 6.11. Undertaking for Costs.................................... 73
SECTION 6.12. Waiver of Stay or Extension Laws......................... 74
SECTION 6.13. Restoration of Rights and Remedies....................... 74
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee........................................ 74
SECTION 7.02. Rights of Trustee........................................ 76
SECTION 7.03. Individual Rights of Trustee............................. 76
SECTION 7.04. Trustee's Disclaimer..................................... 77
SECTION 7.05. Notice of Defaults....................................... 77
SECTION 7.06. Reports by Trustee to Holders............................ 77
SECTION 7.07. Compensation and Indemnity............................... 77
SECTION 7.08. Replacement of Trustee................................... 78
SECTION 7.09. Successor Trustee by Merger.............................. 79
SECTION 7.10. Eligibility; Disqualification............................ 80
SECTION 7.11. Preferential Collection of Claims
Against Company ....................................... 80
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance............................................. 80
SECTION 8.02. Conditions to Defeasance................................. 82
SECTION 8.03. Application of Trust Money............................... 83
SECTION 8.04. Repayment to Company..................................... 83
SECTION 8.05. Indemnity for Government
Obligations............................................ 84
SECTION 8.06. Reinstatement............................................ 84
ARTICLE IX
Amendments
<PAGE> 5
4
SECTION 9.01. Without Consent of Holders............................... 84
SECTION 9.02. With Consent of Holders.................................. 85
SECTION 9.03. Compliance with Trust Indenture Act...................... 87
SECTION 9.04. Revocation and Effect of Consents and
Waivers................................................ 87
SECTION 9.05. Notation on or Exchange
of Securities.......................................... 87
SECTION 9.06. Trustee to Sign Amendments............................... 88
SECTION 9.07. Payment for Consent...................................... 88
ARTICLE X
Subordination of the Securities
SECTION 10.01. Agreement to Subordinate................................. 88
SECTION 10.02. Liquidation, Dissolution, Bankruptcy..................... 89
SECTION 10.03. Default on Senior Indebtedness of
the Company............................................ 89
SECTION 10.04. Acceleration of Payment of Securities.................... 90
SECTION 10.05. When Distribution Must Be Paid Over...................... 90
SECTION 10.06. Subrogation.............................................. 90
SECTION 10.07. Relative Rights.......................................... 91
SECTION 10.08. Subordination May Not Be Impaired by
Company................................................ 91
SECTION 10.09. Rights of Trustee and Paying Agent....................... 91
SECTION 10.10. Distribution or Notice to Representative................. 92
SECTION 10.11. Article X Not To Prevent Events
of Default or Limit
Right To Accelerate.................................... 92
SECTION 10.12. Trust Moneys Not Subordinated............................ 92
SECTION 10.13. Trustee Entitled to Rely................................. 92
SECTION 10.14. Trustee to Effectuate Subordination...................... 93
SECTION 10.15. Trustee Not Fiduciary for Holders of
Senior Indebtedness of the Company..................... 93
SECTION 10.16. Reliance by Holders of Senior
Indebtedness of the Company on
Subordination Provisions............................... 93
SECTION 10.17. Trustee's Compensation Not Prejudiced.................... 94
ARTICLE XI
Subsidiary Guaranties
SECTION 11.01. Subsidiary Guaranties.................................... 94
<PAGE> 6
5
SECTION 11.02. Limitation on Liability.................................. 96
SECTION 11.03. Successors and Assigns................................... 96
SECTION 11.04. No Waiver................................................ 97
SECTION 11.05. Modification............................................. 97
SECTION 11.06. Execution of Supplemental Indenture
for Future Guarantor Subsidiaries...................... 97
ARTICLE XII
Subordination of the Subsidiary Guaranties
SECTION 12.01. Agreement to Subordinate................................. 98
SECTION 12.02. Liquidation, Dissolution, Bankruptcy..................... 98
SECTION 12.03. Default on Senior Indebtedness of a
Guarantor Subsidiary..................................... 98
SECTION 12.04. Demand for Payment....................................... 100
SECTION 12.05. When Distribution Must Be Paid Over...................... 100
SECTION 12.06. Subrogation.............................................. 100
SECTION 12.07. Relative Rights.......................................... 100
SECTION 12.08. Subordination May Not Be Impaired by a
Guarantor Subsidiary................................... 101
SECTION 12.09. Rights of Trustee and Paying Agent....................... 101
SECTION 12.10. Distribution or Notice to Representative................. 101
SECTION 12.11. Article XII Not To Prevent Events
of Default or Limit
Right To Accelerate.................................... 102
SECTION 12.12. Trustee Entitled to Rely................................. 102
SECTION 12.13. Trustee to Effectuate Subordination...................... 102
SECTION 12.14. Trustee Not Fiduciary for Holders of
Senior Indebtedness of a Guarantor
Subsidiary............................................. 103
SECTION 12.15. Reliance by Holders of Senior
Indebtedness of a Guarantor Subsidiary
on Subordination Provisions............................ 103
<PAGE> 7
6
ARTICLE XIII
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls............................. 103
SECTION 13.02. Notices.................................................. 103
SECTION 13.03. Communication by Holders with Other
Holders................................................ 104
SECTION 13.04. Certificate of Opinion as to Conditions
Precedent.............................................. 104
SECTION 13.05. Statements Required in Certificate or
Opinion................................................ 105
SECTION 13.06. When Securities Disregarded.............................. 105
SECTION 13.07. Rules by Trustee, Paying Agent and
Registrar.............................................. 105
SECTION 13.08. Legal Holidays........................................... 105
SECTION 13.09. Governing Law............................................ 106
SECTION 13.10. No Recourse Against Others............................... 106
SECTION 13.11. Successors............................................... 106
SECTION 13.12. Multiple Originals....................................... 106
SECTION 13.13. Table of Contents; Headings.............................. 106
Exhibit A - Form of Face of Initial Security
Exhibit B - Form of Face of Exchange Security
Exhibit C - Form of Transferee Letter of Representation
Exhibit D - Form of First Supplemental Indenture
Exhibit E - Form of Supplemental Indenture
Exhibit F - Form of Certificate to be Delivered upon Termination of
Restricted Period
Exhibit G - Form of Certificate to be Delivered in Connection with
Transfers to Non-QIB Institutional Accredited Investors
Exhibit H - Form of Certificate to be Delivered in Connection with
Transfers pursuant to Regulation S
<PAGE> 8
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- ---------
310(a)(1) ................................................... 7.10
(a)(2) ................................................... 7.10
(a)(3) ................................................... N.A.
(a)(4) ................................................... N.A.
(b) ................................................... 7.08; 7.10
(c) ................................................... N.A.
311(a) ................................................... 7.11
(b) ................................................... 7.11
(c) ................................................... N.A.
312(a) ................................................... 2.05
(b) ................................................... 11.03
(c) ................................................... 11.03
313(a) ................................................... 7.06
(b)(1) ................................................... N.A.
(b)(2) ................................................... 7.06
(c) ................................................... 11.02
(d) ................................................... 7.06
314(a) ................................................... 4.02; 4.09;
11.02
(b) ................................................... N.A.
(c)(1) ................................................... 11.04
(c)(2) ................................................... 11.04
(c)(3) ................................................... N.A.
(d) ................................................... N.A.
(e) ................................................... 13.05
(f) ................................................... 4.12
315(a) ................................................... 7.01
(b) ................................................... 7.05; 11.02
(c) ................................................... 7.01
(d) ................................................... 7.01
(e) ................................................... 6.11
316(a)(last
sentence) ................................................... 13.06
(a)(1)(A) ................................................... 6.05
(a)(1)(B) ................................................... 6.04
(a)(2) ................................................... N.A.
(b) ................................................... 6.07
317(a)(1) ................................................... 6.08
(a)(2) ................................................... 6.09
(b) ................................................... 2.04
318(a) ................................................... 11.01
N.A. means Not Applicable.
- ----------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
CONFORMED COPY
<PAGE> 9
INDENTURE dated as of April 30, 1997, among NC MERGER
COMPANY, a Wisconsin corporation (the "Company"), and United
States Trust Company of New York, a New York banking
corporation (the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Company's 11-1/8%
Senior Subordinated Notes due 2007 (the "Initial Securities") and, when and if
issued pursuant to a registered exchange for Initial Securities, the Company's
11-1/8% Series B Senior Subordinated Notes due 2007 (the "Exchange Securities").
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"ACP Holdings" means ACP Holding Company, a Delaware corporation.
"ACP Products, L.L.C." means ACP Products, L.L.C., a Delaware
limited liability company.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock), including improvements to existing assets, to
be used by the Company or a Restricted Subsidiary in a Related Business; (ii)
the Capital Stock of a Person that becomes a Restricted Subsidiary as a result
of the acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary; provided, however, that, in
the case of clauses (ii) and (iii), such Restricted Subsidiary is primarily
engaged in a Related Business.
"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 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
<PAGE> 10
2
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Section 4.07 only, "Affiliate" shall also mean any beneficial owner
of shares representing 5% or more of the total voting power of the Voting Stock
(on a fully diluted basis) of the Company or of rights or warrants to purchase
such Voting Stock (whether or not currently exercisable) and any Person who
would be an Affiliate of any such beneficial owner pursuant to the first
sentence hereof.
"Applicable Premium" means, with respect to a Security, the greater
of (i) 1.0% of the then outstanding principal amount of such Security and (ii)
the excess of (A) the present value of all remaining required interest and
principal payments due on such Security, computed using a discount rate equal to
the Treasury Rate plus 75 basis points, over (B) the then outstanding principal
amount of such Security.
"Asset Disposition" means any sale, lease, transfer or other
disposition of shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares), property or assets (each referred to for the
purposes of this definition as a "disposition") by the Company or any of its
Restricted Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction) other than: (i) a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Restricted Subsidiary; (ii) a disposition of inventory, in the
ordinary course of business consistent with past practices of the Company and
its Subsidiaries and (iii) dispositions with a fair market value of less than
$500,000 in the aggregate in any fiscal year; (iv) a disposition of properties
and assets that is governed by the provisions of Section 5.01(i)-(v); and (v)
for purposes of Section 4.06 only, a disposition subject to Section 4.04.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate assumed in making calculations in accordance with FAS 13) of the
total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i)
the sum of the
<PAGE> 11
3
products of the numbers of years from the date of determination to the dates of
each successive scheduled principal payment of such Indebtedness or scheduled
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in
respect of the Senior Bank Facilities or any refinancing or replacements thereof
including principal, premium (if any), interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Company whether or not a claim for post-filing interest is allowed in
such proceeding), fees, charges, expenses, reimbursement obligations, guarantees
and all other amounts payable thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"Borrowing Base" means, as of the date of determination, an amount
equal to the sum, without duplication, of (i) 80% of the net book value of the
Company's accounts receivable at such date and (ii) 50% of the net book value of
the Company's inventories at such date. Net book value shall be determined in
accordance with GAAP and shall be that reflected on the most recent available
balance sheet (it being understood that the accounts receivable and inventories
of an acquired business may be included if such acquisition has been completed
on or prior to the date of determination).
"Business Day" means a day other than a Saturday, Sunday or other
day on which banking institutions in New York State are authorized or required
by law to close.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP. The amount of Indebtedness
represented by a Capitalized Lease Obligation shall be the
<PAGE> 12
4
capitalized amount of such obligation determined in accordance with GAAP, and
the Stated Maturity thereof shall be the date of the last scheduled payment of
rent or any other amount due under the relevant lease.
"Change of Control" means the occurrence of any of the following
events:
(a) prior to the earlier to occur of the first public offering of
Voting Stock of ACP Holdings, the Company or Holdings, the Permitted
Holders cease to be entitled (by "beneficial ownership" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act) of Voting Stock, contract or
otherwise) to elect or cause the election of directors of the Company
having a majority of the total voting power of the Board of Directors of
the Company, whether as a result of issuance of securities of the Company,
any merger, consolidation, liquidation or dissolution of the Company, any
direct or indirect transfer of securities by any Permitted Holder or
otherwise (for purposes of this clause (a), the Permitted Holders shall be
deemed to beneficially own any Voting Stock of a corporation (the
"specified corporation") held by any other corporation (the "parent
corporation") so long as one or more of the Permitted Holders beneficially
own (as so defined), directly or indirectly, in the aggregate a majority
of the voting power of the Voting Stock of the parent corporation);
(b) after the first public offering of Voting Stock of ACP Holdings,
the Company or Holdings, any person or group (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more of
the Permitted Holders, is or becomes the beneficial owner (as defined in
clause (a) above), directly or indirectly, of Voting Stock that represents
more than 40% of the aggregate ordinary voting power of all classes of the
Voting Stock of ACP Holdings, the Company or Holdings, voting together as
a single class, and either (x) the Permitted Holders beneficially own (as
defined in clause (a) above), directly or indirectly, in the aggregate
Voting Stock that represents a lesser percentage of the aggregate ordinary
voting power of all classes of the Voting Stock of ACP Holdings, the
Company or Holdings, as the case may be, voting together as a single
class, than such other person or group and are not entitled (by voting
power, contract or otherwise) to elect directors of ACP Holdings, the
Company or Holdings having a
<PAGE> 13
5
majority of the total voting power of the board of directors of ACP
Holdings, Holdings or the Company, as the case may be, or (y) such other
person or group is entitled to elect directors of ACP Holdings, the
Company or Holdings having a majority of the total voting power of the
board of directors of ACP Holding, Holdings or the Company;
(c) after the first public offering of Voting Stock of ACP Holdings,
Holdings or the Company, during any period of not greater than two
consecutive years beginning after the Issue Date, individuals who at the
beginning of such period constituted the board of directors of ACP
Holdings, Holdings or the Company, as the case may be (together with any
new directors whose election by such board of directors or whose
nomination for election by shareholders was approved by the Permitted
Holders or by such board of directors, in each case by a vote of a
majority of the directors of ACP Holdings, the Company or Holdings, as the
case may be, then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved), cease for any reason to have a majority of the
total voting power of the board of directors of ACP Holdings, Holdings or
the Company, as the case may be; or
(d) any sale, lease, or other transfer (in one transaction or in a
series of related transactions) is made by the Company or its Restricted
Subsidiaries of all or substantially all of the consolidated assets of the
Company and its Restricted Subsidiaries to any Person.
"Citicorp" means Citicorp, a Delaware corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Agreement" means one or more of the following agreements
entered into by a Person and one or more financial institutions: commodity
future contracts, forward contracts, options or other similar arrangements or
agreements designed to protect against fluctuations in the price of, or the
shortage of supply of, commodities from time to time.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the applicable provisions of this Indenture
and, thereafter,
<PAGE> 14
6
means the successor and, for purposes of any provision contained herein and
required by the TIA, each other obligor on the indenture securities. In
particular, upon consummation of the Neenah Merger and execution and delivery of
the First Supplemental Indenture, the "Company" shall mean Neenah Corporation.
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination (determined, for the four fiscal quarters ending
prior to the Issue Date, or any thereof, on a pro forma basis to give effect to
the Neenah Merger as if it had occurred at the beginning of such period) to (ii)
Consolidated Interest Expense for such four fiscal quarters (determined, for the
four fiscal quarters ending prior to the Issue Date, or any thereof, on a pro
forma basis to give effect to the Neenah Merger as if it had occurred at the
beginning of such period); provided, however, that
(1) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding
on such date of determination or if the transaction giving rise to the
need to calculate the Consolidated Coverage Ratio is an Incurrence of
Indebtedness, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving effect on a pro forma basis to such
Indebtedness and the application of the proceeds thereof as if such
Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period (except that in the
case of Indebtedness to finance seasonal fluctuations in working capital
needs Incurred under a revolving credit or similar arrangement, the amount
thereof shall be deemed to be the average daily balance of such
Indebtedness during such four quarter period);
(2) if since the beginning of such period the Company or any
Restricted Subsidiary shall have disposed of any assets constituting all
or substantially all of the assets of an operating unit of a business (a
"Disposal"), (x) the EBITDA for such period shall be reduced by an amount
equal to the EBITDA (if positive) directly attributable to the assets
which are the subject of such Disposal for such
<PAGE> 15
7
period or increased by an amount equal to the EBITDA (if negative)
directly attributable thereto for such period and (y) Consolidated
Interest Expense for such period shall be reduced by an amount equal to
the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to the Company
and its continuing Restricted Subsidiaries in connection with such
Disposal for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period
directly attributable to the Indebtedness of such Restricted Subsidiary to
the extent the Company and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale);
(3) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially
all of the assets of an operating unit of a business, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any
Indebtedness in connection therewith) as if such Investment or acquisition
occurred on the first day of such period; and
(4) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period)
shall have made any Disposal or any Investment or acquisition of assets
that would have required an adjustment pursuant to clause (2) or (3) above
if made by the Company or a Restricted Subsidiary during such period,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Disposal,
Investment or acquisition of assets occurred on the first day of such
period.
For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount
<PAGE> 16
8
of Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting Officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term as at the
date of determination in excess of 12 months). If any Indebtedness bears, at the
option of the Company or a Restricted Subsidiary, a fixed or floating rate of
interest and is being given pro forma effect, then (i) if any interest had
accrued on such Indebtedness prior to the date of determination, the interest
expense on such Indebtedness shall be computed by applying a fixed or floating
rate of interest as selected by the Company or such Restricted Subsidiary for
the interest period immediately preceding such determination or (ii) if no
interest accrued on such Indebtedness prior to the date of determination, the
interest expense on such Indebtedness shall be computed by applying, at the
option of the Company or such Restricted Subsidiary, either a fixed or floating
rate. If any Indebtedness which is being given pro forma effect was Incurred
under a revolving credit facility that was in effect throughout the applicable
period, the interest expense on such Indebtedness shall be computed based upon
the average daily balance of such Indebtedness during the applicable period.
"Consolidated Interest Expense" means, for any period, the total
consolidated interest expense of the Company and its Restricted Subsidiaries for
such period, plus, to the extent Incurred by the Company and its Restricted
Subsidiaries in such period but not included in such interest expense: (i)
interest expense attributable to Capitalized Lease Obligations and Attributable
Debt; (ii) amortization of debt discount; (iii) capitalized interest; (iv)
noncash interest expense; (v) commissions, discounts and other fees and charges
with respect to letters of credit and bankers' acceptance financing; (vi) net
costs associated with Interest Rate Agreements; (vii) the interest portion of
any deferred payment obligation for goods or services; (viii) interest actually
paid by the Company or any Restricted Subsidiary on any Indebtedness of any
other Person that is Guaranteed by the Company or any Restricted Subsidiary;
(ix) the cash contributions to any employee stock ownership plan or similar
trust to the extent such
<PAGE> 17
9
contributions are used by such plan or trust to pay interest or fees to any
Person (other than the Company or a Wholly Owned Subsidiary) in connection with
Indebtedness Incurred by such plan or trust; and (x) the earned discount or
yield with respect to the sale of receivables (without duplication of amounts
included in Consolidated Net Income); but in no event shall include (i)
amortization of debt issuance costs; (ii) Preferred Stock dividends in respect
of all Preferred Stock of Subsidiaries of the Company and Disqualified Stock of
the Company held by Persons other than the Company or a Wholly Owned Subsidiary;
or (iii) interest Incurred in connection with Investments in discontinued
operations.
"Consolidated Net Income" means, for any period, the consolidated
net income (loss) of the Company and its Subsidiaries for such period; provided,
however, that there shall not be included in such Consolidated Net Income:
(i) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the limitations
contained in clause (iv) below, the Company's equity in the net income of
any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or
other distribution to a Restricted Subsidiary, to the limitations
contained in clause (iii) below) and (B) the Company's equity in a net
loss of any such Person (other than an Unrestricted Subsidiary) for such
period shall be included in determining such Consolidated Net Income;
(ii) for purposes of Section 4.04(a)(3)(A) only, any net income
(loss) of any person acquired by the Company or a Subsidiary in a pooling
of interests transaction for any period prior to the date of such
acquisition;
(iii) any net income (loss) of any Restricted Subsidiary if such
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that (A)
subject to the limitations contained in (iv) below, the Company's equity
in the net income of any such Restricted Subsidiary for such period shall
be included in such Consolidated Net Income up to the aggregate amount of
cash that could
<PAGE> 18
10
have been distributed by such Restricted Subsidiary during such period to
the Company or another Restricted Subsidiary as a dividend (subject, in
the case of a dividend that could have been made to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Restricted Subsidiary for such
period shall be included in determining such Consolidated Net Income;
(iv) any gain (or loss) realized upon the sale or other disposition
of any asset of the Company or its Consolidated Subsidiaries (including
pursuant to any Sale/Leaseback Transaction) which is not sold or otherwise
disposed of in the ordinary course of business and any gain (or loss)
realized upon the sale or other disposition of any Capital Stock of any
Person;
(v) any extraordinary gain or loss; and
(vi) the cumulative effect of a change in accounting principles
after the Issue Date.
Notwithstanding the foregoing, for the purpose of Section 4.04 only,
there shall be excluded from Consolidated Net Income any dividends, repayments
of loans or advances or other transfers of assets from Unrestricted Subsidiaries
to the Company or a Restricted Subsidiary to the extent such dividends,
repayments or transfers increase the amount of Restricted Payments permitted
under Section 4.04(a)(3)(D). Notwithstanding anything to the contrary in Section
4.04, all amounts paid to Holdings pursuant to Section 4.04(b)(xi)(B) shall be
deducted in computing Consolidated Net Income.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and the Restricted Subsidiaries, determined on a
Consolidated basis, as of the end of the most recent fiscal quarter of the
Company ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
<PAGE> 19
11
"Consolidated Non-Cash Charges" of any Person means, for any period,
the aggregate depreciation, amortization and other non-cash charges of such
Person and its Consolidated Subsidiaries for such period, on a Consolidated
basis, as determined in accordance with GAAP (excluding any such other non-cash
charge which requires an accrual or reserve for cash charges for any future
period).
"Consolidation" means the consolidation of the accounts of each of
the Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" shall not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary shall
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Currency Agreement" means with respect to any Person any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement as to which such Person is a party or a beneficiary.
"CVC" means Citicorp Venture Capital, Ltd., a New York corporation.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Definitive Securities" means Securities that are in the form of
Exhibit A or Exhibit B attached hereto that do not include the information
called for by footnote 1 thereof.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
as the Depositary with respect to the Securities, until a successor shall have
been appointed and becomes such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and
(ii) any other Senior Indebtedness of the Company which, at the date of
determination, has an aggregate principal amount outstanding of, or under which,
at the date of determination, the holders thereof are committed to lend at least
$25,000,000 and is specifically designated by the Company in the instrument
evidencing or
<PAGE> 20
12
governing such Senior Indebtedness as "Designated Senior Indebtedness" for
purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, 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 exercisable) or upon the
happening of any event (i) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise; (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock; or (iii) is redeemable at the option of the
holder thereof, in whole or in part, in each case on or prior to ninety-one days
after the Stated Maturity of the Securities. Disqualified Stock shall not
include any Capital Stock that is not otherwise Disqualified Stock if by its
terms the holders have the right to require the issuer to repurchase such stock
upon a Change of Control (or upon events substantially similar to a Change of
Control).
"Domestic Subsidiary" means a Subsidiary that is incorporated or
organized under the laws of the United States of America, any state thereof or
the District of Columbia.
"EBITDA" for any period means the Consolidated Net Income for such
period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense; (ii) Consolidated Interest
Expense; and (iii) Consolidated Non-Cash Charges, in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization of, a Subsidiary of the
Company shall be added to Consolidated Net Income to compute EBITDA only to the
extent (and in the same proportion) that the net income (loss) of such
Subsidiary was included in calculating Consolidated Net Income.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange and Registration Rights Agreement" means the Exchange and
Registration Rights Agreement dated as of the Issue Date by and among the
Initial Purchasers, the Neenah Corporation and the Initial Guarantors, as such
agreement may be amended, modified, or supplemented from time to time in
accordance with the terms thereof.
"Exchange Offer" shall have the meaning set forth in the Exchange
and Registration Rights Agreement.
<PAGE> 21
13
"Exchange Offer Registration Statement" shall have the meaning set
forth in the Exchange and Registration Rights Agreement.
"First Supplemental Indenture" means the First Supplemental
Indenture to be entered into in connection with the Neenah Merger, which shall
be substantially in the form of Exhibit D hereto.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, in statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
"Global Security" means a Security that is in the form of Exhibit A
or Exhibit B hereto that includes the information called for by footnote 1
thereof.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
through an agreement enforceable by or for the benefit of the holder of such
Indebtedness and any such obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation of such other
Person (whether arising to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for purposes of assuring in any other manner the obligee of such
Indebtedness or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part); provided,
however, that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Guarantor Subsidiary" means any Person that has issued a Subsidiary
Guaranty. Upon consummation of the Neenah Merger and execution and delivery of
the First Supplemental Indenture, the term "Guarantor Subsidiary" shall include
each of the Initial Guarantors.
<PAGE> 22
14
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Commodity Agreement, Interest Rate Agreement or Currency
Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holdings" means NFC Castings, Inc., a Delaware corporation, any
Person acceding to its ownership, and successors thereto.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Person at the time it becomes a Restricted Subsidiary; provided
further, however, that in the case of a discount security, the accretion of
original issue discount on such security shall not be considered an Incurrence
of Indebtedness if (but only if) the Company elects to treat the whole face
amount of such security as Incurred at such time (and such Incurrence is then
permitted in accordance with the terms of this Indenture).
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal of indebtedness of such Person for borrowed money;
(ii) the principal of obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(iii) all obligations of such Person in respect of letters of credit
or other similar instruments (including reimbursement obligations with
respect thereto) other than letters of credit or similar instruments
supporting Trade Payables entered into in the ordinary course of business
of such Person to the extent that such letters of credit are not drawn
upon or, if and to the extent drawn upon, such drawing is reimbursed not
later than the third business day following such drawing;
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables), which
purchase price
<PAGE> 23
15
is due more than twelve months after the date of placing such property in
service or taking delivery and title thereto or the completion of such
services;
(v) all Capitalized Lease Obligations and all Attributable Debt of
such Person;
(vi) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Disqualified Stock
or, with respect to any Subsidiary of the Company, any Preferred Stock
(but excluding, in each case, any accrued dividends);
(vii) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the amount of Indebtedness of such Person
shall be the lesser of (A) the fair market value of such asset at such
date of determination and (B) the amount of such Indebtedness of such
other Persons;
(viii) all Indebtedness of other Persons to the extent Guaranteed by
such Person; and
(ix) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Initial Guarantors" means Neenah Foundry Company, Hartley Controls
Corporation and Neenah Transport, Inc., each a Wisconsin corporation.
"Initial Purchasers" means Chase Securities Inc. and Morgan Stanley
& Co. Incorporated.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge
<PAGE> 24
16
agreement or other similar agreement or arrangement as to which such Person is
party or a beneficiary.
"Investment" in any Person means any direct or indirect advance loan
(other than advances or loans to customers or suppliers in the ordinary course
of business that are recorded as accounts receivable on the balance sheet of the
Person making such loan or advance) or other extension of credit (including by
way of Guarantee or similar arrangement) or capital contribution to (by means of
any transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such Person.
For purposes of the definition of "Unrestricted Subsidiary" and Section 4.04
only, (i) "Investment" shall include the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net assets
of any Subsidiary of the Company at the time that such Subsidiary is designated
an Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if
positive) equal to (x) the Company's "Investment" in such Subsidiary at the time
of such redesignation less (y) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net assets
of such Subsidiary at the time of such redesignation; and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined in good
faith by the Board of Directors.
"Issue Date" means the date on which the Initial Securities are
originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Management Investors" means the officers and employees of ACP
Products, L.L.C., ACP Holdings, Holdings, the Company or a Subsidiary of the
Company who acquire Voting Stock of ACP Products, L.L.C., ACP Holdings, Holdings
or the Company on or after the Issue Date.
"Moody's" means Moody's Investors Service, Inc., and its successors.
<PAGE> 25
17
"Neenah Corporation" means Neenah Corporation, a Wisconsin
corporation.
"Neenah Merger" means the merger of the Company with and into Neenah
Corporation under the terms of the Agreement and Plan of Reorganization (as
amended) by and among the Company, Holdings and Neenah Corporation dated
November 20, 1996.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable, or from an escrow
account or otherwise, in each case only as and when received, but excluding any
other consideration received in the form of assumption by the acquiring person
of Indebtedness or other obligations relating to the properties or assets that
are the subject of such Asset Disposition or received in any other non-cash
form) therefrom, in each case net of: (i) all legal, title and recording
expenses, commissions and other expenses (including fees and expenses of counsel
and investment bankers) incurred, and all Federal, state, provincial, foreign
and local taxes required to be paid or accrued as a liability under GAAP, as a
consequence of such Asset Disposition; (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition,
in accordance with the terms of any Lien upon such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law, be repaid out of the proceeds from such Asset Disposition;
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition; and (iv) appropriate amounts to be provided by the party or parties
making such Asset Disposition as a reserve, in accordance with GAAP, against any
liabilities associated with the assets disposed of in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the proceeds of such issuance or sale in the form of cash,
including payments in respect of deferred payment obligations when received in
form of, or stock or other assets when disposed for, cash, net of attorneys'
fees, accountants' fees, underwriters' or
<PAGE> 26
18
placement agents' fees, discounts or commissions and brokerage, filing and
registration fees, trustee's fees, consultant and other fees actually incurred
in connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"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,
one of whom shall be the principal executive, financial or accounting officer of
the Company.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel to
the Company or the Trustee.
"Permitted Holders" means (i) CVC and its Affiliates and Permitted
Transferees and (ii) the Management Investors and their Permitted Transferees.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in: (i) the Company; (ii) a Restricted Subsidiary or a
Person which shall, upon the making of such Investment, become a Restricted
Subsidiary; provided, however, that the primary business of such Restricted
Subsidiary is a Related Business; (iii) another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that such Person's primary business is
a Related Business; (iv) Temporary Cash Investments; (v) receivables owing to
the Company or any Restricted Subsidiary, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms, provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances; (vi) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vii) loans or advances to employees made in the ordinary
course of business and not exceeding $1,000,000 in the aggregate outstanding at
any one time; (viii) stock, obligations or securities received in settlement of
debts
<PAGE> 27
19
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments; (ix) securities received
as consideration in sales of assets made in compliance with Section 4.06; (x)
other Investments, of any type, provided that the amount of such Investments
made after the Issue Date in reliance on this clause (x) and outstanding at any
time does not exceed 7.5% of Total Assets; or (xi) Guarantees relating to
Indebtedness which is permitted to be Incurred under Section 4.03.
"Permitted Liens" means with respect to any Person, (a) Liens to
secure Indebtedness permitted under the provisions described under clause (b)(i)
or (ii) under Section 4.03; (b) pledges or deposits made or other Liens granted
by (1) such Person under workmen's compensation laws, unemployment insurance
laws or similar legislation, (2) in connection with bids, tenders, contracts
(other than for the payment of Indebtedness) or leases to which such Person is a
party, or (3) to secure public or statutory obligations of such Person or
deposits of cash or United States government bonds to secure surety or appeal
bonds to which such Person is a party, or deposits as security for contested
taxes or import duties or for the payment of rent, in each case Incurred in the
ordinary course of business, (c) Liens imposed by law, such as carriers',
warehousemen's, mechanics', employees' and other like Liens, in each case for
sums not yet due or being contested in good faith by appropriate proceedings or
other Liens arising out of judgments, awards, decrees or orders of any court or
other governmental authority against such Person with respect to which such
Person shall then be proceeding with an appeal or other proceedings for review;
(d) Liens for property taxes not yet due or payable or subject to penalties for
non-payment or which are being contested in good faith and by appropriate
proceedings; (e) Liens in favor of issuers of surety, performance, judgment,
appeal and other like bonds or letters of credit issued pursuant to the request
of and for the account of such Person in the ordinary course of its business;
(f) minor survey exceptions, minor encumbrances, easements or reservations of,
or rights of others for, licenses, rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning provisions,
carveouts, conditional waivers or other restrictions as to the use of real
properties or minor irregularities of title (and with respect to leasehold
interests, mortgages, obligations, Liens and other encumbrances incurred,
created, assumed or permitted to exist and arising by, through or under a
landlord or owner of the leased property, with or without consent of the
<PAGE> 28
20
lessee) or Liens incidental to the conduct of the business of such Person or to
the ownership of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially impair the use of such
properties in the operation of the business of such Person; (g) Liens existing
or provided for under written arrangements existing on the Issue Date; (h) Liens
securing Indebtedness or other obligations of a Subsidiary of such Person owing
to such Person or a wholly owned Subsidiary of such Person; (i) Liens securing
Hedging Obligations so long as the related Indebtedness is, and is permitted to
be under the Indenture, secured by a Lien on the same property securing such
Hedging Obligations; (j) Liens to secure any refinancing, refunding,
replacement, renewal, repayment or extension (or successive refinancings,
refundings, replacements, renewals, repayments or extensions) as a whole, or in
part, of any Indebtedness secured by any Lien referred to in clause (g), (i),
(l), (m) or (n); provided, however, that (x) such new Lien shall be limited to
all or part of the same property that secured the original Lien (plus
improvements on such property) and (y) the Indebtedness secured by such Lien at
such time is not increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, committed amount of the
Indebtedness described under clauses (g), (i), (l), (m) or (n) at the time the
original Lien became a Permitted Lien and (B) an amount necessary to pay any
fees and expenses, including premiums, related to such refinancing, refunding,
replacement, renewal, repayment or extension; (k)(i) mortgages, liens, security
interests, restrictions or encumbrances that have been placed by any developer,
landlord or other third party on property over which the Company or any
Restricted Subsidiary or the Company has easement rights or on any real property
leased by the Company and subordination or similar agreements relating thereto
and (ii) any condemnation or eminent domain proceedings affecting any real
property; (l) Liens on property, assets or shares of stock of a Person at the
time such Person becomes a Subsidiary; provided, however, such Liens are not
created, Incurred or assumed by such Person in connection with, or in
contemplation of, such other Person becoming such a Subsidiary; provided
further, however, that such Liens may not extend to any other property owned by
the Company or any Restricted Subsidiary; (m) Liens on property or assets at the
time the Company or a Restricted Subsidiary acquired the property or assets,
including any acquisition by means of a merger or consolidation with or into the
Company or a Restricted Subsidiary; provided, however, that such Liens are not
created in connection with, or in contemplation of, such acquisition; provided
further,
<PAGE> 29
21
however, that the Liens may not extend to any other property owned by the
Company or any Restricted Subsidiary; and (n) any Lien on stock or other
securities of an Unrestricted Subsidiary that secures Indebtedness of such
Unrestricted Subsidiary.
"Permitted Transferee" means (a) with respect to CVC (i) Citicorp,
any direct or indirect wholly owned subsidiary of Citicorp, and any officer,
director or employee of CVC, Citicorp or any wholly owned subsidiary of
Citicorp; (ii) any spouse or lineal descendant (including by adoption and
stepchildren) of the officers, directors and employees in clause (a)(i) above or
(iii) any trust, corporation or partnership 100% in interest of the
beneficiaries, stockholders or partners of which consists of one or more of the
persons described in clause (a)(i) or (ii) above and (b) with respect to any
officer or employee of ACP Products, L.L.C., ACP Holdings, Holdings, the Company
or a Subsidiary of the Company (i) any spouse or lineal descendant (including by
adoption and stepchildren) of such officer or employee and (ii) any trust,
corporation or partnership 100% in interest of the beneficiaries, stockholders
or partners of which consists of such officer or employee, any of the persons
described in clause (b)(i) above or any combination thereof.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security plus
the premium, if any, payable on the Security that is due or overdue or is to
become due at the relevant time.
"Private Placement Legend" means the legend set forth under such
caption in the form of Initial Security in Exhibit A hereto.
<PAGE> 30
22
"Public Equity Offering" means an underwritten primary public
offering of common stock of ACP Holdings, Company or Holdings (or, for purposes
of Section 4.11(d), any Restricted Subsidiary) pursuant to an effective
registration statement (other than a registration statement on Form S-4, S-8 or
any successor or similar forms) under the Securities Act (whether alone or in
conjunction with any secondary public offering); provided, however, that if any
such offering is an offering of the common stock of ACP Holdings, only the net
proceeds thereof that are contributed to the Company shall be taken into
consideration for purposes of this definition.
"Public Market" means any time after (x) a Public Equity Offering
has been consummated and (y) at least 15% of the total issued and outstanding
common stock of ACP Holdings, the Company or Holdings (or, for purposes of
Section 4.11, any Restricted Subsidiary) has been distributed by means of an
effective registration statement under the Securities Act.
"Purchase Agreement" means the Purchase Agreement dated April 23,
1997 among the Company and the Initial Purchasers.
"Purchase Money Indebtedness" means Indebtedness (i) consisting of
the deferred purchase price of an asset or assets (including Capital Stock and
the assets of an ongoing business) including additions and improvements, any
conditional sale obligation, any obligation under any title retention agreement
or any other purchase money obligation or (ii) incurred to finance the
acquisition by the Company or a Restricted Subsidiary of an asset or assets
(including Capital Stock and the assets of a Related Business), including
additions and improvements; provided that in the case of clause (i) the Average
Life of such Indebtedness is less than the anticipated useful life of assets
having an aggregate fair market value representing more than 50% of the
aggregate fair market value of all assets so acquired and that in the case of
clauses (i) and (ii) such Indebtedness is incurred within 180 days after the
acquisition by the Company or Restricted Subsidiary of such asset or assets, or
is in existence with respect to any asset or other property at the time such
asset or property is acquired.
"Redemption Date" means the date on which the Securities are
optionally redeemed pursuant to Section 3.07.
<PAGE> 31
23
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances" and "refinanced"
shall have a correlative meaning) any Indebtedness existing on the Issue Date or
Incurred in compliance with this Indenture (including Indebtedness of the
Company that refinances Indebtedness of any Restricted Subsidiary (to the extent
permitted in this Indenture) and Indebtedness of any Restricted Subsidiary that
refinances Indebtedness of that or another Restricted Subsidiary of the
Company), including Indebtedness that refinances Refinancing Indebtedness;
provided, however, that (i) the Refinancing Indebtedness has a Stated Maturity
no earlier than the Stated Maturity of the Indebtedness being refinanced; (ii)
the Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average Life of
the Indebtedness being refinanced; (iii) such Refinancing Indebtedness is
Incurred in an aggregate principal amount (or, if issued with original issue
discount, an aggregate issue price) that is equal to or less than the aggregate
principal amount (or, if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being refinanced plus the
amount of any premium reasonably determined by the Company or such Restricted
Subsidiary, as applicable, as necessary at the time of such refinancing to
accomplish such refinancing or required pursuant to the terms thereof, plus the
amount of expenses of the Company or such Restricted Subsidiary, as applicable,
Incurred in connection with such refinancing; and (iv) if the Indebtedness being
refinanced is subordinated in right of payment to the Securities, such
Refinancing Indebtedness is subordinated in right of payment to the Securities
to the extent of the Indebtedness being refinanced; provided further, however,
that Refinancing Indebtedness shall not include Indebtedness of the Company or a
Restricted Subsidiary that refinances Indebtedness of an Unrestricted
Subsidiary.
"Registered Exchange Offer" shall have the meaning set forth in the
Exchange and Registration Rights Agreement.
"Related Business" means any business of the Company and the
Restricted Subsidiaries as conducted on the Issue Date and any business related,
ancillary or complementary thereto.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
<PAGE> 32
24
"S&P" means Standard and Poor's Ratings Group, a division of
McGraw-Hill, Inc., and its successors.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired by the Company or a Restricted
Subsidiary whereby the Company or such Restricted Subsidiary transfers such
property to a Person and the Company or such Restricted Subsidiary leases it
from such Person, other than leases between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" of the Company means any Indebtedness of the
Company secured by a Lien. "Secured Indebtedness" of any Guarantor Subsidiary
has a correlative meaning.
"Securities" means, collectively, the Initial Securities and, when
and if issued as provided in the Exchange and Registration Rights Agreement, the
Exchange Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depository), or any successor entity
thereto and shall initially be the Trustee.
"Senior Bank Facilities" means the credit agreement dated as of the
Issue Date, as amended, waived or otherwise modified from time to time, among
Holdings, the Company, the lenders party thereto from time to time, and The
Chase Manhattan Bank, a New York banking corporation, as agent (except to the
extent that any such amendment, waiver or other modification thereto would be
prohibited by the terms of this Indenture).
"Senior Indebtedness" of the Company means all principal of, premium
(if any), accrued interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Company
whether or not a claim for post-filing interest is allowed in such proceedings),
fees, charges, expenses, reimbursement obligations, guarantees and other amounts
owing with respect to all Indebtedness of the Company, and including all Bank
<PAGE> 33
25
Indebtedness, whether outstanding on the Issue Date or thereafter incurred,
unless in the instrument creating or evidencing the same or pursuant to which
the same is outstanding it is expressly provided that such obligations are not
superior in right of payment to the Notes; provided, however, that Senior
Indebtedness shall not include (1) any obligation of the Company to any
Subsidiary, (2) any liability for federal, foreign, state, local or other taxes
owed or owing by the Company, (3) any accounts payable or other liability to
trade creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities), (4) any Indebtedness or
obligation of the Company which is subordinate or junior in any respect (other
than as a result of the Indebtedness being unsecured) to any other Indebtedness
or obligation of the Company, including any Senior Subordinated Indebtedness and
any Subordinated Obligations, (5) any obligations with respect to any Capital
Stock or (6) any Indebtedness Incurred in violation of this Indenture. "Senior
Indebtedness" of any Guarantor Subsidiary has a correlative meaning.
"Senior Subordinated Indebtedness" means the Securities and any
other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Securities and is not subordinated
by its terms to any Indebtedness or other obligation of the Company which is not
Senior Indebtedness. "Senior Subordinated Indebtedness" of any Guarantor
Subsidiary has a correlative meaning.
"Shelf Registration Statement" shall have the meaning set forth in
the Exchange and Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of the Company within the meaning of clause (w)(1)
or (2) of Rule 1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the purchase of
such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
<PAGE> 34
26
"Subordinated Obligation" of the Company means any Indebtedness of
the Company (whether outstanding on the Issue Date or thereafter Incurred) which
is expressly subordinate in right of payment to the Securities pursuant to a
written agreement. "Subordinated Obligation" of any Guarantor Subsidiary shall
have a correlative meaning.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers, trustees or members of any other
governing body thereof is at the time owned or controlled, directly or
indirectly, by (i) such Person or (ii) one or more Subsidiaries of such Person.
"Subsidiary Guaranty" means any Guarantee of the Securities which
may from time to time be executed and delivered pursuant to the terms of this
Indenture. Each such Subsidiary Guaranty shall be in the form prescribed in this
Indenture. The First Supplemental Indenture includes the Subsidiary Guaranties
issued by the Initial Guarantors.
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations (x) of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof or (y) of any foreign country recognized by the United States of
America rated at least "A" by S&P or "A-1" by Moody's; (ii) investments in time
deposit accounts, certificates of deposit and money market deposits maturing
within 365 days of the date of acquisition thereof issued by a bank or trust
company which is organized under the laws of the United States of America, any
state thereof or any foreign country recognized by the United States of America
having capital and surplus in excess of $250,000,000 (or the foreign currency
equivalent thereof) and whose long-term debt is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act); (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above; (iv) investments in
commercial paper, maturing not more than 365 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United
<PAGE> 35
27
States of America or any foreign country recognized by the United States of
America with a rating at the time as of which any investment therein is made of
"P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P;
(v) investments in securities with maturities of six months or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's; (vi)
any money market deposit accounts issued or offered by a domestic commercial
bank or a commercial bank organized and located in a country recognized by the
United States of America, in each case, having capital and surplus in excess of
$250,000,000 (or the foreign currency equivalent thereof), or investments in
money market funds complying with the risk limiting conditions of Rule 2a-7 (or
any successor rule) of the Commission under the Investment Company Act of 1940,
as amended; and (vii) similar investments approved by the Board of Directors in
the ordinary course of business.
"Term Loans" means the Tranche A Term Loans and the Tranche B Term
Loans made pursuant to the Senior Bank Facilities.
"Total Assets" means, at any date of determination, the total
consolidated assets of the Company and its Restricted Subsidiaries, as set forth
on the Company's then most recent consolidated balance sheet.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled by, and published in, the most recent Federal Reserve Statistical
Release H.15(519) which has become publicly available at least two Business Days
prior to the date fixed for redemption of the Securities following a Change of
Control (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the then
remaining Average Life to Stated Maturity of the
<PAGE> 36
28
Securities; provided, however, that if the Average Life to Stated Maturity of
the Securities is not equal to the constant maturity of a United States Treasury
security for which a weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the Average Life to Stated Maturity
of the Securities is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one
year shall be used.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President, or
any other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
that at the time of determination shall be designated an Unrestricted Subsidiary
by the Board of Directors in the manner provided below and (ii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of,
or owns or holds any Lien on any property of, the Company or any other
Restricted Subsidiary of the Company that is not a Subsidiary of the Subsidiary
to be so designated; provided, however, that either (A) the Subsidiary to be so
designated has total Consolidated assets of $1,000 or less or (B) if such
Subsidiary has Consolidated assets greater than $1,000, then such designation
would be permitted under the Section 4.04. The Board of Directors may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however,
that immediately after giving effect to such designation (x) the Company could
Incur $1.00 of additional Indebtedness under paragraph (a) of Section 4.03 and
(y) no Default shall have occurred and be continuing. Any such designation by
the Board of Directors shall be evidenced to the Trustee by promptly filing with
the Trustee a copy of the resolution of the Board of
<PAGE> 37
29
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock
of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares and, to the
extent required by local ownership laws in foreign countries, shares owned by
foreign shareholders) is owned by the Company or another Wholly Owned Subsidiary
(including shares held of record by a nominee for the benefit of the Company or
another Wholly Owned Subsidiary).
<PAGE> 38
30
SECTION 1.02. Other Definitions.
Term Defined in
---- Section
----------
"Affiliate Transaction"............................................. 4.07
"Bankruptcy Law".................................................... 6.01
"covenant defeasance option"........................................ 8.01(b)
"Custodian"......................................................... 6.01
"Event of Default".................................................. 6.01
"IAI"............................................................... 2.01(b)
"IAI Global Note"................................................... 2.01(b)
"legal defeasance option"........................................... 8.01(b)
"Legal Holiday"..................................................... 13.08
"Obligations"....................................................... 10.01
"Offer"............................................................. 4.06(b)
"Offer Amount"...................................................... 4.06(c)
"Offer Period"...................................................... 4.06(c)
"Offshore Securities Exchange Date"................................. 2.01(c)
"Paying Agent"...................................................... 2.03
"Permanent Offshore Physical Securities"............................ 2.01(c)
"Purchase Date"..................................................... 4.06(c)
"QIB Global Note"................................................... 2.01(b)
"QIBs".............................................................. 2.01(b)
"Registrar"......................................................... 2.03
"Restricted Payment"................................................ 4.04
"Rule 144A"......................................................... 2.01(b)
"Successor Company"................................................. 5.01
"Temporary Offshore Physical Securities"............................ 2.01(c)
"U.S. Global Security".............................................. 2.01(b)
"U.S. Physical Securities".......................................... 2.01(d)
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31
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture Securityholder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness of the Company or a Guarantor Subsidiary,
as the case may be, merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a
<PAGE> 40
32
balance sheet of the issuer dated such date prepared in accordance with
GAAP and accretion of principal on such security shall be deemed to be the
Incurrence of Indebtedness; and
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. (a) The Initial Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture, and as otherwise provided in this Article II. Any Exchange Securities
and the Trustee's certificate of authentication shall be substantially in the
form of Exhibit B, which is incorporated in and expressly made a part of this
Indenture, and as otherwise provided in this Article II. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company or any Guarantor Subsidiary is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). Each Security shall be dated the date of its
authentication. The terms of the Securities set forth in Exhibit A and B are
part of the terms of this Indenture. The Securities shall be issuable only in
registered form without coupons and only in denominations of $1,000 and integral
multiples thereof.
(b) The Initial Securities are being offered and sold by the Company
pursuant to the Purchase Agreement. Initial Securities offered and sold to
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act) ("QIBs") and institutional "Accredited Investors" (within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) ("IAIs"), in each case
in accordance with Rule 144A under the Securities Act ("Rule 144A") as provided
in the Purchase Agreement, shall be issued on the Issue Date initially in the
form of two permanent global Securities (with separate CUSIP numbers)
substantially in the form set forth in Exhibit A (each a "U.S. Global Security")
deposited with the Trustee, as
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33
custodian for the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. One U.S. Global Security (which may be
represented by more than one certificate, if so required by the Depositary's
rules regarding the maximum principal amount to be represented by a single
certificate) will represent Initial Securities sold to QIBs (the "QIB Global
Note"), and the other will represent Initial Securities sold to IAIs (the "IAI
Global Note"). The aggregate principal amount of each U.S. Global Security may
from time to time be increased or decreased by adjustments made on the records
of the Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided. Transfers of Initial Securities from QIBs to IAIs, and from IAIs to
QIBs, will be represented by appropriate increases and decreases to the
respective amounts of the appropriate U.S. Global Securities, as more fully
provided in Section 2.13.
(c) Initial Securities offered and sold in reliance on Regulation S,
if any, shall be issued initially in the form of temporary certificated
Securities in registered form substantially in the form set forth in Exhibit A
(the "Temporary Offshore Physical Securities"). The Temporary Offshore Physical
Securities will be registered in the name of, and held by, a temporary
certificate holder designated by Chase Securities Inc. until the later of the
completion of the distribution of the Initial Securities and the termination of
the "restricted period" (as defined in Regulation S) with respect to the offer
and sale of the Initial Securities (the "Offshore Securities Exchange Date").
The Company shall promptly notify the Trustee in writing of the occurrence of
the Offshore Securities Exchange Date and, at any time following the Offshore
Securities Exchange Date, upon receipt by the Trustee and the Company of a
certificate substantially in the form set forth in Exhibit F, the Company shall
execute, and the Trustee shall authenticate and deliver, one or more permanent
certificated Securities in registered form substantially in the form set forth
in Exhibit A (the "Permanent Offshore Physical Securities") in exchange for the
Temporary Offshore Physical Securities of like tenor and amount.
(d) Initial Securities offered and sold other than as described in
the preceding two paragraphs, if any, shall be issued in the form of permanent
certificated Securities in registered form in substantially the form set forth
in Exhibits A (the "U.S. Physical Securities").
<PAGE> 42
34
(e) The Temporary Offshore Physical Securities, Permanent Offshore
Physical Securities and U.S. Physical Securities are sometimes collectively
herein referred to as the "Physical Securities".
SECTION 2.02. Execution and Authentication. Two Officers shall sign
the Securities for the Company by manual or facsimile signature. The Company's
seal shall be impressed, affixed, imprinted or reproduced on the Securities and
may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall
be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and deliver (1) Initial Securities
for original issue in an aggregate principal amount of $150,000,000 and (2)
Exchange Securities for issue only in a Registered Exchange Offer, pursuant to
the Exchange and Registration Rights Agreement, for Initial Securities for a
like principal amount of Initial Securities exchanged pursuant thereto, in each
case upon a written order of the Company signed by two Officers or by an Officer
and either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the amount of the Securities to be authenticated, the date
on which the original issue of Securities is to be authenticated and whether the
Securities are to be Initial Securities or Exchange Securities. The aggregate
principal amount of Securities outstanding at any time may not exceed
$150,000,000 except as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Any such appointment
shall be evidenced by an instrument signed by an authorized officer of the
Trustee, a copy of which shall be furnished to the Company. Unless limited by
the terms of such appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
<PAGE> 43
35
Upon execution and delivery of the First Supplemental Indenture, the
Initial Securities shall be endorsed by Neenah Corporation and each of the
Initial Guarantors to evidence their assumption and Guaranties of the
obligations thereunder.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities 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 shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee 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 and shall
be entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities.
The Company initially appoints The Depository Trust Company to act
as Depositary with respect to the Global Securities.
The Company may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided that no
such removal shall become effective until (1) acceptance of an appointment by a
successor as evidenced by an appropriate agreement entered into by the Company
and such successor Registrar or Paying Agent, as the case may be, and delivered
to the Trustee or (2) notification to the Trustee that the Trustee shall serve
as Registrar or Paying Agent until the appointment of a successor in accordance
with clause (1) above. The Registrar or Paying Agent may resign at any time upon
written notice; provided, however, that the Trustee may
<PAGE> 44
36
resign as Paying Agent or Registrar only if the Trustee also resigns as Trustee
in accordance with Section 7.08.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due
date of the principal and interest on any Security, the Company shall deposit
with the Paying Agent (or if the Company or a Subsidiary is acting as Paying
Agent, segregate and hold in trust for the benefit of the Persons entitled
thereto) a sum sufficient to pay such principal and interest when so becoming
due. The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the Company
or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed by the Paying Agent. Upon complying with this Section,
the Paying Agent shall have no further liability for the money delivered to the
Trustee.
Any money deposited with any Paying Agent, or then held by the
Company or a Subsidiary in trust for the payment of principal or interest on any
Security and remaining unclaimed for two years after such principal and interest
has become due and payable shall be paid to the Company at its request, or, if
then held by the Company or a Subsidiary, shall be discharged from such trust;
and the Securityholders shall thereafter, as unsecured general creditors, look
only to the Company for payment thereof, and all liability of the Paying Agent
with respect to such money, and all liability of the Company or such Subsidiary
as trustee thereof, shall thereupon cease.
SECTION 2.05. Securityholder 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 Securityholders. If the Trustee is not the
Registrar, the Company shall furnish, or cause the Registrar to furnish, to the
Trustee, in writing at least five Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of Securityholders.
<PAGE> 45
37
SECTION 2.06. Transfer and Exchange. The Securities shall be issued
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401(l)
of the Uniform Commercial Code are met. When Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's or co-registrar's
request. The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with any transfer or
exchange pursuant to this Section. The Company shall not be required to make and
the Registrar need not register transfers or exchanges of Securities selected
for redemption (except, in the case of Securities to be redeemed in part, the
portion thereof not to be redeemed) or any Securities for a period of 15 days
before a selection of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest, if any, on such Security and for all other
purposes whatsoever, whether or not such Security is overdue, and none of the
Company, the Trustee, the Paying Agent, the Registrar or any co-registrar shall
be affected by notice to the contrary.
Any Holder of a U.S. Global Security shall, by acceptance of such
Global Note, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by the Holder of
such Global Security (or its agent), and that ownership of a beneficial interest
in such Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to this
Section 2.06 will evidence the same debt and will be entitled to the same
benefits under this Indenture as the Securities surrendered upon such transfer
or exchange.
<PAGE> 46
38
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies the Company or the Trustee within a reasonable time after he has
notice of such loss, destruction or wrongful taking and the Registrar does not
register a transfer prior to receiving such notification, (ii) makes such
request to the Company or the Trustee prior to the Security being acquired by a
bona fide purchaser and (iii) satisfies any other reasonable requirements of the
Trustee. If required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Trustee to protect the Company,
the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss
that any of them may suffer if a Security is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Security. In
the event any such mutilated, lost, destroyed or wrongfully taken Security has
become or is about to become due and payable, the Company in its discretion may
pay such Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the
Company.
The provisions of this Section 2.07 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancelation and those described in this Section
as not outstanding. A Security does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and
<PAGE> 47
39
interest payable on that date with respect to the Securities (or portions
thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is
not prohibited from paying such money to the Securityholders on that date
pursuant to the terms of this Indenture, then on and after that date such
Securities (or portions thereof) cease to be outstanding and interest on them
ceases to accrue.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Company or any of its Affiliates shall be disregarded, except that,
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which the
Trustee knows or has reason to know are so owned shall be disregarded.
SECTION 2.09. Temporary Securities. Until Definitive Securities and
Global Securities are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate Definitive
Securities and deliver them in exchange for temporary Securities upon surrender
of such temporary Securities at the office or agency of the Company, without
charge to the Holder.
SECTION 2.10. Cancelation. The Company at any time may deliver
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancelation unless the Company directs the Trustee to deliver canceled
Securities to the Company. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancelation.
The Trustee shall not authenticate Securities in place of canceled Securities
other than pursuant to the terms of this Indenture.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful
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40
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail or cause to be
mailed to each Securityholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
The Company may make payment of any defaulted interest in any other
lawful manner not inconsistent with the requirements (if applicable) of any
securities exchange on which the Securities 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 paragraph, such manner of
payment shall be deemed practicable by the Trustee.
SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
SECTION 2.13. Book-Entry Provisions for U.S. Global Security.
(a) Each U.S. Global Security initially shall (i) be registered in
the name of the Depositary for such U.S. Global Security or the nominee of such
Depositary and (ii) be delivered to the Trustee as custodian for such
Depositary.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any U.S. Global
Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under such U.S. Global Security, and the Depositary may be treated
by the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such U.S. Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification,
<PAGE> 49
41
proxy or other authorization furnished by the Depositary or shall impair, as
between the Depositary and its Agent Members, the operation of customary
practices governing the exercise of the rights of a Holder of any Security.
(b) Transfers of a U.S. Global Security shall be limited to
transfers of such U.S. Global Security in whole, but not in part, to the
Depositary, its successors or their respective nominees. Interests of beneficial
owners in a U.S. Global Security may be transferred in accordance with the rules
and procedures of the Depositary and the provisions of Section 2.14. If required
to do so pursuant to any applicable law or regulation, beneficial owners may
obtain U.S. Physical Securities in exchange for their beneficial interests in a
U.S. Global Security upon written request in accordance with the Depositary's
and the Registrar's procedures. In addition, U.S. Physical Securities shall be
transferred to all beneficial owners in exchange for their beneficial interests
in a U.S. Global Security if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such U.S. Global Security or
the Depositary ceases to be a clearing agency registered under the Exchange Act,
at a time when the Depositary is required to be so registered in order to act as
Depositary, and in each case a successor depositary is not appointed by the
Company within 90 days of such notice or, (ii) the Company executes and delivers
to the Trustee and Security Registrar an Officers' Certificate stating that such
U.S. Global Security shall be so exchangeable or (iii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depositary.
(c) In connection with any transfer of a portion of the beneficial
interest in a U.S. Global Security pursuant to subsection (b) of this Section to
beneficial owners who are required to hold U.S. Physical Securities, the
Registrar shall reflect on its books and records the date and a decrease in the
principal amount of such U.S. Global Security in an amount equal to the
principal amount of the beneficial interest in the U.S. Global Security to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more U.S. Physical Securities of like tenor and amount.
(d) In connection with the transfer of an entire U.S. Global
Security to beneficial owners pursuant to subsection (b) of this Section, such
U.S. Global Security shall be deemed to be surrendered to the Trustee for
cancelation, and the Company shall execute, and the Trustee
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42
shall authenticate and deliver, to each beneficial owner identified by the
Depositary in exchange for its beneficial interest in such U.S. Global Security,
an equal aggregate principal amount of U.S. Physical Securities of authorized
denominations.
(e) Any U.S. Physical Security delivered in exchange for an interest
in a U.S. Global Security pursuant to subsection (c) or subsection (d) of this
Section shall, except as otherwise provided by paragraph (f) of Section 2.14,
bear the applicable legend regarding transfer restrictions applicable to the
U.S. Physical Security set forth in Exhibit A.
(f) The registered holder of a U.S. Global Security may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Securities.
SECTION 2.14. Special Transfer Provisions.
Unless and until an Initial Security is transferred or exchanged
under an effective registration statement under the Securities Act, the
following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of an Initial Security to any IAI which is not a QIB
(excluding Non-U.S. Persons) that is consistent with the Private Placement
Legend:
(i) The Registrar shall register the transfer of any Initial
Security if (x) the requested transfer is at least two years after the
original issue date of the Initial Security or (y) the proposed transferee
has delivered to the Registrar a certificate substantially in the form set
forth in Exhibit C.
(ii) If the proposed transferee is an Agent Member, and the Initial
Security to be transferred consists of U.S. Physical Securities or an
interest in the QIB Global Security, upon receipt by the Registrar of (x)
the document, if any, required by paragraph (i) and (y) instructions given
in accordance with the Depositary's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records
<PAGE> 51
43
the date and an increase in the principal amount of the IAI Global
Security in an amount equal to (x) the principal amount of the U.S.
Physical Securities to be transferred, and the Trustee shall cancel the
U.S. Physical Security so transferred or (y) the amount of the beneficial
interest in the QIB Global Security to be so transferred (in which case
the Registrar shall reflect on its books and records the date and an
appropriate decrease in the principal amount of the QIB Global Security).
(iii) If the proposed transferee is entitled to receive a U.S.
Physical Security as provided in Section 2.13 and the proposed transferor
is an Agent Member holding a beneficial interest in a U.S. Global
Security, upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (i) and (y) instructions given in accordance with
the Depositary's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and a decrease in the
principal amount of such U.S. Global Security in an amount equal to the
principal amount of the beneficial interest in such U.S. Global Security
to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more U.S. Physical Securities of like
tenor and amount.
(iv) If the Initial Security to be transferred consists of U.S.
Physical Securities and the proposed transferee is entitled to receive a
U.S. Physical Security as provided in Section 2.13, upon receipt by the
Registrar of the document, if any, required by paragraph (i), the
Registrar shall register such transfer and the Company shall execute, and
the Trustee shall authenticate and deliver, one or more U.S. Physical
Securities of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Security to a
QIB (excluding Non-U.S. Persons):
(i) If the Security to be transferred consists of U.S. Physical
Securities, Temporary Offshore Physical Securities, Permanent Offshore
Physical Securities or an interest in the IAI Global Security, the
Registrar shall register the transfer if such transfer is being made by a
proposed transferor who has provided the
<PAGE> 52
44
Registrar with a certificate substantially in the form set forth in
Exhibit G hereto.
(ii) If the proposed transferee is an Agent Member, and the Initial
Security to be transferred consists of U.S. Physical Securities, Temporary
Offshore Physical Securities, Permanent Offshore Physical Securities or an
interest in the IAI Global Security, upon receipt by the Registrar of (x)
the document, if any, required by paragraph (i) and (y) instructions given
in accordance with the Depositary's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the QIB Global Security in an
amount equal to (x) the principal amount of the U.S. Physical Securities,
Temporary Offshore Physical Securities or Permanent Offshore Physical
Securities, as the case may be, to be transferred, and the Trustee shall
cancel the Physical Security so transferred or (y) the amount of the
beneficial interest in the IAI Global Security to be so transferred (in
which case the Registrar shall reflect on its books and records the date
and an appropriate decrease in the principal amount of the IAI Global
Security).
(iii) If the proposed transferee is entitled to receive a U.S.
Physical Security as provided in Section 2.13 and the proposed transferor
is an Agent Member holding a beneficial interest in a U.S. Global
Security, upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (i) and (y) instructions given in accordance with
the Depositary's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and a decrease in the
principal amount of such U.S. Global Security in an amount equal to the
principal amount of the beneficial interest in such U.S. Global Security
to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more U.S. Physical Securities of like
tenor and amount.
(iv) If the Initial Security to be transferred consists of U.S.
Physical Securities, Temporary Offshore Physical Securities or Permanent
Offshore Physical Securities and the proposed transferee is entitled to
receive a U.S. Physical Security as provided in Section 2.13, upon receipt
by the Registrar of the document, if any, required by paragraph (i), the
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Registrar shall register such transfer and the Company shall execute, and
the Trustee shall authenticate and deliver, one or more U.S. Physical
Securities of like tenor and amount.
(c) Transfers by Non-U.S. Persons Prior to June 8, 1997. The
following provisions shall apply with respect to registration of any proposed
transfer of an Initial Security by a Non-U.S. Person prior to June 8, 1997:
(i) The Registrar shall register the transfer of any Initial
Security (x) if the proposed transferee is a Non-U.S. Person and the
proposed transferor has provided the Registrar with a certificate
substantially in the form set forth in Exhibit H hereto or (y) if the
proposed transferee is a QIB and the proposed transferor has provided the
Registrar with a certificate substantially in the form set forth in
Exhibit G hereto. Unless clause (ii) below is applicable, the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Temporary Offshore Physical Securities of like tenor and amount.
(ii) If the proposed transferee is an Agent Member in connection
with a proposed transfer of an Initial Security to a QIB, upon receipt by
the Registrar of (x) the document, if any, required by paragraph (i) and
(y) instructions given in accordance with the Depositary's and the
Registrar's procedures therefor, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of the QIB
Global Security in an amount equal to the principal amount of the
Temporary Offshore Physical Security to be transferred, and the Registrar
shall cancel the Temporary Offshore Physical Securities so transferred.
(d) Transfers by Non-U.S. Persons on or After June 8, 1997. The
following provisions shall apply with respect to any transfer of an Initial
Security by a Non-U.S. Person on or after June 8, 1997:
(i) (x) If the Initial Security to be transferred is a Permanent
Offshore Physical Note, the Registrar shall register such transfer, (y) if
the Initial Security to be transferred is a Temporary Offshore Physical
Note, upon receipt of a certificate substantially in the form set forth in
Exhibit F from the proposed transferor, the Registrar shall register such
transfer and (z) in the case of either clause (x) or (y), unless clause
(ii) below is applicable, the
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46
Company shall execute, and the Trustee shall authenticate and deliver, one
or more Permanent Offshore Physical Securities of like tenor and amount.
(ii) If the proposed transferee is an Agent Member in connection
with a proposed transfer of an Initial Security to a QIB, upon receipt by
the Registrar of instructions given in accordance with the Depositary's
and the Registrar's procedures therefor, the Registrar shall reflect on
its books and records the date and an increase in the principal amount of
the QIB Global Security in an amount equal to the principal amount of the
Temporary Offshore Physical Security or of the Permanent Offshore Physical
Security to be transferred, and the Trustee shall cancel the Physical
Security so transferred.
(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of an Initial Security to a
Non-U.S. Person:
(i) Prior to June 8, 1997, the Registrar shall register any proposed
transfer of an Initial Security to a Non-U.S. Person upon receipt of a
certificate substantially in the form set forth in Exhibit H from the
proposed transferor and the Company shall execute, and the Trustee shall
authenticate and make available for delivery, one or more Temporary
Offshore Physical Securities.
(ii) On and after June 8, 1997, the Registrar shall register any
proposed transfer to any Non-U.S. Person (w) if the Initial Security to be
transferred is a Permanent Offshore Physical Note, (x) if the Initial
Security to be transferred is a Temporary Offshore Physical Note, upon
receipt of a certificate substantially in the form set forth in Exhibit F
from the proposed transferor, (y) if the Initial Security to be
transferred is a U.S. Physical Security or an interest in a U.S. Global
Security, upon receipt of a certificate substantially in the form set
forth in Exhibit F from the proposed transferor and (z) in the case of
either clause (w), (x) or (y), the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Permanent Offshore Physical
Securities of like tenor and amount.
(iii) If the proposed transferor is an Agent Member holding a
beneficial interest in a U.S. Global Security, upon receipt by the
Registrar of (x) the
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document, if any, required by paragraph (i), and (y) instructions in
accordance with the Depositary's and the Registrar's procedures therefor,
the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of such U.S. Global Security in an amount
equal to the principal amount of the beneficial interest in the U.S.
Global Security to be transferred and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Permanent Offshore
Physical Securities of like tenor and amount.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless either (i) the circumstances contemplated by
paragraph (c) of Section 2.01 (relating to Permanent Offshore Physical
Securities) or paragraph (a)(i)(x), (d)(i) or (e)(ii) of this Section 2.14 exist
or (ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(g) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.13 or this Section 2.14.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
Interest payable on the Notes shall be computed on the basis of a
360-day year comprised of 30-day months.
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ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to Section 3.07, it shall notify the Trustee in writing of
the redemption date and the principal amount of Securities to be redeemed.
The Company shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein; provided, however, that an
Opinion of Counsel shall not be required in connection with a redemption
pursuant to Section 3.07. If fewer than all the Securities are to be redeemed,
the record date relating to such redemption shall be selected by the Company and
given to the Trustee, which record date shall be not less than 15 days after the
date of notice to the Trustee (unless a shorter period shall be acceptable to
the Trustee). Any such notice may be canceled by notice in writing to the
Trustee at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect.
SECTION 3.02. Selection of Securities to be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that complies with applicable
legal and securities exchange requirements, if any, and that the Trustee
considers fair and appropriate and in accordance with methods generally used at
the time of selection by fiduciaries in similar circumstances. The Trustee shall
make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Securities, the Company shall mail
a notice of
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redemption by first-class mail to each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the certificate numbers and principal amounts of the particular Securities
to be redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or
portion thereof) called for redemption ceases to accrue on and after the
redemption date;
(7) the CUSIP number, if any, printed on the Securities being
redeemed;
(8) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities; and
(9) that if a Security is to be redeemed in part, only the portion
of the principal amount (equal to $1,000 or an integral multiple thereof)
of such Security to be redeemed and that a new Security in the aggregate
principal amount equal to the unredeemed portion thereof will be issued
without charge to the holder.
At the Company's request (which may be revoked at any time in
writing prior to the time at which the Trustee shall have given such notice to
the Holders), the Trustee shall give the notice of redemption in the Company's
name and at the Company's expense. In such event, the Company shall provide the
Trustee with the information required by this Section.
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SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest, if any, 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 Securityholder of the redeemed Securities registered on the relevant record
date. If mailed in the manner provided herein, the notice shall be conclusively
presumed to have been given whether or not the Holder receives such notice.
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. At least one Business Day
prior to the redemption date, the Company shall deposit with the Paying Agent
(or, if the Company or a Subsidiary is the Paying Agent, shall segregate and
hold in trust) money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which have been delivered by the
Company to the Trustee for cancelation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security
surrendered.
SECTION 3.07. Optional Redemption. (a) Except as set forth in the
next two paragraphs, the Securities may not be redeemed prior to May 1, 2002. On
and after that date, the Company may redeem the Securities in whole or in part,
at any time at the following redemption prices (expressed in percentages of
principal amount), plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record
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51
date to receive interest due on the relevant interest payment date that is on or
prior to the date of redemption), if redeemed during the 12-month period
beginning on or after May 1 of the years set forth below:
Redemption
Period Price
- ------ ----------
2002 .......................................................... 105.5625%
2003 .......................................................... 103.7083%
2004 .......................................................... 101.8542%
2005 and thereafter ........................................... 100.0000%
(b) Notwithstanding the foregoing, at any time on or prior to May 1,
2000, the Company may redeem in the aggregate up to 40% of the original
aggregate principal amount of Securities with the proceeds of one or more Public
Equity Offerings following which there is a Public Market, at a redemption price
(expressed as a percentage of principal amount thereof) of 111.125% plus accrued
and unpaid interest, if any, to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date that is on or prior to the date of redemption);
provided, however, that at least 60% of the original aggregate principal amount
of the Securities must remain outstanding after each such redemption.
(c) At any time prior to May 1, 2002, the Securities may be
redeemed, in whole or in part, at any time within 180 days after a Change of
Control, at a redemption price equal to the sum of (i) the principal amount
thereof plus (ii) accrued and unpaid interest, if any, to the redemption date
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption) plus (iii) the Applicable Premium.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall promptly pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the
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Trustee or the Paying Agent holds in accordance with this Indenture money
sufficient to pay all principal and interest then due and the Trustee or the
Paying Agent, as the case may be, is not prohibited from paying such money to
the Securityholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company may not
be required to be or remain subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, the Company shall file with the SEC (after the
date that either the Exchange Offer, Registration Statement or the Shelf
Registration Statement becomes effective), and provide (both prior to and after
such effective date) the Trustee and Securityholders and prospective
Securityholders (upon request) with the annual reports and the information,
documents and other reports which are specified in Section 13 or 15(d) of the
Exchange Act. The Company also shall comply with the other provisions of TIA ss.
314(a).
SECTION 4.03. Limitation on Indebtedness. (a) The Company shall not,
and shall not permit any Restricted Subsidiary to, Incur any Indebtedness (other
than pursuant to the following paragraph (b)) unless on the date of such
Incurrence the Consolidated Coverage Ratio exceeds 2.00 to 1.
(b) Notwithstanding Section 4.03(a), the Company and its Restricted
Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness consisting of the Term Loans in an aggregate
principal amount outstanding of up to $45,000,000 less (A) the amount of
any scheduled principal payments thereon and (B) the aggregate amount of
all repayments of principal actually made thereunder since the Issue Date
with Net Available Cash from Asset Dispositions pursuant to Section
4.06(a)(iii)(A);
(ii) Indebtedness consisting of revolving credit, working capital or
letters of credit financing in an aggregate principal amount at any time
outstanding not in excess of the greater of $35,000,000 and the Borrowing
Base in effect from time to time (in each case less the aggregate amount
of all repayments of
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principal actually made thereunder since the Issue Date with Net Available
Cash from Asset Dispositions pursuant to Section 4.06(a)(iii)(A));
(iii) Indebtedness of the Company owing to and held by any Wholly
Owned Subsidiary or Indebtedness of a Restricted Subsidiary owing to and
held by the Company or any Wholly Owned Subsidiary; provided, however,
that any subsequent issuance or transfer of any Capital Stock or any other
event which results in any such Wholly Owned Subsidiary ceasing to be a
Wholly Owned Subsidiary or any subsequent transfer of any such
Indebtedness (except to the Company or a Wholly Owned Subsidiary) will be
deemed, in each case, to constitute the Incurrence of such Indebtedness by
the issuer thereof;
(iv) Indebtedness of the Company represented by the Securities;
(v) any Indebtedness of the Company and its Restricted Subsidiaries
(other than the Indebtedness described in clauses (i), (ii) or (iii)
above) outstanding on the Issue Date;
(vi) Indebtedness of the Company and its Restricted Subsidiaries (A)
in respect of judgment, appeal, surety, performance and other like bonds,
bankers' acceptances and letters of credit provided by the Company and its
Restricted Subsidiaries in the ordinary course of their business and which
do not secure other Indebtedness and (B) under Commodity Agreements,
Currency Agreements and Interest Rate Agreements that are designed to
protect the Company and its Restricted Subsidiaries against fluctuations
in commodity prices (for raw materials used by them), interest rates or
currency exchange rates and not for the purposes of speculation;
(vii) Indebtedness represented by Guarantees by the Company of
Indebtedness of a Restricted Subsidiary, or in respect of letters of
credit provided by the Company to support such Indebtedness, or Guarantees
by a Restricted Subsidiary of Indebtedness of the Company or a Restricted
Subsidiary, or in respect of letters of credit provided by a Restricted
Subsidiary to support such Indebtedness; provided, however, that only
Indebtedness that is incurred in compliance with this covenant may be
guaranteed pursuant to this clause (vii);
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54
(viii) Purchase Money Indebtedness, industrial revenue bonds or
similar Indebtedness and Capitalized Lease Obligations of the Company and
its Restricted Subsidiaries in an aggregate principal amount at any time
outstanding not in excess of 10% of Total Assets;
(ix) Indebtedness of the Company or any Restricted Subsidiary
consisting of guarantees, indemnities or obligations in respect of
purchase price adjustments, in connection with the acquisition or
disposition of any business, assets or Subsidiary of the Company permitted
under the Indenture;
(x) Indebtedness of the Company and its Restricted Subsidiaries, to
the extent the proceeds thereof are immediately used after the Incurrence
thereof to purchase Securities tendered in an offer to purchase made as a
result of a Change of Control;
(xi) Indebtedness of the Company or a Restricted Subsidiary owed to
(including obligations in respect of letters of credit for the benefit of)
any Person in connection with liability insurance provided by such Person
to the Company or such Restricted Subsidiary, pursuant to reimbursement or
indemnification obligations to such Person, in each case Incurred in the
ordinary course of business;
(xii) Indebtedness of the Company consisting of guarantees of up to
an aggregate principal amount of $2,000,000 of borrowings by Management
Investors in connection with purchases of Voting Stock of Holdings on or
after the Issue Date and in accordance with Section 4.04;
(xiii) Indebtedness of the Company or any Restricted Subsidiary in
an aggregate principal amount at any time outstanding not in excess of
$15,000,000 million which Indebtedness may be incurred pursuant to clause
(ii) above; and
(xiv) any Refinancing Indebtedness Incurred in respect of any
Indebtedness Incurred pursuant to paragraph (a) or pursuant to clause (i),
(ii), (v), (viii), (x) or (xiv) of this paragraph (b).
Notwithstanding the foregoing, the Company shall not Incur any
Indebtedness if such Indebtedness is subordinate or junior in ranking in any
respect to any Senior Indebtedness of the Company unless such Indebtedness
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55
is Senior Subordinated Indebtedness or is expressly subordinated in right of
payment to Senior Subordinated Indebtedness of the Company. In addition, the
Company shall not Incur any Secured Indebtedness which is not Senior
Indebtedness of the Company unless contemporaneously therewith effective
provision is made to secure the Securities equally and ratably with (or on a
senior basis to, in the case of Indebtedness subordinated in right of payment to
the Securities) such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien. A Guarantor Subsidiary shall not incur any
Indebtedness if such Indebtedness is subordinate or junior in ranking in any
respect to any Senior Indebtedness of the Subsidiary Guarantor unless such
Indebtedness is Senior Subordinated Indebtedness of such Subsidiary Guarantor or
is expressly subordinated in right of payment to Senior Subordinated
Indebtedness of such Subsidiary Guarantor. In addition, a Guarantor Subsidiary
shall not incur any Secured Indebtedness which is not Senior Indebtedness of
such Guarantor Subsidiary unless contemporaneously therewith effective provision
is made to secure the Subsidiary Guaranty equally and ratably with (or on a
senior basis to, in the case of Indebtedness subordinated in right of payment to
such Subsidiary Guaranty) such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
(d) For purposes of determining the outstanding principal amount of
any particular Indebtedness Incurred pursuant to this section 4.03, (i)
Indebtedness permitted by this section need not be permitted solely by reference
to one provision permitting such Indebtedness but may be permitted in part by
one such provision and in part by one or more other provisions of this provision
permitting such Indebtedness and (ii) in the event that Indebtedness or any
portion thereof meets the criteria of more than one of the types of Indebtedness
described in this section, the Company, in its sole discretion, shall classify
such Indebtedness and only be required to include the amount of such
Indebtedness in one of such clauses.
SECTION 4.04. Limitation on Restricted Payments. (a) The Company
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) except dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and except
dividends or distributions payable to the Company or another Restricted
Subsidiary (and, if such Restricted Subsidiary
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56
has shareholders other than the Company or other Restricted Subsidiaries, to its
other shareholders on a pro rata basis or on a basis that results in the receipt
by the Company or a Restricted Subsidiary of dividends or distributions of equal
or greater value); (ii) purchase, redeem, retire or otherwise acquire for value
any Capital Stock of the Company or any Restricted Subsidiary held by Persons
other than the Company or another Restricted Subsidiary; (iii) purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment any
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying
a sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of acquisition); or (iv) make any Investment
(other than a Permitted Investment) in any Person (any such dividend,
distribution, purchase, redemption, repurchase, defeasance, other acquisition,
retirement, Investment or payment being herein referred to as a "Restricted
Payment") if at the time the Company or such Restricted Subsidiary makes such
Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company could not Incur at least $1.00 of additional
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Board of Directors, whose determination
shall be conclusive and evidenced by a resolution of the Board of
Directors) declared or made subsequent to the Issue Date would exceed the
sum of:
(A) 50% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from the Issue Date to the
end of the most recent fiscal quarter ending at least 45 days prior
to the date of such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such
deficit);
(B) 100% of the aggregate net proceeds received by the Company
(including the fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and
evidenced by a resolution of the Board of
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57
Directors) of property received by the Company; provided, however,
that such property is related, ancillary or complementary to any
business of the Company and the Restricted Subsidiaries conducted on
the Issue Date) as a capital contribution or from the issue or sale
of its Capital Stock (other than Disqualified Stock) of the Company
or Holdings subsequent to the Issue Date (other than an issuance or
sale to a Subsidiary of the Company or an employee stock ownership
plan or other trust established by the Company or any of its
Subsidiaries to the extent the purchase by such plan or trust is
financed by Indebtedness of such plan or trust and for which the
Company or a Subsidiary is liable, directly or indirectly, as a
guarantor or otherwise (including by the making of cash
contributions to such plan or trust which are used to pay interest
or principal on such Indebtedness));
(C) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a Subsidiary) of any
Indebtedness of the Company or its Restricted Subsidiaries issued
subsequent to the Issue Date and convertible or exchangeable for
Capital Stock (other than Disqualified Stock) of the Company (less
the amount of any cash or other property (other than such Capital
Stock) distributed by the Company or any Restricted Subsidiary upon
such conversion or exchange) (including any such exchange pursuant
to the exercise of a conversion right or privilege in connection
with which cash is paid in lieu of the issuance of fractional shares
or scrip);
(D) the aggregate Net Cash Proceeds received subsequent to the
Issue Date by the Company or Holdings (other than from any
Restricted Subsidiary) upon the exercise of any options or warrants
to purchase Capital Stock (other than Disqualified Stock) of the
Company or Holdings; and
(E) the amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from (i) payments of dividends,
repayments of the principal of loans, return of capital or advances
or other transfers of assets to the Company or any
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58
Restricted Subsidiary from Unrestricted Subsidiaries or (ii) the
redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investment") or the receipt of proceeds from the sale or other
disposition of any portion of any Investment in an Unrestricted
Subsidiary not to exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made by the Company
or any Restricted Subsidiary in such Unrestricted Subsidiary, which
amount was included in the calculation of the amount of Restricted
Payments.
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) any purchase, redemption, retirement or other acquisition of
Capital Stock or Subordinated Obligations of the Company made by exchange
for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary or an employee stock
ownership plan or other trust established by the Company or any of its
Subsidiaries to the extent the purchase by such plan or trust is financed
by Indebtedness of such plan or trust and for which the Company or a
Subsidiary is liable, directly or indirectly, as a guarantor or otherwise
(including by the making of cash contributions to such plan or trust which
are used to pay interest or principal on such Indebtedness)); provided,
however, that (A) such purchase, redemption, retirement or other
acquisition shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale to the
extent so used shall be excluded from Section 4.04(a)(iv)(B);
(ii) any purchase, defeasance, retirement, redemption or other
acquisition of (A) Subordinated Obligations of the Company made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Indebtedness of the Company which is permitted to be Incurred pursuant
to Section 4.03(b) or (B) Subordinated Obligations of a Restricted
Subsidiary made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Indebtedness of any Restricted
Subsidiary or the Company which is permitted to be Incurred pursuant to
Section 4.03(b); provided,
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59
however, that such purchase, defeasance, retirement, redemption or other
acquisition shall be excluded in the calculation of the amount of
Restricted Payments;
(iii) any purchase, retirement, redemption or other acquisition of
Disqualified Stock made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Disqualified Stock; provided, however,
that such purchase, retirement, redemption or other acquisition shall be
excluded in the calculation of the amount of Restricted Payments;
(iv) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by Section 4.06; provided, however,
that such purchase or redemption shall be excluded in the calculation of
the amount of Restricted Payments;
(v) upon the occurrence of a Change of Control and within 60 days
after the completion of the offer to repurchase the Securities pursuant to
Section 4.08 (including the purchase of all Securities tendered), any
purchase, defeasance, retirement, redemption or other acquisition of
Subordinated Obligations required pursuant to the terms thereof as a
result of such Change of Control; provided, however, that such purchase,
defeasance, retirement, redemption or other acquisition shall be included
in the calculation of the amount of Restricted Payments;
(vi) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this covenant; provided, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments;
(vii) the repurchase, for cash or notes, of shares of, or options or
warrants to purchase shares of, or payments to Holdings to enable Holdings
to repurchase shares of, or options or warrants to purchase shares of,
Capital Stock of Holdings, the Company or any of the Subsidiaries of the
Company from present or former Management Investors in an amount not in
excess of $2,000,000 in any one year and $5,000,000 in the aggregate;
provided, however, that the amount of such repurchase shall be included in
the calculation of the amount of Restricted Payments;
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(viii) payments in lieu of fractional shares in amount not in excess
of $250,000 in the aggregate;
(ix) payments by the Company to Holdings to pay Federal, state and
local taxes to the extent such taxes are attributable to the Company and
its Restricted Subsidiaries; provided, however, that such payments shall
be excluded from the calculation of the amount of Restricted Payments;
(x) loans, advances, dividends or distributions by the Company to
Holdings to pay dividends on the common stock of Holdings following a
Public Equity Offering of such stock; but only to the extent that such
loans, advances, dividends or distributions do not exceed 6% per annum of
the net proceeds received by the Company in such Public Equity Offering;
provided, however, that the amount of such loans, advances, dividends or
distributions shall be included in the amount of Restricted Payments; or
(xi) in each case to the extent such payments by Holdings are
attributable to the Company and its Restricted Subsidiaries, payments by
the Company to Holdings not to exceed an amount necessary to permit
Holdings to (A) make payments in respect to its indemnification
obligations owing to directors, officers or other Persons under Holding's
charter or by-laws or pursuant to written agreements with any such Person,
(B) make payments in respect of its other operational expenses (other than
taxes) incurred in the ordinary course of business, or (C) make payments
in respect of indemnification obligations and costs and expenses incurred
by Holdings in connection with any offering of common stock of Holdings;
provided, however, that all such payments shall be included in the
calculation of the amount of Restricted Payments.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness owed to the Company, (ii) make any
loans or
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61
advances to the Company or (iii) transfer any of its property or assets to the
Company, except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date;
(2) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness entered
into prior to the date on which such Restricted Subsidiary was acquired or
designated as a Restricted Subsidiary by the Company (other than as
consideration in, in contemplation of, or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was otherwise acquired by the
Company);
(3) any encumbrance or restriction pursuant to (x) an agreement
constituting Refinancing Indebtedness of Indebtedness Incurred pursuant to
an agreement referred to in clause (1) or (2) of this Section or contained
in any amendment to an agreement referred to in clause (1) or (2) of this
Section 4.05 or this clause (3) or (y) Indebtedness Incurred pursuant to
clause (i) or (ii) of paragraph (b) of Section 4.03; provided, however,
that the encumbrances and restrictions contained in (A) any such
refinancing agreement or amendment referred to in clause (x) above are,
collectively, no more restrictive in any material respect, than the
encumbrances and restrictions contained in such agreements (as determined
in good faith by the Company) and (B) any instrument relating to any
Indebtedness referred to in clause (y) above, are, collectively, no more
restrictive in any material respect than the encumbrances and restrictions
contained in the Senior Bank Facilities as in effect on the Issue Date (as
determined in good faith by the Company);
(4) in the case of clause (iii) of this Section 4.05, any
encumbrance or restriction contained in security agreements or mortgages
securing Indebtedness of a Restricted Subsidiary which are not prohibited
by Section 4.12 to the extent such encumbrances or restrictions restrict
the transfer of the property or assets subject to such security agreements
or mortgages;
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(5) any encumbrance or restriction existing under or by reason of
applicable law;
(6) customary non-assignment provisions of any licensing agreement
or of any lease;
(7) any encumbrance or restriction contained in contracts for sales
of assets otherwise permitted by this Indenture;
(8) with respect to a Restricted Subsidiary, any encumbrance or
restriction imposed pursuant to an agreement that has been entered into
for the sale of all or substantially all of the Capital Stock of such
Restricted Subsidiary; and
(9) Purchase Money Obligations for Property acquired in the ordinary
course of business that impose restrictions of the type referred to in
clause (iii) of this Section 4.05.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any Restricted Subsidiary to,
make any Asset Disposition unless (i) the Company or such Restricted Subsidiary
receives 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 Disposition at least equal to the fair market value, as
may be determined (and shall be determined, to the extent an Asset Disposition
(or a series of related Asset Dispositions) involves a fair market value greater
than $1,000,000) in good faith by the Board of Directors, whose determination
shall be conclusive and evidenced by a resolution of the Board of Directors
(including as to the value of all non-cash consideration), of the shares and
assets subject to such Asset Disposition, (ii) in the case of an Asset
Disposition (or a series of related Asset Dispositions) having a fair market
value of $1,000,000 or more at least 80% (or 100% in the case of lease payments)
of the consideration thereof received by the Company or such Restricted
Subsidiary is in the form of cash or cash equivalents and (iii) an amount equal
to 100% of the Net Available Cash from such Asset Disposition is applied by the
Company (or such Restricted Subsidiary, as the case may be) (A) first, to the
extent the Company or such Restricted Subsidiary elects (or is required by the
terms of any Senior Indebtedness), to prepay, repay or purchase Senior
Indebtedness of the Company or a Wholly Owned Subsidiary or, in the case of a
sale by a Restricted Subsidiary which is
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not a Wholly Owned Subsidiary, to prepay, repay or purchase Senior Indebtedness
of such Restricted Subsidiary (in each case other than Indebtedness owed to the
Company or an Affiliate of the Company) within 365 days after the later of the
date of such Asset Disposition or the receipt of such Net Available Cash; (B)
second, to the extent of the balance of Net Available Cash after application in
accordance with clause (A), to the extent the Company or such Restricted
Subsidiary elects, to reinvest (or enter into a binding contract to do so) in
Additional Assets (including by means of an Investment in Additional Assets by a
Restricted Subsidiary with Net Available Cash received by the Company or another
Restricted Subsidiary), within 365 days from the later of such Asset Disposition
or the receipt of such Net Available Cash; (C) third, to the extent of the
balance of such Net Available Cash after application in accordance with clauses
(A) and (B), to make an Offer (as defined below) to purchase Securities pursuant
to and subject to the conditions of Section 4.06(b) and (D) fourth, to the
extent of the balance of such Net Available Cash after application in accordance
with clauses (A), (B) and (C), to fund (to the extent consistent with any other
applicable provision of this Indenture) any corporate purpose; provided,
however, that in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (A) above, the Company or such Restricted
Subsidiary shall retire such Indebtedness and shall cause the related loan
commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased. Notwithstanding the foregoing
provisions of this covenant, the Company and its Restricted Subsidiaries shall
not be required to apply any Net Available Cash in accordance with this covenant
except to the extent that the aggregate Net Available Cash from all Asset
Dispositions in any year which are not applied in accordance with this covenant
exceed $5,000,000 in such year.
For the purposes of Section 4.06(a)(ii), the following are deemed to
be cash: (w) the assumption of Indebtedness of the Company (other than
Disqualified Stock of the Company) or any Restricted Subsidiary and the release
of the Company or such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Disposition, (x) securities received
by the Company or any Restricted Subsidiary from the transferee that are
promptly converted by the Company or such Restricted Subsidiary into cash, (y)
Indebtedness of any Restricted Subsidiary that is no longer a Restricted
Subsidiary as a result of such Asset Disposition, to the extent that the Company
and each other Restricted Subsidiary is released from any Guarantee of such
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Indebtedness in connection with such Asset Disposition, and (z) consideration
consisting of Indebtedness of the Company or any Restricted Subsidiary.
(b) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to Section 4.06(a)(iii)(C), the Company shall be required
to purchase Securities tendered pursuant to an offer, commenced within 30 days
following the expiration of the 365 day period referred to in Section
4.06(a)(iii)(B) (or, if the Company so elects, at any time within such 365 day
period), by the Company for the Securities (the "Offer") at a purchase price of
100% of their principal amount plus accrued and unpaid interest, if any, to the
date of purchase in accordance with the procedures (including prorationing in
the event of oversubscription) set forth in Section 4.06(c). If the aggregate
purchase price of Securities tendered pursuant to the Offer is less than the Net
Available Cash allotted to the purchase of the Securities, the Company shall
apply the remaining Net Available Cash in accordance with Section
4.06(a)(iii)(D) and upon completion of the purchase of the Notes tendered
pursuant to the Offer, the remaining amount of Net Available Cash, if any, will
be reset at zero. The Company shall not be required to make an Offer for
Securities pursuant to this Section if the Net Available Cash available therefor
(after application of the proceeds as provided in clauses (A) and (B) of Section
4.06(a)(iii)) is less than $5,000,000 (which lesser amount shall be carried
forward for purposes of determining whether an Offer is required with respect to
the Net Available Cash from any subsequent Asset Disposition).
(c)(1) Promptly, and in any event within 10 days after the Company
becomes obligated to make an Offer, the Company shall deliver to the Trustee and
send, by first-class mail to each Holder, a written notice stating that the
Holder may elect to have his Securities purchased by the Company either in whole
or in part (subject to prorationing as hereinafter described in the event the
Offer is oversubscribed) in integral multiples of $1,000 of principal amount, at
the applicable purchase price. The notice shall specify a purchase date not less
than 30 days nor more than 60 days after the date of such notice (the "Purchase
Date") and shall contain such information concerning the business of the Company
which the Company in good faith believes will enable such Holders to make an
informed decision (which at a minimum will include (i) the most recently filed
Annual Report on Form 10-K (including audited consolidated financial statements)
of the Company, the most recent subsequently filed Quarterly Report on Form 10-Q
and any
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Current Report on Form 8-K of the Company filed subsequent to such Quarterly
Report, other than Current Reports describing Asset Dispositions otherwise
described in the offering materials (or corresponding successor reports), (ii) a
description of material developments in the Company's business subsequent to the
date of the latest of such Reports, and (iii) if material, appropriate pro forma
financial information) and all instructions and materials necessary to tender
Securities pursuant to the Offer, together with the information contained in
clause (3).
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided below, the Company shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, segregate and hold in
trust) in Temporary Cash Investments an amount equal to the Offer Amount to be
held for payment in accordance with the provisions of this Section. Upon the
expiration of the period for which the Offer remains open (the "Offer Period"),
the Company shall deliver to the Trustee for cancelation the Securities or
portions thereof which have been properly tendered to and are to be accepted by
the Company. The Trustee (or paying agent) shall, on the Purchase Date, mail or
deliver payment to each tendering Holder in the amount of the purchase price. In
the event that the aggregate purchase price of the Securities delivered by the
Company to the Trustee is less than the Offer Amount, the Trustee (or paying
agent) shall deliver the excess to the Company (or if the Company is acting as
paying agent, the Company may release such amount from trust) promptly after the
expiration of the Offer Period for application in accordance with this Section.
(3) Holders electing to have a Security purchased will be required
to surrender the Security, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders will be entitled to withdraw their election
if the Trustee or the Company receives not later than 5:00 PM Eastern Standard
Time one Business Day prior to the Purchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security which was delivered for
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purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased. If at the expiration of the Offer
Period the aggregate principal amount of Securities surrendered by Holders
exceeds the Offer Amount, the Company shall select the Securities to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of $1,000,
or integral multiples thereof, shall be purchased). Holders whose Securities are
purchased only in part will be issued new Securities equal in principal amount
to the unpurchased portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company shall also deliver an Officers'
Certificate and an Opinion of Counsel stating that such Securities are to be
accepted by the Company pursuant to and in accordance with the terms of this
Section. A Security shall be deemed to have been accepted for purchase at the
time the Trustee, directly or through an agent, mails or delivers payment
therefor to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.07. Limitation on Transactions with Affiliates. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, enter into or conduct any transaction (including the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Affiliate of the Company (an "Affiliate Transaction") on terms (i) that are
less favorable to the Company or such Restricted Subsidiary, as the case may be,
than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate and (ii) that,
in the event such Affiliate Transaction involves an aggregate amount in excess
of $1,000,000, are not in writing and have not been approved by a majority of
the members of the Board of Directors having no material direct or indirect
financial interest in or with respect to such Affiliate Transaction.
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In addition, if such Affiliate Transaction involves an amount in excess of
$5,000,000, a fairness opinion must be obtained from a nationally recognized
appraisal or investment banking firm.
(b) The provisions of Section 4.07(a) shall not prohibit (i) any
Restricted Payment or Permitted Investment permitted to be made pursuant to
Section 4.04, (ii) fees, compensation or employee benefit arrangements paid to,
and any indemnity provided for the benefit of directors, officers or employees
of the Company, Holdings or any Subsidiary of the Company in the ordinary course
of business or any Indebtedness permitted to be Incurred pursuant to Section
4.03(b)(xiii), or any payments in respect thereof, (iii) any issuance of
securities, or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment arrangements, stock options and stock
ownership plans approved by the Board of Directors, (iv) transactions pursuant
to agreements entered into or in effect on the Issue Date, including amendments
thereto entered into after the Issue Date, provided that the terms of any such
amendment are not, in the aggregate, less favorable to the Company or such
Restricted Subsidiary than the terms of such agreement prior to such amendment
and provided further that such agreements are set forth on Schedule 4.07 hereto,
(v) loans or advances to employees that are Affiliates of the Company in the
ordinary course of business, but in any event not to exceed $2,000,000 in the
aggregate outstanding at any one time, (vi) any transaction between the Company
and a Restricted Subsidiary or between Restricted Subsidiaries (so long as the
other stockholders of any participating Restricted Subsidiaries which are not
Wholly Owned Subsidiaries are not themselves Affiliates of the Company) or (vii)
payments with respect to Indebtedness Incurred pursuant to Section 4.03(b)(ix).
SECTION 4.08. Change of Control. (a) Upon a Change of Control, each
Holder shall have the right to require that the Company repurchase all or any
part of such Holder's Securities at a purchase price in cash equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date, in
accordance with the terms contemplated in Section 4.08(b); provided, however,
that notwithstanding the occurrence of a Change of Control, the Company shall
not be obligated to purchase the Securities pursuant to this Section 4.08 in the
event that it has mailed notice of its election to redeem all the Securities
under Section 3.07.
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(b) Subject to the proviso to Section 4.08(a), within 30 days
following any Change of Control, the Company shall mail a notice to each Holder
with a copy to the Trustee stating, among other things:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Company to purchase all or any portion in
integral multiples of $1,000 of such Holder's Securities at a purchase
price in cash equal to 101% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase (subject to the right
of Holders of record on a record date to receive interest due on the
relevant interest payment date that is on or prior to the date of
purchase);
(2) the circumstances and relevant facts and financial information
regarding such Change of Control;
(3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with this
Section, that a Holder must follow in order to have its Securities or any
portion thereof purchased.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than 5:00 PM Eastern Standard
Time one Business Day prior to the purchase date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security which was delivered for purchase by the Holder and a
statement that such Holder is withdrawing his election to have such Security
purchased.
(d) On the purchase date, all Securities purchased by the Company
under this Section shall be delivered to the Trustee for cancelation, and the
Company shall pay the purchase price plus accrued and unpaid interest to the
purchase date, if any, to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations
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in connection with the repurchase of Securities pursuant to this Section. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this Section, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section by virtue thereof.
SECTION 4.09. Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year and within 60 days
of the end of the first three fiscal quarters of the Company an Officers'
Certificate complying with Section 314(a)(4) of the TIA and stating that in the
course of the performance by the signers of their duties as Officers of the
Company they would normally have knowledge of any Default or Event of Default
and, if such signer does know of such a Default or Event of Default, the
certificate shall describe such Default or Event of Default with particularity
and describe what actions, if any, the Company proposes to take with respect to
such Default or Event of Default.
SECTION 4.10. Further Instruments and Acts. Upon request of the
Trustee, the Company shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.11. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries. The Company shall not sell any shares of Capital Stock
of a Restricted Subsidiary, and shall not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell any shares of its Capital Stock, except
(i) to the Company or a Wholly Owned Subsidiary, (ii) if, immediately after
giving effect to such issuance or sale, such Restricted Subsidiary would no
longer constitute a Restricted Subsidiary, (iii) directors' qualifying shares or
(iv) in a Public Equity Offering as a result of or after which a Public Market
exists. The proceeds of any sale of such Capital Stock permitted by clause (ii)
shall be treated as Net Available Cash from an Asset Disposition and must be
applied in accordance with the terms of Section 4.06.
SECTION 4.12. Limitation on Liens. (a) The Company shall not, and
shall not permit any Guarantor Subsidiary to, directly or indirectly, create or
permit to exist any Lien (the "Initial Lien") on any of its property or assets
(including Capital Stock), whether owned on the Issue Date or thereafter
acquired, securing any Indebtedness
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other than Senior Indebtedness of the Company in the case of the Company, or
Senior Indebtedness of a Guarantor Subsidiary, in the case of a Guarantor
Subsidiary, unless contemporaneously therewith effective provision is made to
secure the Securities and, in respect of Liens on any Guarantor Subsidiary's
property or assets, the Subsidiary Guaranty of such Guarantor Subsidiary equally
and ratably with (or on a senior basis to, in the case of Indebtedness
subordinated in right of payment to the Securities and such Subsidiary Guaranty)
such obligation for so long as such obligation is so secured. The preceding
sentence shall not require the Company or any Restricted Subsidiary to equally
ratably secure the Securities if the Initial Lien consists of Permitted Liens.
(b) Any Lien created for the benefit of the Holders of the
Securities pursuant to the foregoing paragraph (a) shall provide by its terms
that such Lien shall be automatically and unconditionally released and
discharged upon the release and discharge of the Initial Lien.
SECTION 4.13. Limitation on Sale/Leaseback Transactions. The Company
shall not, and shall not permit any Restricted Subsidiary to, enter into any
Sale/Leaseback Transaction with respect to any property unless (i) the Company
or such Restricted Subsidiary would be entitled to Incur Indebtedness in an
amount equal to the Attributable Debt with respect to such Sale/Leaseback
Transaction pursuant to Section 4.03 and (ii) the net cash proceeds received by
the Company or any Restricted Subsidiary in connection with such Sale/Leaseback
Transaction are at least equal to the fair market value (in the case of
Sale/Leaseback Transactions involving amounts in excess of $1,000,000, as
determined by the Board of Directors, whose determination shall be conclusive
and evidenced by a resolution of the Board of Directors) of such property and
(iii) the transfer of such property is permitted by, and the Company applies the
proceeds of such transaction in compliance with, Section 4.06.
SECTION 4.14. Limitation on Lines of Business. The Company shall
not, and shall not permit any Restricted Subsidiary to, engage in any business
other than (i) a Related Business and (ii) the making of Permitted Investments
and the operations of any business that is part of a Permitted Investment.
Holdings will not engage in any business other than managing its investment in
the Company.
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SECTION 4.15. Future Guarantor Subsidiaries. The Company shall cause
(a) each Restricted Subsidiary that is a Domestic Subsidiary which Incurs
Indebtedness and (b) each Restricted Subsidiary that is not a Domestic
Subsidiary and that after the Issue Date enters into a Guarantee of any of the
obligations of the Company, Holdings or any of the Company's Subsidiaries
pursuant to the Senior Bank Facilities to execute and deliver to the Trustee a
supplemental indenture in the form of Exhibit D hereto pursuant to which such
Subsidiary shall Guarantee payment of the Securities as provided in Section
10.06; provided, however, that such Subsidiary shall not be required to execute
and deliver a supplemental indenture pursuant to this Section in the event that
such Subsidiary is a party to this Indenture at the time of such Incurrence of
Indebtedness.
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. The Company
shall not consolidate with or merge with or into, or convey, transfer or lease
all or substantially all its assets to any Person unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation organized and existing under the laws of
the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of the
Company under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(iii) except in the case of a merger the sole purpose of which is to
change the Company's jurisdiction of incorporation, immediately after
giving effect to such transaction, the Successor Company would be able to
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Incur an additional $1.00 of Indebtedness under Section 4.03(a);
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount which is
not less than the Consolidated Net Worth of the Company immediately prior
to such transaction; and
(v) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
Notwithstanding the foregoing clauses (ii), (iii) and (iv), any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its properties and assets to the Company.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but the
predecessor Company in the case of a conveyance, transfer or lease of all or
substantially all its assets shall not be released from the obligation to pay
the principal of and interest on the Securities.
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
(1) a default occurs in any payment of interest on any Security when
the same becomes due and payable, whether or not such payment shall be
prohibited by Article X, and such default continues for a period of 30
days;
(2) a default occurs in the payment of the principal of any Security
when the same becomes due and payable at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or
otherwise, whether or not such payment shall be prohibited by Article X;
(3) the Company fails to comply with Section 5.01;
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(4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07, 4.08, 4.11, 4.12, 4.13, 4.14 or 4.15 (other than a failure to
purchase Securities when required under Section 4.06 or 4.08) and such
failure continues for 30 days after the notice specified in the
penultimate paragraph of this Section 6.01;
(5) the Company or any Guarantor Subsidiary fails to comply with any
of its agreements in the Securities or this Indenture (other than those
referred to in (1), (2), (3) or (4) above) and such failure continues for
60 days after the notice specified in the penultimate paragraph of this
Section 6.01;
(6) Indebtedness of the Company or any Significant Subsidiary is not
paid within any applicable grace period after final maturity or the
acceleration of any such Indebtedness by the holders of such Indebtedness
because of a default and the total amount of such Indebtedness unpaid or
accelerated exceeds $5,000,000 or its foreign currency equivalent at the
time;
(7) the Company or any Restricted Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property;
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Restricted
Subsidiary in an involuntary case;
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(B) appoints a Custodian of the Company or any Restricted
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Restricted Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
(9) the rendering of any judgment or decree for the payment of money
in excess of $5,000,000 or its foreign currency equivalent (net of amounts
paid within 30 days of such judgment or decree under any insurance,
indemnity, bond, surety or similar instrument) against the Company or any
Restricted Subsidiary and is not discharged, waived or stayed and either
(A) an enforcement proceeding is commenced with respect to such judgment
or decree or (B) such judgment or decree remains outstanding the later of
(i) the day which is the sixtieth day after the judgment is rendered and
(ii) the day on which any right to appeal expires; or
(10) any Subsidiary Guaranty ceases to be in full force and effect
(except as contemplated by the terms thereof) or any Guarantor Subsidiary
shall deny or disaffirm its obligations under this Indenture or any
Subsidiary Guaranty and such Default continues for 10 days.
The foregoing shall constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected 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.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4) or (5) is not an Event of Default until
the Trustee or the Holders of at least 25% in principal amount of the
outstanding Securities notify the Company of the Default and the Company does
not cure such Default within the time specified in clauses (4) or (5) hereof
after receipt of such notice. Such notice must
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specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default."
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (3), (6), (7) or (10) and any event which with
the giving of notice or the lapse of time would become an Event of Default under
clause (4), (5), (8) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(7) or 6.01(8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the outstanding Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.01(7) or 6.01(8) with respect to
the Company occurs and is continuing, the principal of and interest on all the
Securities shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Securityholders.
The Holders of a majority in principal amount of the Securities by notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquies-
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cence in the Event of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security or (ii) a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any
consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Securityholder may not pursue
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
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(5) the Holders of a majority in principal amount of the Securities
do not give the Trustee a direction inconsistent with the request during
such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and interest on the Securities held by such Holder, on
or after the respective due dates expressed in the Securities, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(1) or 6.01(2) occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company for the whole amount then due and owing (together with interest on
any unpaid interest to the extent lawful) and the amounts provided for in
Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents and take such other actions,
including participating as a member, voting or otherwise, of any committee of
creditors appointed in the matter, as may be necessary or advisable in order to
have the claims of the Trustee and the Securityholders allowed in any judicial
proceedings relative to the Company, any Subsidiary, their respective creditors
or their property and, unless prohibited by law or applicable regulations, may
vote on behalf of the Holders in any election of a trustee in bankruptcy or
other Person performing similar functions, and any Custodian in any such
judicial proceeding is hereby authorized by each Holder to make 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, its agents and its counsel, and any other amounts due the Trustee under
Section 7.07.
Nothing herein shall be deemed to empower the Trustee to authorize
or consent to, or accept or adopt on behalf of any Securityholder, any plan of
reorganization,
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arrangement, adjustment or composition affecting the Securities or the rights of
any Securityholder, or to authorize the Trustee to vote in respect of the claim
of any Securityholder in any such proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money or
property from the Company pursuant to this Article VI, it shall pay out the
money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section. At least 15 days before such record
date, the Trustee shall mail to each Securityholder and the Company a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Company, a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a
suit by Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it
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may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and shall not hinder, delay or impede the execution of any power herein
granted to the Trustee, but shall suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 6.13. Restoration of Rights and Remedies. If the Trustee or
any Securityholder 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
Securityholder, then, and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Securityholders shall be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Company, Trustee and Securityholders
shall continue as though no such proceeding had been instituted.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against 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.
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(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section and Section 7.02(e);
(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 written
direction received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. Subject to Section 7.01: (a) The
Trustee may conclusively rely on any document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opin-
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ion of Counsel. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on the Officers' Certificate or Opinion of
Counsel.
(c) The Trustee may act through 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; provided, however, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers created in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction.
(g) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it
may see fit.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, it will not be responsible
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for the use or application of any monies received by a Paying Agent other than
the Trustee, and it shall not be responsible for any statement of the Company in
this Indenture or in any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee's certificate of
authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to a Trust Officer of the Trustee, the Trustee
shall mail to each Securityholder notice of the Default within the earlier of 90
days after it occurs or 30 days after it is known to a Trust Officer or written
notice of it is received by the Trustee. Except in the case of a Default in
payment of principal of, premium (if any) or interest on any Security (including
payments pursuant to the mandatory redemption provisions of such Security, if
any), the Trustee may withhold the notice if and so long as a committee of its
Trust Officers in good faith determines that withholding the notice is in the
interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with May 15, 1998, and in any event
prior to July 15 in each year, the Trustee shall mail to each Securityholder a
brief report dated as of May 15 that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report shall be transmitted). The Trustee will
also comply with TIA ss. 313(b) and TIA ss. 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to
the Trustee, Paying Agent and Registrar 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 shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and other professionals. Any costs and expenses associated
with
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the Exchange Securities shall be paid by the Company. The Company shall
indemnify the Trustee, Paying Agent, Registrar, and each of their officers,
directors and employees (each in their respective capacities), for and hold each
of them harmless against any and all loss, liability or expense (including
attorneys' fees) incurred by them without negligence or bad faith on their part
in connection with the administration of this trust and the performance of their
duties hereunder, including the costs and expenses of defending itself against
any claim or liability in connection with the acceptance, exercise or
performance of any of its powers or duties hereunder. The Trustee, Paying Agent
and Registrar shall notify the Company of any claim for which they may seek
indemnity promptly upon obtaining actual knowledge thereof; provided that any
failure so to notify the Company shall not relieve the Company of its indemnity
obligations hereunder except to the extent the Company shall have been adversely
affected thereby. The Company shall defend the claim and the indemnified party
shall provide reasonable cooperation at the Company's expense in the defense.
Such indemnified parties may have separate counsel and the Company shall pay the
fees and expenses of such counsel; provided that the Company shall not be
required to pay such fees and expenses if it assumes such indemnified parties'
defense and, in such indemnified parties' reasonable judgment, there is no
conflict of interest between the Company and such parties in connection with
such defense. The Company need not pay for any settlement made without its
written consent. The Company need not reimburse any expense or indemnify against
any loss, liability or expense incurred by an indemnified party through such
party's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee, Paying Agent or
Registrar incurs expenses after the occurrence of a Default specified in Section
6.01(7) or 6.01(8) with respect to the Company, the expenses are intended to
constitute expenses of administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Company
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in writing. The Holders of a majority in principal amount of the Securities may
remove the Trustee by so notifying the Company and the Trustee and may appoint a
successor Trustee with the consent of the Company, which shall not be
unreasonably withheld. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders
of a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon 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. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under
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Section 7.07 shall continue for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
out standing if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
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ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancelation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III hereof
and the Company irrevocably deposits with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due will be
sufficient to pay at maturity or upon redemption all outstanding Securities,
including interest thereon to maturity or such redemption date (other than
Securities replaced pursuant to Section 2.07), and if in either case the Company
pays all other sums payable hereunder by the Company including, but not limited
to fees and expenses of the Trustee and its counsel, then this Indenture shall,
subject to Section 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06, the Company at any
time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12, 4.13, 4.14, 4.15,
5.01(iii) and 5.01(iv) and the operation of Sections 6.01(4), 6.01(6), 6.01(7)
(with respect to Restricted Subsidiaries only), 6.01(8) (with respect to
Restricted Subsidiaries only), 6.01(9) and 6.01(10) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Sections 6.01(4),
6.01(6), 6.01(7) (with respect to Restricted Subsidiaries only), 6.01(8) (with
respect to Restricted Subsidiaries only), 6.01(9) and 6.01(10) or because of the
failure of the Company to comply with Sections 5.01(iii) and 5.01(iv).
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Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06 shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal, premium (if
any) and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(7) or 6.01(8) with respect to
the Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
(5) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(6) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an
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Opinion of Counsel stating that (i) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling, or
(ii) since the date of this Indenture there has been a change in the
applicable federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the
Securityholders will not recognize income, gain or loss for federal income
tax purposes as a result of such 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 defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders 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; and
(8) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
VIII have been complied with.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to this Section 8.02 or the principal, premium, if any, and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Securities.
Anything in this Section 8.02 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request,
in writing, by the Company any cash in dollars or U.S. Government Obligations
held by it as provided in paragraph (d) above which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect an
equivalent legal defeasance or covenant defeasance.
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Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal or interest that remains unclaimed for two years,
and, thereafter, Securityholders entitled to the money must look to the Company
for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Company
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations other than
any tax, fee or other charge which by law is for the account of the
Securityholders.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or
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U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company, the Guarantor
Subsidiaries and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Section 4.15 or Article V;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article X or Article XII that would limit
or terminate the benefits available to any holder of Senior Indebtedness
(or Representative therefor) under Article X or Article XII;
(5) to add further Guarantees with respect to the Securities or to
release Guarantor Subsidiaries when permitted by the terms hereof, or to
secure the Securities;
(6) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(7) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA;
(8) to make any change that does not adversely affect the rights of
any Securityholder; or
(9) to provide for the issuance and authorization of the Exchange
Securities.
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Notwithstanding the foregoing and Section 9.02, on the date hereof
(but after execution and delivery of this Indenture and the issuance of the
Securities and after or concurrently with consummation of the Neenah Merger),
the Neenah Corporation, the Initial Guarantors and the Trustee shall execute and
deliver the First Supplemental Indenture.
An amendment under this Section may not make any change that
adversely affects the rights under Article X or Article XII of any holder of
Senior Indebtedness of the Company or any Guarantor Subsidiary then outstanding
unless the holders of such Senior Indebtedness (or any group or representative
thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company, the Guarantor
Subsidiaries and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written consent of the Holders of at
least a majority in principal amount of the Securities. The Holders of at least
a majority in principal amount of the Securities may waive compliance by the
Company or any Guarantor Subsidiary with any provision or covenant of this
Indenture or the Securities. However, without the consent of each Securityholder
affected, an amendment or waiver may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment or waiver;
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption of any Security
or change the time at which any Security may be redeemed in accordance
with Article III;
(5) make any Security payable in money other than that stated in the
Security;
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(6) make any change in Article X or Article XII that adversely
affects the rights of any Securityholder under Article X or Article XII;
(7) impair the right of any Holder to receive payment of principal
of and interest on such Holder's Securities on or after the due dates
therefor or to institute suit for the enforcement of any payment on or
with respect to such Holder's Securities.
(8) modify the Subsidiary Guarantees (except as contemplated by the
terms thereof or of this Indenture) in any manner adverse to the Holders;
or
(9) make any change in Section 6.04, Section 6.07 or the third
sentence of this Section.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article X or Article XII of any holder of
Senior Indebtedness of the Company or a Guarantor Subsidiary then outstanding
unless the holders of such Senior Indebtedness (or any group or representative
thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee
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receives the notice of revocation before the date the amendment or waiver
becomes effective. After an amendment or waiver becomes effective, it shall bind
every Securityholder. An amendment or waiver becomes effective once the
consents from the Holders of the requisite percentage in principal amount of
outstanding Securities are received by the Company or the Trustee.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and complies with the
provisions hereof (including Section 9.03).
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration,
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whether by way of interest, fee or otherwise, to any Holder for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Securities unless such consideration is offered to be
paid to all Holders that so consent, waive or agree to amend in the time frame
set forth in solicitation documents relating to such consent, waiver or
agreement.
ARTICLE X
Subordination of the Securities
SECTION 10.01. Agreement To Subordinate. The Company agrees, and
each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article X, to the prior payment in full of
all Senior Indebtedness of the Company and that the subordination is for the
benefit of and enforceable by the holders of Senior Indebtedness of the Company.
The Securities shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of the Company, and only Indebtedness of the Company
that is Senior Indebtedness of the Company shall rank senior to the Securities
in accordance with the provisions set forth herein. For purposes of these
subordination provisions, the Indebtedness evidenced by the Securities is deemed
to include the liquidated damages payable pursuant to the provisions set forth
in the Securities and the Exchange and Registration Rights Agreement. All
provisions of this Article X shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company and its properties:
(1) holders of Senior Indebtedness of the Company shall be entitled
to receive payment in full of such Senior Indebtedness before
Securityholders shall be entitled to receive any payment of principal of
or interest on the Securities; and
(2) until the Senior Indebtedness of the Company is paid in full,
any payment or distribution to which Securityholders would be entitled but
for this
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Article X shall be made to holders of such Senior Indebtedness as their
respective interests may appear.
SECTION 10.03. Default on Senior Indebtedness of the Company. The
Company may not pay the principal of, premium (if any) or interest on the
Securities or make any deposit pursuant to Section 8.01 and may not otherwise
purchase, redeem or otherwise retire any Securities (collectively, "pay the
Securities") if (i) any Senior Indebtedness of the Company is not paid when due
or (ii) any other default on Senior Indebtedness of the Company occurs and the
maturity of such Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Senior Indebtedness has been paid in
full; provided, however, that the Company may pay the Securities without regard
to the foregoing if the Company and the Trustee receive written notice approving
such payment from the Representative of the holders of such Senior Indebtedness
with respect to which either of the events in clause (i) or (ii) of this
sentence has occurred and is continuing. During the continuance of any default
(other than a default described in clause (i) or (ii) of the preceding sentence)
with respect to any Designated Senior Indebtedness of the Company pursuant to
which the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, the Company may not pay the
Securities for a period (a "Payment Blockage Period") commencing upon the
receipt by the Trustee (with a copy to the Company) of written notice (a
"Blockage Notice") of such default from the Representative of the holders of the
Designated Senior Indebtedness of the Company specifying an election to effect a
Payment Blockage Period and ending 179 days thereafter (or earlier if such
Payment Blockage Period is terminated (i) by written notice to the Trustee (with
a copy to the Company) from the Person or Persons who gave such Blockage Notice,
(ii) because such Designated Senior Indebtedness has been repaid in full or
(iii) because the default giving rise to such Blockage Notice is no longer
continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in the first
sentence of this Section), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume payments
on the Securities after such Payment Blockage Period, including any missed
payments. Not more than one Blockage Notice may be given in any consecutive
360-day
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period, irrespective of the number of defaults with respect to Designated Senior
Indebtedness of the Company during such period; provided, however, that if any
Blockage Notice within such 360-day period is given by or on behalf of any
holders of Designated Senior Indebtedness of the Company (other than the Bank
Indebtedness), the Representative of the Bank Indebtedness may give another
Blockage Notice within such period; provided further, however, that in no event
may the total number of days during which any Payment Blockage Period or Periods
is in effect exceed 179 days in the aggregate during any 360 consecutive day
period.
SECTION 10.04. Acceleration of Payment of Securities. If payment of
the Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
of the Company (or the Representative of such holders) of the acceleration. If
any Designated Senior Indebtedness of the Company is outstanding, the Company
may not pay the Securities until five Business Days after such holders or the
Representative of the holders of the Designated Senior Indebtedness of the
Company receive notice of such acceleration and, thereafter, may pay the
Securities only if this Article X otherwise permits payment at that time.
SECTION 10.05. When Distribution Must Be Paid Over. If a payment or
distribution is made to Securityholders that because of this Article X should
not have been made to them, the Securityholders who receive the payment or
distribution shall hold such payment or distribution in trust for holders of the
Senior Indebtedness of the Company and pay it over to them as their respective
interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of the
Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness of the Company to receive distributions applicable to Senior
Indebtedness of the Company. A distribution made under this Article X to holders
of Senior Indebtedness of the Company which otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a payment by
the Company on Senior Indebtedness of the Company.
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SECTION 10.07. Relative Rights. This Article X defines the relative
rights of Securityholders and holders of Senior Indebtedness of the Company.
Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of the Company to receive distributions otherwise
payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired by Company. No
right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent. Notwithstanding
Section 10.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives written notice satisfactory to it that payments may not be made under
this Article X. The Company, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness of the Company may give the
notice; provided, however, that, if an issue of Senior Indebtedness of the
Company has a Representative, only the Representative may give the notice. The
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself or itself to be a holder of any Senior Indebtedness
of the Company (or a Representative of such holder) to establish that such
notice has been given by a holder of such Senior Indebtedness or Representative
thereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of the Company with the same rights it would have if it were not
Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all
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the rights set forth in this Article X with respect to any Senior Indebtedness
of the Company which may at any time be held by it, to the same extent as any
other holder of Senior Indebtedness of the Company; and nothing in Article VII
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article X shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, the distribution may be made and the notice given to their
Representative (if any).
SECTION 10.11. Article X Not To Prevent Events of Default or Limit
Right To Accelerate. The failure to make a payment pursuant to the Securities by
reason of any provision in this Article X shall not be construed as preventing
the occurrence of a Default. Nothing in this Article X shall have any effect on
the right of the Securityholders or the Trustee to accelerate the maturity of
the Securities.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebtedness of the Company or
subject to the restrictions set forth in this Article X, and none of the
Securityholders shall be obligated to pay over any such amount to the Company or
any holder of Senior Indebtedness of the Company or any other creditor of the
Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness of the Company and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount
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or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article X. In the event that the Trustee determines, in good faith, that
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness of the Company to participate in any payment or distribution
pursuant to this Article X, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness of the Company held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article X, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article X.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of the Company as provided in this Article X and appoints
the Trustee as attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Company. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of the Company and shall
not be liable to any such holders if it shall mistakenly pay over or distribute
to Securityholders or the Company or any other Person, money or assets to which
any holders of Senior Indebtedness of the Company shall be entitled by virtue of
this Article X or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness of the
Company on Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of the Company, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
such Senior Indebtedness of the Company shall be deemed conclusively to have
relied on
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such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
SECTION 10.17. Trustee's Compensation Not Prejudiced. Nothing in
this Article shall apply to amounts due to the Trustee pursuant to other
sections of this Indenture.
ARTICLE XI
Subsidiary Guarantees
SECTION 11.01. Subsidiary Guarantees. Each Guarantor Subsidiary
hereby jointly and severally unconditionally and irrevocably guarantees, as a
primary obligor and not merely as a surety, to each Holder and to the Trustee
and its successors and assigns (a) the full and punctual payment of principal of
and interest on the Securities when due, whether at maturity, by acceleration,
by redemption or otherwise, and all other monetary obligations of the Company
under this Indenture (including obligations to the Trustee) and the Securities
and (b) the full and punctual performance within applicable grace periods of all
other obligations of the Company whether for expenses, indemnification or
otherwise under this Indenture and the Securities (all the foregoing being
hereinafter collectively called the "Obligations"). Each Guarantor Subsidiary
further agrees that the Obligations may be extended or renewed, in whole or in
part, without notice or further assent from each such Guarantor Subsidiary, and
that each such Guarantor Subsidiary shall remain bound under this Article XI
notwithstanding any extension or renewal of any Obligation.
Each Guarantor Subsidiary waives presentation to, demand of, payment
from and protest to the Company of any of the Obligations and also waives notice
of protest for nonpayment. Each Guarantor Subsidiary waives notice of any
default under the Securities or the Obligations. The obligations of each
Guarantor Subsidiary hereunder shall not be affected by (a) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Company or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (b) any extension or renewal of
any thereof; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities or any other agreement;
(d) the release of any security held by any Holder or the Trustee for the
Obligations or any of
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them; (e) the failure of any Holder or Trustee to exercise any right or remedy
against any other guarantor of the Obligations; or (f) any change in the
ownership of such Guarantor Subsidiary, except as provided in Section 11.02(b).
Each Guarantor Subsidiary further agrees that its Subsidiary
Guaranty herein constitutes a guarantee of payment, performance and compliance
when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Obligations.
The obligations of each Guarantor Subsidiary hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor Subsidiary herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under this Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of any Guarantor Subsidiary or would
otherwise operate as a discharge of any Guarantor Subsidiary as a matter of law
or equity.
Each Guarantor Subsidiary further agrees that its Subsidiary
Guaranty herein shall continue to be effective or be reinstated, as the case may
be, if at any time payment, or any part thereof, of principal of or interest on
any Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Guarantor Subsidiary by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or
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comply with any other Obligation, each Guarantor Subsidiary hereby promises to
and shall, upon receipt of written demand by the Trustee, forthwith pay, or
cause to be paid, in cash, to the Holders or the Trustee an amount equal to the
sum of (i) the unpaid principal amount of such Obligations, (ii) accrued and
unpaid interest on such Obligations (but only to the extent not prohibited by
law) and (iii) all other monetary Obligations of the Company to the Holders and
the Trustee.
Each Guarantor Subsidiary agrees that it shall 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. Each
Guarantor Subsidiary further agrees that, as between it, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in Article VI for
the purposes of any Subsidiary Guaranty herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such Obligations as provided in Article VI, such Obligations
(whether or not due and payable) shall forthwith become due and payable by such
Guarantor Subsidiary for the purposes of this Section.
Each Guarantor Subsidiary also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section.
SECTION 11.02. Limitation on Liability. (a) Any term or provision of
this Indenture to the contrary notwithstanding, the maximum, aggregate amount of
the obligations guaranteed hereunder by any Guarantor Subsidiary shall not
exceed the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to any Guarantor Subsidiary, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
(b) This Subsidiary Guaranty as to any Guarantor Subsidiary shall
terminate and be of no further force or effect upon the sale or other transfer
(i) by such Guarantor Subsidiary of all or substantially all of its assets or
(ii) by the Company of all of its stock or other equity interests in such
Guarantor Subsidiary, to a Person that is not an Affiliate of the Company;
provided, however, that such sale or transfer shall be deemed to constitute an
Asset
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Disposition and the Company shall comply with its obligations under Section
4.06.
SECTION 11.03. Successors and Assigns. This Article XI shall be
binding upon each Guarantor Subsidiary and its successors and assigns and shall
enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 11.04. No Waiver. Neither a failure nor a delay on the part
of either the Trustee or the Holders in exercising any right, power or privilege
under this Article XI shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article XI at law,
in equity, by statute or otherwise.
SECTION 11.05. Modification. No modification, amendment or waiver of
any provision of this Article XI, nor the consent to any departure by any
Guarantor Subsidiary therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Guarantor Subsidiary in any case shall
entitle such Guarantor Subsidiary to any other or further notice or demand in
the same, similar or other circumstances.
SECTION 11.06. Initial Guarantors; Execution of Supplemental
Indenture for Future Guarantor Subsidiaries. (a) Upon consummation of the Neenah
Merger and execution and delivery of the First Supplemental Indenture pursuant
to Section 9.01 hereof, the Initial Guarantors will become Guarantor
Subsidiaries.
(b) Each Subsidiary which is required to become a Guarantor
Subsidiary pursuant to Section 4.15 shall promptly execute and deliver to the
Trustee a supplemental indenture in the form of Exhibit D hereto pursuant to
which such Subsidiary shall become a Guarantor Subsidiary under this
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Article XI and shall guarantee the Obligations. Concurrently with the execution
and delivery of such supplemental indenture, the Company shall deliver to the
Trustee an Opinion of Counsel and an Officers' Certificate to the effect that
such supplemental indenture has been duly authorized, executed and delivered by
such Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating to
creditors' rights generally and to the principles of equity, whether considered
in a proceeding at law or in equity, the Subsidiary Guaranty of such Guarantor
Subsidiary is a legal, valid and binding obligation of such Guarantor
Subsidiary, enforceable against such Guarantor Subsidiary in accordance with its
terms.
ARTICLE XII
Subordination of the Subsidiary Guaranties
SECTION 12.01. Agreement To Subordinate. Each Guarantor Subsidiary
agrees, and each Securityholder by accepting a Security agrees, that the
Obligations of a Guarantor Subsidiary are subordinated in right of payment, to
the extent and in the manner provided in this Article XII, to the prior payment
in full of all Senior Indebtedness of such Guarantor Subsidiary and that the
subordination is for the benefit of and enforceable by the holders of Senior
Indebtedness of such Guarantor Subsidiary. The Obligations with respect to a
Guarantor Subsidiary shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of such Guarantor Subsidiary, and only Indebtedness of
such Guarantor Subsidiary that is Senior Indebtedness of such Guarantor
Subsidiary shall rank senior to the Obligations of such Guarantor Subsidiary in
accordance with the provisions set forth herein.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of a Guarantor Subsidiary to creditors
upon a total or partial liquidation or a total or partial dissolution of such
Guarantor Subsidiary or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Guarantor Subsidiary and its
properties:
(1) holders of Senior Indebtedness of such Guarantor Subsidiary
shall be entitled to receive payment in full of such Senior Indebtedness
before Securityholders shall be entitled to receive any payment of any
Obligations from such Guarantor Subsidiary; and
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(2) until the Senior Indebtedness of such Guarantor Subsidiary is
paid in full, any payment or distribution to which Securityholders would
be entitled but for this Article XII shall be made to holders of such
Senior Indebtedness as their respective interests may appear.
SECTION 12.03. Default on Senior Indebtedness of a Guarantor
Subsidiary. A Guarantor Subsidiary may not make any payment pursuant to any of
the Obligations or repurchase, redeem or otherwise retire any Securities
(collectively, "pay its Guaranty") if (i) any Senior Indebtedness of such
Guarantor Subsidiary is not paid when due or (ii) any other default on Senior
Indebtedness of such Guarantor Subsidiary occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the default has been cured or waived and any such acceleration has been
rescinded or (y) such Senior Indebtedness has been paid in full; provided,
however, that such Guarantor Subsidiary may pay its Guaranty without regard to
the foregoing if such Guarantor Subsidiary and the Trustee receive written
notice approving such payment from the Representative of the holders of such
Senior Indebtedness with respect to which either of the events in clause (i) or
(ii) of this sentence has occurred and is continuing. During the continuance of
any default (other than a default described in clause (i) or (ii) of the
preceding sentence) with respect to any Designated Senior Indebtedness of a
Guarantor Subsidiary pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods,
such Subsidiary Guarantor may not pay its Guaranty for a period (a "Guarantor
Subsidiary Payment Blockage Period") commencing upon the receipt by the Trustee
(with a copy to such Guarantor Subsidiary and the Company) of written notice (a
"Guarantor Subsidiary Blockage Notice") of such default from the Representative
of the holders of the Designated Senior Indebtedness of such Guarantor
Subsidiary specifying an election to effect a Guarantor Subsidiary Payment
Blockage Period and ending 179 days thereafter (or earlier if such Guarantor
Subsidiary Payment Blockage Period is terminated (i) by written notice to the
Trustee (with a copy to such Guarantor Subsidiary and the Company) from the
Person or Persons who gave such Guarantor Subsidiary Blockage Notice, (ii)
because such Designated Senior Indebtedness has been repaid in full or (iii)
because the default giving rise to such Guarantor Subsidiary Blockage Notice is
no longer continuing). Notwithstanding the provisions described in
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the immediately preceding sentence (but subject to the provisions contained in
the first sentence of this Section), unless the holders of such Designated
Senior Indebtedness or the Representative of such holders shall have accelerated
the maturity of such Designated Senior Indebtedness, such Guarantor Subsidiary
may resume to pay its Guaranty after such Guarantor Subsidiary Payment Blockage
Period, including any missed payments. Not more than one Guarantor Subsidiary
Blockage Notice may be given with respect to a Guarantor Subsidiary in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness of such Guarantor Subsidiary during such
period; provided, however, that if any Guarantor Subsidiary Blockage Notice
within such 360-day period is given by or on behalf of any holders of Designated
Senior Indebtedness of such Guarantor Subsidiary (other than the Bank
Indebtedness), the Representative of the Bank Indebtedness may give another
Guarantor Subsidiary Blockage Notice within such period; provided further,
however, that in no event may the total number of days during which any
Guarantor Subsidiary Payment Blockage Period or Periods is in effect exceed 179
days in the aggregate during any 360 consecutive day period.
SECTION 12.04. Demand for Payment. If payment of the Securities is
accelerated because of an Event of Default and a demand for payment is made on a
Guarantor Subsidiary pursuant to Article XI the Trustee shall promptly notify
the holders of the Designated Senior Indebtedness of such Guarantor Subsidiary
(or the Representative of such holders) of such demand. If any Designated Senior
Indebtedness of such Guarantor Subsidiary is outstanding, such Guarantor
Subsidiary may not pay its Guaranty until five Business Days after such holders
or the Representative of the holders of the Designated Senior Indebtedness of
such Guarantor Subsidiary receive notice of such demand and, thereafter, may pay
its Guaranty only if this Article XII otherwise permits payment at that time.
SECTION 12.05. When Distribution Must Be Paid Over. If a payment or
distribution is made to Securityholders that because of this Article XII should
not have been made to them, the Securityholders who receive the payment or
distribution shall hold such payment or distribution in trust for holders of the
Senior Indebtedness of the relevant Guarantor Subsidiary and pay it over to them
as their respective interests may appear.
SECTION 12.06. Subrogation. After all Senior Indebtedness of a
Guarantor Subsidiary is paid in full and
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until the Securities are paid in full, Securityholders shall be subrogated to
the rights of holders of Senior Indebtedness of such Guarantor Subsidiary to
receive distributions applicable to Senior Indebtedness of such Guarantor
Subsidiary. A distribution made under this Article XII to holders of Senior
Indebtedness of such Guarantor Subsidiary which otherwise would have been made
to Securityholders is not, as between such Guarantor Subsidiary and
Securityholders, a payment by such Guarantor Subsidiary on Senior Indebtedness
of such Guarantor Subsidiary.
SECTION 12.07. Relative Rights. This Article XII defines the
relative rights of Securityholders and holders of Senior Indebtedness of a
Guarantor Subsidiary. Nothing in this Indenture shall:
(1) impair, as between a Guarantor Subsidiary and Securityholders,
the obligation of a Guarantor Subsidiary which is absolute and
unconditional, to pay its Obligations to the extent set forth in Article
XI; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a default by a Guarantor Subsidiary under its
Obligations, subject to the rights of holders of Senior Indebtedness of
such Guarantor Subsidiary to receive distributions otherwise payable to
Securityholders.
SECTION 12.08. Subordination May Not Be Impaired by a Guarantor
Subsidiary. No right of any holder of Senior Indebtedness of a Guarantor
Subsidiary to enforce the subordination of the Obligations of such Guarantor
Subsidiary shall be impaired by any act or failure to act by such Guarantor
Subsidiary or by its failure to comply with this Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent. Notwithstanding
Section 12.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article XII. A Guarantor Subsidiary, the Registrar or co-registrar, the Paying
Agent, a Representative or a holder of Senior Indebtedness of a Guarantor
Subsidiary may give the notice; provided, however, that, if an issue of Senior
Indebtedness of a Guarantor Subsidiary has a Representative,
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only the Representative may give the notice. The Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
or itself to be a holder of any Senior Indebtedness of a Guarantor Subsidiary
(or a Representative of such holder) to establish that such notice has been
given by a holder of such Senior Indebtedness or Representative thereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of a Guarantor Subsidiary with the same rights it would have if it
were not Trustee. The Registrar and co-registrar and the Paying Agent may do the
same with like rights. The Trustee shall be entitled to all the rights set forth
in this Article XII with respect to any Senior Indebtedness of a Guarantor
Subsidiary which may at any time be held by it, to the same extent as any other
holder of Senior Indebtedness of such Guarantor Subsidiary; and nothing in
Article VII shall deprive the Trustee of any of its rights as such holder.
Nothing in this Article XII shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
SECTION 12.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of a Guarantor Subsidiary, the distribution may be made and the notice given to
their Representative (if any).
SECTION 12.11. Article XII Not To Prevent Events of Default or Limit
Right To Accelerate. The failure of a Guarantor Subsidiary to make a payment on
any of its Obligations by reason of any provision in this Article XII shall not
be construed as preventing the occurrence of a default by such Guarantor
Subsidiary under its Obligations. Nothing in this Article XII shall have any
effect on the right of the Securityholders or the Trustee to make a demand for
payment on a Guarantor Subsidiary pursuant to Article XI.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article XII, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of a Guarantor Subsidiary for the purpose of ascertaining the
Persons entitled to participate
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in such payment or distribution, the holders of the Senior Indebtedness of a
Guarantor Subsidiary and other Indebtedness of a Guarantor Subsidiary, 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. In the
event that the Trustee determines, in good faith, that evidence is required with
respect to the right of any Person as a holder of Senior Indebtedness of a
Guarantor Subsidiary to participate in any payment or distribution pursuant to
this Article XII, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
of such Guarantor Subsidiary held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article XII, and, if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article XII.
SECTION 12.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of each of the Guarantor Subsidiaries as provided in this
Article XII and appoints the Trustee as attorney-in-fact for any and all such
purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of a Guarantor Subsidiary. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness of a Guarantor
Subsidiary and shall not be liable to any such holders if it shall mistakenly
pay over or distribute to Securityholders or the relevant Guarantor Subsidiary
or any other Person, money or assets to which any holders of Senior Indebtedness
of such Guarantor Subsidiary shall be entitled by virtue of this Article XII or
otherwise.
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a
Guarantor Subsidiary on Subordination Provisions. Each Securityholder by
accepting a Security acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement and a consideration to
each holder of any Senior Indebtedness of a
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Guarantor Subsidiary, whether such Senior Indebtedness was created or acquired
before or after the issuance of the Securities, to acquire and continue to hold,
or to continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE XIII
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail or by national
overnight courier service addressed as follows:
if to the Company or any Guarantor Subsidiary:
2121 Brooks Avenue
Neenah, WI 54957
Attention of:
Chief Financial Officer
if to the Trustee:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036
Attention: Corporate Trust Division
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed by first class mail within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its
<PAGE> 119
111
sufficiency with respect to other Securityholders. If a notice or communication
is mailed in the manner provided above, it is duly given, whether or not the
addressee receives it, except that any such notice to the Trustee must be
received by a Trust Officer to be duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice.
SECTION 13.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee and complying with Section 11.05 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 complied
with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee and complying with Section 11.05 stating that,
in the opinion of such counsel, all such conditions precedent have been
complied with.
SECTION 13.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual 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
<PAGE> 120
112
statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. When Securities Disregarded. In determining whether
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which commercial banking institutions (including, without
limitation, the Federal Reserve System) are authorized or required by law to
close in New York City. If a payment date is a Legal Holiday, payment shall be
made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 13.09. Governing Law. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
<PAGE> 121
113
SECTION 13.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company of any Guarantor Subsidiary
shall not have any liability for any obligations of the Company or any Guarantor
Subsidiary under the Securities or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of the
Securities.
SECTION 13.11. Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 13.12. Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 13.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
<PAGE> 122
114
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
NC MERGER COMPANY,
by
-------------------------
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK
by
-------------------------
Name:
Title:
<PAGE> 123
[FACE OF INITIAL SECURITY]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("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.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE 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.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT 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 WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) 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 SECURITY
<PAGE> 124
2
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, IN EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PURCHASE PRICE OF
$250,000 FOR SUCH SECURITIES FOR INVESTMENT PURPOSES 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 THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE
(D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF ANY OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
COMPANY AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
NC MERGER COMPANY
11-1/8% SENIOR SUBORDINATED NOTE DUE 2007
No. C-1 CUSIP No. 640071AA4
$150,000,000
NC MERGER COMPANY, a Wisconsin corporation, promises to pay to Cede
& Co., or registered assigns, the principal sum of $150,000,000 on May 1, 2007.
Interest Payment Dates: May 1 and November 1
<PAGE> 125
3
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the other
side of this Security.
Dated: April 30, 1997
NC MERGER COMPANY,
by
-----------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture,
by
---------------------------
Authorized Signatory
<PAGE> 126
4
Assumed and Guaranteed
pursuant to the First
Supplemental Indenture
NEENAH CORPORATION,
by
-----------------------
Name:
Title:
NEENAH FOUNDRY COMPANY,
by
-----------------------
Name:
Title:
NEENAH TRANSPORT, INC.,
by
-----------------------
Name:
Title:
HARTLEY CONTROLS CORPORATION,
by
-----------------------
Name:
Title:
<PAGE> 127
5
[REVERSE SIDE OF INITIAL SECURITY]
11-1/8% Senior Subordinated Note due 2007
1. Interest
NC Merger Company, a Wisconsin corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above. The Company and the
Guarantor Subsidiaries will use their best efforts to have the Exchange Offer
Registration Statement or, if applicable, the Shelf Registration Statement (each
a "Registration Statement") declared effective by the Commission as promptly as
practicable after the filing thereof. If (i) the Shelf Registration Statement or
Exchange Offer Registration Statement, as applicable under the Exchange and
Registration Rights Agreement is not filed with the Commission on or prior to 45
days after the Issue Date, (ii) the Exchange Offer Registration Statement or, as
the case may be, the Shelf Registration Statement, is not declared effective
within 105 days after the Issue Date, (iii) the Exchange Offer is not
consummated on or prior to 135 days after the Issue Date, or (iv) the Shelf
Registration Statement is filed and declared effective within 105 days after the
Issue Date but shall thereafter cease to be effective (at any time that the
Company is obligated to maintain the effectiveness thereof) without being
succeeded within 30 days by an additional Registration Statement filed and
declared effective (each such event referred to in clauses (i) through (iv), a
"Registration Default"), the Company will pay liquidated damages to each holder
of Transfer Restricted Securities, during the period of such Registration
Default, in an amount equal to $0.192 per week per $1,000 principal amount of
the Securities constituting Transfer Restricted Securities held by such holder
until the applicable Registration Statement is filed or declared effective, the
Exchange Offer is consummated or the Shelf Registration Statement again becomes
effective, as the case may be. All accrued liquidated damages shall be paid to
holders in the same manner as interest payments on the Securities on semi-annual
payment dates which correspond to interest payment dates for the Securities.
Following the cure of all Registration Defaults, the accrual of liquidated
damages will cease. The Trustee shall have no responsibility with respect to the
determination of the
<PAGE> 128
6
amount of any such liquidated damages. For purposes of the foregoing, "Transfer
Restricted Securities" means each Initial Security until (i) the date on which
such Initial Security has been exchanged for a freely transferable Exchange
Security in the Exchange Offer, (ii) the date on which such Initial Security has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iii) the date on which such
Initial Security is distributed to the public pursuant to Rule 144 under the
Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.
The Company will pay interest and liquidated damages, if any,
semiannually on May 1 and November 1 of each year. Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from April 30, 1997. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay interest
on overdue principal at the rate borne by the Securities plus 1% per annum, and
it shall pay interest on overdue installments of interest at the same rate to
the extent lawful.
2. Method of Payment
The Company will pay interest (except defaulted interest) on and
liquidated damages, if any, in respect of the Securities to the Persons who are
registered holders of Securities at the close of business on the April 15 or
October 15 next preceding the interest payment date even if Securities are
canceled after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money or by wire transfer of federal funds.
<PAGE> 129
7
3. Paying Agent and Registrar
Initially, UNITED STATES TRUST COMPANY OF NEW YORK, a New York
banking corporation ("Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice to the Holders. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture and First Supplemental Indenture
The Company issued the Securities under an Indenture dated as of
April 30, 1997 ("Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
Pursuant to the First Supplemental Indenture dated as of April 30,
1997, among Neenah Corporation, the Initial Guarantors and the Trustee, Neenah
Corporation assumed the Company's obligations under the Indenture and the
Securities and each of the Initial Guarantors agreed to guarantee those
obligations under the Indenture and the Securities.
The Securities are unsecured senior subordinated obligations of the
Company limited to $150,000,000 aggregate principal amount at any one time
outstanding (subject to Section 2.07 of the Indenture). This Security is one of
the Initial Securities referred to in the Indenture. The Securities include the
Initial Securities and any Exchange Securities issued in exchange for the
Initial Securities pursuant to the Indenture. The Initial Securities and the
Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on the Incurrence of
Indebtedness by the Company and its Restricted Subsidiaries; the payment of
dividends on, and redemption of, Capital Stock of the Company and its Restricted
Subsidiaries and the redemption of certain Subordinated Obligations of the
Company and its Restricted Subsidiaries; Investments; sales of assets and
<PAGE> 130
8
Restricted Subsidiary Capital Stock; certain transactions with Affiliates of the
Company; the sale or issuance of Capital Stock of the Restricted Subsidiaries;
the creation of Liens; the lines of business in which the Company and its
Restricted Subsidiaries may operate; Sale/Leaseback Transactions and
consolidations, mergers and transfers of all or substantially all of the
Company's assets. In addition, the Indenture prohibits certain restrictions on
distributions and dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture (as supplemented by the First
Supplemental Indenture), the Initial Guarantors have guaranteed the Company's
obligations under the Indenture on a senior subordinated basis pursuant to the
terms of the Indenture.
5. Optional Redemption
Except as set forth in the next two paragraphs, the Securities may
not be redeemed prior to May 1, 2002. On and after that date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest, if any, to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date that is on or prior to the date of
redemption), if redeemed during the 12-month period beginning on or after May 1
of the years set forth below:
Redemption
Period Price
- ------ ----------
2002........................................................ 105.5625%
2003........................................................ 103.7083%
2004........................................................ 101.8542%
2005 and thereafter......................................... 100.0000%
Notwithstanding the foregoing, at any time prior to May 1, 2000, the
Company may redeem in the aggregate up
<PAGE> 131
9
to 40% of the original aggregate principal amount of Securities with the
proceeds of one or more Public Equity Offerings by the Company at a redemption
price (expressed as a percentage of principal amount) of 111.125% plus accrued
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date); provided, however, that at least 60% of the original
aggregate principal amount of the Securities must remain outstanding after each
such redemption.
At any time prior to May 1, 2002, the Securities may be redeemed, in
whole or in part, at the option of the Company within 180 days after a Change of
Control, at a redemption price equal to the sum of (i) the principal amount
thereof plus (ii) accrued and unpaid interest, if any, to the redemption date
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption) plus (iii) the Applicable Premium.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued interest
on all Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, unless the Company has elected to redeem
the Securities pursuant to paragraph 5, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus
<PAGE> 132
10
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date that is on or prior to the date of
purchase) as provided in, and subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid before the Securities may be
paid. In addition, each Subsidiary Guaranty is subordinated to Senior
Indebtedness of the relevant Guarantor Subsidiary, as defined in the Indenture.
The Company and each Guarantor Subsidiary agrees, and each Securityholder by
accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the Trustee
as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay
any taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
<PAGE> 133
11
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any past default or noncompliance with any provision may be waived
with the consent of the Holders of a majority in principal amount then
outstanding of the Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company and the
Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article V of the Indenture,
or to provide for uncertificated Securities in addition to or in place of
certificated Securities, or to add guarantees with respect to the Securities or
to secure the Securities, or to release Guarantor Subsidiaries when permitted by
the Indenture, or to add additional covenants or surrender rights and powers
conferred on the Company, or to comply with any request of the SEC in connection
with qualifying the Indenture under the Act, or to make any other change that
does not adversely affect the rights of any Securityholder, or to provide for
the issuance and authorization of the Exchange Securities.
<PAGE> 134
12
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30
days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph
5 of the Securities, or failure by the Company to redeem or purchase, upon
declaration or otherwise (whether or not such payment is prohibited by Article
X), Securities when required; (iii) failure by the Company or any Guarantor
Subsidiary to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company or a Significant Subsidiary if the amount
accelerated (or so unpaid) exceeds $5,000,000 or its foreign currency
equivalent; (v) certain events of bankruptcy, insolvency or reorganization with
respect to the Company and its Restricted Subsidiaries; (vi) certain judgments
or decrees not covered by insurance for the payment of money in excess of
$5,000,000 or its foreign currency equivalent against the Company or a
Restricted Subsidiary; and (vii) a Subsidiary Guaranty ceasing to be in full
force and effect (other than in accordance with its terms) or any Guarantor
Subsidiary denies or disaffirms its obligations under the Indenture or any
Subsidiary Guaranty and such Default continues for 10 days. If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or
security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal, premium, if any, or interest)
if and so long as a committee of its Trust Officers in good faith determines
that withholding notice is in the interest of the Holders.
<PAGE> 135
13
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Guarantor Subsidiary shall not have any liability for any
obligations of the Company or a Guarantor Subsidiary under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Governing Law
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN
<PAGE> 136
14
(=joint tenants with rights of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in
it the text of this Security in larger type. Requests may be made to:
NC MERGER COMPANY
2121 Brooks Avenue
Neenah, Wisconsin 54957
Attention of James K. Hildebrand
<PAGE> 137
15
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint _________________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
________________________________________________________________________________
Date: _____________________________ Your Signature: ____________________________
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed by a participant in a
recognized signature guarantee medallion program)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
<PAGE> 138
16
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
|_| has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depository a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
|_| has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such
<PAGE> 139
17
Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW:
(1) |_| to the Company; or
(2) |_| pursuant to an effective registration statement
under the Securities Act of 1933; or
(3) |_| inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act of 1933) that purchases
for its own account or for the account of a
qualified institutional buyer to whom notice is
given that such transfer is being made in reliance
on Rule 144A, in each case pursuant to and in
compliance with Rule 144A under the Securities Act
of 1933; or
(4) |_| o outside the United States in an offshore
transaction within the meaning of Regulation S
under the Securities Act in compliance with Rule
904 under the Securities Act of 1933; or
(5) |_| pursuant to another available exemption from
registration provided by Rule 144 under the
Securities Act of 1933.
<PAGE> 140
18
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that
if box (4) or (5) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided
by Rule 144 under such Act.
------------------------
Signature
Signature Guarantee:
- ----------------------------------- --------------------------
Signature must be guaranteed Signature
________________________________________________________________________________
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated: ________________ ______________________________
NOTICE: To be executed by
an executive officer
<PAGE> 141
19
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase) Custodian
</TABLE>
<PAGE> 142
20
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
|_|
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
$_______________
Date: __________________ Your Signature: ___________________________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:_________________________________________________________
(Signature must be guaranteed by a participant in a
recognized signature guarantee medallion program)
<PAGE> 143
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
[Global Securities Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("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 OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. (2)
NEENAH CORPORATION
11-1/8% SERIES B SENIOR SUBORDINATED NOTE DUE 2007
No. Cusip No. [ ]
$[ ]
NEENAH CORPORATION, a Wisconsin corporation, promises to pay to [ ],
or registered assigns, the principal sum of $__________ on May 1, 2007.
Interest Payment Dates: May 1 and November
Record Dates: April 15 and October 15
- ----------
(2) This paragraph should only be added if the Security is issued in
global form.
<PAGE> 144
2
Additional provisions of this Security are set forth on the other
side of this Security.
Dated:
NEENAH CORPORATION,
by
-----------------------
Name:
Title:
-----------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee, certifies [Seal]
that this is one of
the Securities referred
to in the Indenture,
by
-------------------------
Authorized Signatory
<PAGE> 145
3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
11-1/8% Series B Senior Subordinated Note due 2007
1. Interest
NEENAH CORPORATION, a Wisconsin corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above. The Company will pay
interest and liquidated damages, if any, semiannually on May 1 and November 1 of
each year. Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from April 30,
1997. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the April 15 or October 15 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may pay principal and interest by
check payable in such money or by wire transfer of federal funds.
3. Paying Agent and Registrar
Initially, UNITED STATES TRUST COMPANY OF NEW YORK, a New York
banking corporation ("Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice to the Holders. The Company or any of its domestically
incorporated
<PAGE> 146
4
Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture; First Supplemental Indenture
NC Merger Company, a Wisconsin corporation ("NC Merger"), issued the
Securities under an Indenture dated as of April 30, 1997 ("Indenture"), among NC
Merger and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date
of the Indenture (the "Act"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the Act for a statement of those terms.
Pursuant to the First Supplemental Indenture dated as of April 30,
1997, among the Company, the Initial Guarantors and the Trustee, the Company
assumed NC Merger's obligations under the Indenture and the Securities and each
of the Initial Guarantors agreed to guarantee those obligations under the
Indenture and the Securities.
The Securities are unsecured senior subordinated obligations of the
Company limited to $150,000,000 aggregate principal amount at any one time
outstanding (subject to Section 2.07 of the Indenture). This Security is one of
the Exchange Securities referred to in the Indenture. The Securities include the
Initial Securities and any Exchange Securities issued in exchange for the
Initial Securities pursuant to the Indenture. The Initial Securities and the
Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on the Incurrence of
Indebtedness by the Company and its Restricted Subsidiaries; the payment of
dividends on, and redemption of, Capital Stock of the Company and its Restricted
Subsidiaries and the redemption of certain Subordinated Obligations of the
Company and its Restricted Subsidiaries; Investments; sales of assets and
Restricted Subsidiary Capital Stock; certain transactions with Affiliates of the
Company; the sale or issuance of Capital Stock of the Restricted Subsidiaries;
the creation of Liens; the lines of business in which the Company and its
Restricted Subsidiaries may operate; Sale/Leaseback Transactions and
consolidations, mergers and transfers of all or substantially all of the
Company's assets. In addition, the Indenture prohibits certain
<PAGE> 147
5
restrictions on distributions and dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Guarantor Subsidiaries have
guaranteed the Company's obligations under the Indenture on a senior
subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the next two paragraphs, the Securities may
not be redeemed prior to May 1, 2002. On and after that date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest, if any, to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date that is on or prior to the date of
redemption), if redeemed during the 12-month period beginning on or after May 1
of the years set forth below:
Redemption
Period Price
- ------ ----------
2002............................................................ 105.5625%
2003............................................................ 103.7083%
2004............................................................ 101.8542%
2005 and thereafter............................................. 100.0000%
Notwithstanding the foregoing, at any time on or prior to May 1,
2000, the Company may redeem in the aggregate up to 40% of the original
aggregate principal amount of Securities with the proceeds of one or more Public
Equity Offerings at a redemption price (expressed as a percentage of principal
amount thereof) of 111.125% plus accrued and unpaid interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date that
is on or prior to the date of redemption); provided, however, that at least 60%
of the original
<PAGE> 148
6
aggregate principal amount of the Securities must remain outstanding after each
such redemption.
At any time prior to May 1, 2002, the Securities may be redeemed, in
whole or in part, at the option of the Company within 180 days after a Change of
Control, at a redemption price equal to the sum of (i) the principal amount
thereof plus (ii) accrued and unpaid interest, if any, to the redemption date
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption) plus (iii) the Applicable Premium.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued interest
on all Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, unless the Company has elected to redeem
the Securities pursuant to paragraph 5, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to purchase all or any part of the Securities of such Holder at a
repurchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of purchase) as provided in, and subject to the terms of, the
Indenture.
<PAGE> 149
7
8. Subordination
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid before the Securities may be
paid. In addition, each Subsidiary Guaranty is subordinated to Senior
Indebtedness of the relevant Guarantor Subsidiary, as defined in the Indenture.
The Company and each Guarantor Subsidiary agrees, and each Securityholder by
accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the Trustee
as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes required by law or permitted by the Indenture. The Regis trar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
<PAGE> 150
8
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any past default or noncompliance with any provision may be waived with
the consent of the Holders of a majority in principal amount then outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article V of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to release Guarantor Subsidiaries when permitted by the Indenture or to add
additional covenants or surrender rights and powers conferred on the Company, or
to comply with any request of the SEC in connection with qualifying the
Indenture under the Act, or to make certain changes in the subordination
provisions, or to make any change that does not adversely affect the rights of
any Securityholder.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30
days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities, or failure by the Company to redeem or purchase, upon
declaration or otherwise (whether or not such payment is prohibited by Article
X), Securities when required; (iii) failure by the Company or any Guarantor
Subsidiary to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (iv) certain accelerations
<PAGE> 151
9
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds
$5,000,000 or its foreign currency equivalent; (v) certain events of bankruptcy,
insolvency or reorganization with respect to the Company and its Restricted
Subsidiaries; and (vi) certain judgments or decrees not covered by insurance for
the payment of money in excess of $5,000,000 or its foreign currency equivalent
against the Company or a Restricted Subsidiary; and (vii) a Subsidiary Guaranty
ceasing to be in full force and effect (other than in accordance with its terms)
or any Guarantor Subsidiary denies or disaffirms its obligations under the
Indenture or any Subsidiary Guaranty and such Default continues for 10 days. If
an Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Securities may declare all the Securities
to be due and payable immediately. Certain events of bankruptcy or insolvency
are Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal, premium, if any, or interest) if and
so long as a committee of its Trust Officers in good faith determines that
withholding notice is in the interest of the Holders.
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
<PAGE> 152
10
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Guarantor Subsidiary shall not have any liability for any
obligations of the Company or a Guarantor Subsidiary under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Governing Law
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either
<PAGE> 153
11
as printed on the Securities or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
NEENAH CORPORATION
2121 Brooks Avenue
Neenah, WI 54957
Attention of Chief Financial Officer
<PAGE> 154
12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint __________________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
________________________________________________________________________________
Date: ____________________________ Your Signature: _____________________________
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed by a participant in a
recognized signature guarantee medallion program)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
<PAGE> 155
13
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase) Custodian
</TABLE>
<PAGE> 156
14
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
|_|
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
$______________
Date: _____________________________ Your Signature: ____________________________
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee:_______________________________________
(Signature must be guaranteed by a participant in a
recognized signature guarantee medallion program)
<PAGE> 157
EXHIBIT C
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS TO NON-QIB
INSTITUTIONAL ACCREDITED INVESTORS]
Transferee Letter of Representation
Neenah Corporation
c/o United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Dear Ladies and Gentlemen:
This certificate is delivered to request a transfer of $ principal
amount of the 11-1/8% Senior Subordinated Notes due 2007 (the "Securities") of
Neenah Corporation (the "Company").
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name: ___________________________________
Address: ________________________________
Taxpayer ID Number: _____________________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Securities
and invest in or purchase securities similar to the Securities in the normal
course of our business. We and any accounts for which we are acting are each
able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence.
<PAGE> 158
2
We agree on our own behalf and on behalf of any investor account for which we
are purchasing Securities to offer, sell or otherwise transfer such Securities
prior to the date which is two years after the later of the date of original
issue and the last date on which the Company or any affiliate of the Company was
the owner of such Securities (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under the
Securities Act, to a person we reasonably believe is a qualified institutional
buyer under Rule 144A (a "QIB") that purchases for its own account or for the
account of a QIB and 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 within the meaning of Regulation S under the Securities Act or (e)
to an institutional "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act that is purchasing for its own account
or for the account of such an institutional "accredited investor", in each case
in a transaction involving a minimum principal amount of Securities of $250,000
or (f) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of our property or the property of
such investor account or accounts be at all times within our or their control
and in compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Securities is proposed
to be made pursuant to clause (e) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Company and the Trustee, which
shall provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act and that it is acquiring such Securities for investment
purposes and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that the Company and the Trustee reserve the right prior
to any offer, sale or other transfer prior to the Resale Termination Date of the
Securities
<PAGE> 159
3
pursuant to clause (d), (e) or (f) above to require the delivery of an opinion
of counsel, certifications and/or other information satisfactory to the Company
and the Trustee.
TRANSFEREE:___________________
BY____________________________
<PAGE> 160
EXHIBIT D
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE (this "Supplemental
Indenture"), dated as of April 30, 1997, among NEENAH
CORPORATION, a Wisconsin corporation ("Neenah"), NEENAH
FOUNDRY COMPANY, NEENAH TRANSPORT, INC. and HARTLEY
CONTROLS CORPORATION, each a Wisconsin corporation and a
wholly owned subsidiary of Neenah (collectively, the
"Initial Guarantors"), and UNITED STATES TRUST COMPANY
OF NEW YORK, a New York corporation, as trustee under
the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS NC Merger Company, a Wisconsin corporation (the "Company"),
as issuer, has heretofore executed and delivered to the Trustee an indenture
(the "Indenture"), dated as of April 30, 1997, providing for the issuance of an
aggregate principal amount of $150,000,000 of 11-1/8% Senior Subordinated Notes
due 2007 of the Company (the "Securities");
WHEREAS, immediately after the execution of the Indenture and the
issuance of the Securities, the Company was merged with and into Neenah in the
Neenah Merger, with Neenah as the surviving corporation;
WHEREAS, (i) pursuant to the terms of the Neenah Merger, Neenah
succeeded to the obligations of the Company under the Indenture and (ii) the
Guarantors have agreed to become Guarantor Subsidiaries under the Indenture; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the parties
hereto are required to execute and deliver this Supplemental Indenture;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, Neenah,
each of the Guarantors and the Trustee mutually covenant and agree for
<PAGE> 161
2
the equal and ratable benefit of the holders of the Securities as follows:
1. Definitions. (a) Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
(b) For all purposes of this Supplemental Indenture, except as
otherwise herein expressly provided or unless the context otherwise requires:
(i) the terms and expressions used herein shall have the same meanings as
corresponding terms and expressions used in the Indenture; and (ii) the words
"herein", "hereof" and "hereby" and other words of similar import used in this
Supplement refer to this Supplement as a whole and not to any particular section
hereof.
2. Express Assumption of Obligations under the Indenture. Neenah
acknowledges and agrees that as a result of its being the surviving corporation
in the Merger with NC Merger it has succeeded to all of the obligations and
duties of NC Merger under the Securities and the Indenture on the terms and
subject to the conditions set forth in the Securities and the Indenture. Neenah
agrees to be bound by all provisions of the Securities and the Indenture.
3. Agreement To Guarantee. Each of the Guarantors hereby agrees to,
jointly and severally guarantee Neenah's obligations under the Securities on the
terms and subject to the conditions set forth in Article XI of the Indenture and
to be bound by all other applicable provisions of the Indenture.
4. Ratification of Indenture; Supplemental Indenture, Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed by the parties hereto and all the terms, conditions and
provisions thereof shall remain in full force and effect. This Supplemental
Indenture shall form a part of the Indenture for all purposes, and every holder
of Securities heretofore or hereafter authenticated and delivered shall be bound
hereby.
5. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
<PAGE> 162
3
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
6. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental Indenture.
7. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
8. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
NEENAH CORPORATION,
by
-----------------------
Name:
Title:
NEENAH FOUNDRY COMPANY,
by
-----------------------
Name:
Title:
NEENAH TRANSPORT, INC.,
by
-----------------------
Name:
Title:
<PAGE> 163
4
HARTLEY CONTROLS CORPORATION,
by
-----------------------
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee,
by
-----------------------
Name:
Title:
<PAGE> 164
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental
Indenture"), dated as of [ ], among [NEW GUARANTOR
SUBSIDIARY] (the "New Guarantor Subsidiary"), a
subsidiary of NEENAH CORPORATION (or its successor), a
Wisconsin corporation (the "Company"), THE COMPANY, on
behalf of itself and the Guarantor Subsidiaries (the
"Existing Guarantor Subsidiaries") under the Indenture
referred to below, and UNITED STATES TRUST COMPANY OF
NEW YORK, a New York banking association, as trustee
under the indenture referred to below (the "Trustee").
W I T N E S S E T H :
WHEREAS NC Merger Company, a Wisconsin corporation ("NC Merger"),
has heretofore executed and delivered to the Trustee an Indenture (the
"Indenture"), dated as of April 30, 1997, providing for the issuance of an
aggregate principal amount of $150,000,000 of 11-1/8% Senior Subordinated Notes
due 2007 (the "Securities") and the Company and the Initial Guarantors have
executed and delivered the First Supplemental Indenture pursuant to which the
Company assumed NC Merger's obligations under the Indenture and the Securities
and the Initial Guarantors agreed to guarantee those obligations;
WHEREAS Section 4.15 of the Indenture provides that under certain
circumstances the Company is required to cause the New Guarantor Subsidiary to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the New Guarantor Subsidiary shall unconditionally guarantee all of the
Company's obligations under the Securities pursuant to a Subsidiary Guaranty on
the terms and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the
Company and Existing Guarantor Subsidiaries are authorized to execute and
deliver this Supplemental Indenture;
<PAGE> 165
2
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor Subsidiary, the Company, the Existing Guarantor Subsidiaries and the
Trustee mutually covenant and agree for the equal and ratable benefit of the
holders of the Securities as follows:
1. Definitions. (a) Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
(b) For all purposes of this Supplemental Indenture, except as
otherwise herein expressly provided or unless the context otherwise requires:
(i) the terms and expressions used herein shall have the same meanings as
corresponding terms and expressions used in the Indenture; and (ii) the words
"herein," "hereof" and "hereby" and other words of similar import used in this
Supplement refer to this Supplement as a whole and not to any particular section
hereof.
2. Agreement to Guarantee. The New Guarantor Subsidiary hereby
agrees, jointly and severally with all other Guarantor Subsidiaries, to
Guarantee the Company's obligations under the Securities on the term and subject
to the conditions set forth in Article 11 of the Indenture and to be bound by
all other applicable provisions of the Indenture.
3. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
4. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
<PAGE> 166
3
5. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental Indenture.
6. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
7. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW GUARANTOR SUBSIDIARY],
by
-----------------------------
Name:
Title:
NEENAH CORPORATION, on behalf
of itself and the Existing
Guarantor Subsidiaries,
by
-----------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK as Trustee,
by
-----------------------------
Name:
Title:
<PAGE> 167
4
<PAGE> 168
EXHIBIT F
[FORM OF CERTIFICATE TO BE DELIVERED
UPON TERMINATION OF RESTRICTED PERIOD]
On or after June 8, 1997
Neenah Corporation
c/o United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: [ ]
Re: Neenah Corporation (the "Company") 11-1/8%
Senior Subordinated Notes due 2007 (the
"Initial Securities") and 11-1/8% Series B
Senior Subordinated Notes due 2007 (the
"Exchange Securities" and, together with the
Initial Securities, the "Securities")
Ladies and Gentlemen:
This letter relates to Securities represented by a temporary global
note certificate (the "Temporary Certificate"). Pursuant to Section 2.01 of the
Indenture dated as of April 30, 1997 relating to the Securities (the
"Indenture"), we hereby certify that (1) we are the beneficial owner of $[ ]
principal amount of Initial Securities represented by the Temporary Certificate
and (2) we are a person outside the United States to whom the Initial Securities
could be transferred in accordance with Rule 904 of Regulation S promulgated
under the Securities Act of 1933, as amended. Accordingly, you are hereby
requested to issue a Certificated Note representing the undersigned's interest
in the principal amount of Initial Securities represented by the Temporary
Certificate, all in the manner provided by the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any
<PAGE> 169
2
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.
Very truly yours,
[Name of Holder]
By:___________________________
Authorized Signature
<PAGE> 170
EXHIBIT G
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS PURSUANT TO RULE 144A]
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: [ ]
[date]
Re: Neenah Corporation (the "Company") 11-1/8%
Senior Subordinated Notes due 2007 (the
"Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $_______ aggregate principal
amount at maturity of the Securities, we hereby certify that such transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, we hereby further certify that the Securities are being transferred
to a person that we reasonably believe is purchasing the Securities for its own
account, or for one or more accounts with respect to which such person exercises
sole investment discretion, and such person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Securities are being transferred
in compliance with any applicable blue sky securities laws of any state of the
United States.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter
<PAGE> 171
2
or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.
Very truly yours,
------------------------------
[Name of Transferor]
By:_________________________
Authorized Signature
<PAGE> 172
EXHIBIT H
[Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S]
[date]
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: [ ]
Re: Neenah Corporation (the "Company") 11-1/8%
Senior Subordinated Notes due 2007 (the
"Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Securities was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
<PAGE> 173
2
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_______________________
Authorized Signature
<PAGE> 1
EXHIBIT 4.2
EXECUTION COPY
NC MERGER COMPANY
$150,000,000
11-1/8 % Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
April 23, 1997
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
NC Merger Company, a Wisconsin corporation (the "Company"), proposes
to issue and sell $150,000,000 aggregate principal amount of its 11-1/8% Senior
Subordinated Notes due 2007 (the "Notes"). The Notes will be issued pursuant to
an Indenture to be dated as of April 30, 1997 (the "Indenture") between the
Company and United States Trust Company of New York, as trustee (the "Trustee").
Immediately following the consummation of the sale of the Notes hereunder and
pursuant to the Agreement and Plan of Reorganization dated November 20, 1996, as
amended (the "Merger Agreement"), among NFC Castings, Inc., a Delaware
corporation ("Holdings"), the Company and Neenah Corporation, a Wisconsin
corporation ("Neenah"), the Company will merge (the "Merger") with and into
Neenah, with Neenah being the surviving corporation. Upon consummation of the
Merger, Neenah will assume, by supplemental indenture (the "Supplemental
Indenture"), all of the obligations of the Company under the Indenture and the
Notes, Neenah will become the primary obligor on the Notes and the Notes will be
guaranteed on an unsecured senior subordinated basis (the "Guarantees", and
together with the Notes, the "Securities") by the principal operating
subsidiaries of Neenah, Neenah Foundry Company, Hartley Controls Corporation and
Neenah Transport, Inc. (collectively, the "Guarantors"). The Company confirms
its agreement with Chase Securities Inc. ("CSI") and Morgan Stanley & Co.
Incorporated (together with CSI, the "Initial Purchasers") concerning the
purchase of the Securities from the Company by the several Initial Purchasers.
<PAGE> 2
2
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated April 4, 1997 (the "Preliminary
Offering Memorandum") and will prepare an offering memorandum dated the date
hereof (the "Offering Memorandum") setting forth information concerning the
Company, Neenah, the Guarantors and the Securities. Copies of the Preliminary
Offering Memorandum have been, and copies of the Offering Memorandum will be,
delivered by the Company to the Initial Purchasers pursuant to the terms of this
Agreement. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto, unless otherwise noted. The Company hereby confirms that it has
authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of the Securities by the
Initial Purchasers in accordance with Section 2.
Holders of the Securities (including the Initial Purchasers and
their direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A (the "Registration Rights Agreement"), pursuant to which
Neenah and the Guarantors will agree to file with the Securities and Exchange
Commission (the "Commission") (i) a registration statement under the Securities
Act (the "Exchange Offer Registration Statement") registering an issue of senior
subordinated notes of the Company (the "Exchange Securities") which are
identical in all material respects to the Securities (except that the Exchange
Securities will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement").
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company. The
Company represents and warrants to, and agrees with, the several Initial
Purchasers on and as of the date hereof and the Closing Date (as defined in
Section 3) that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date
the Offering Memorandum will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided
that the Company makes no representation or warranty as to information
contained in or omitted from the Preliminary Offering Memorandum or the
Offering Memorandum in reliance upon and in conformity with written
information relating to the Initial Purchasers furnished to the Company by
or on behalf of any Initial Purchaser specifically for use therein (the
"Initial Purchasers' Information").
<PAGE> 3
3
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 2 and their compliance with
the agreements set forth therein, it is not necessary, in connection with
the issuance and sale of the Securities to the Initial Purchasers and the
offer, resale and delivery of the Securities by the Initial Purchasers in
the manner contemplated by this Agreement and the Offering Memorandum, to
register the Securities under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(d) Holdings has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
the Company, Neenah and each of Neenah's subsidiaries have been duly
incorporated and are validly existing as corporations under the laws of
the State of Wisconsin; and each of the Company, Holdings, Neenah and each
of Neenah's subsidiaries are duly qualified to do business and are in good
standing as foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged and to take the actions
necessary to consummate each of the transactions contemplated by this
Agreement and the Offering Memorandum (the "Transactions"), except where
the failure to so qualify or have such power or authority would not,
singularly or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), results of operations, business or
prospects of Neenah and its subsidiaries taken as a whole (a "Material
Adverse Effect").
(e) Neenah has a capitalization as set forth in the Offering
Memorandum under the heading "Capitalization"; all of the outstanding
shares of capital stock of Holdings, the Company, Neenah and each of
Neenah's Subsidiaries have been, and upon the consummation of the
Transactions will be, duly and validly authorized and issued and are, and
upon the consummation of the Transactions will be, fully paid and
non-assessable, except as set forth in Section 180.0622(2)(b) of the
Wisconsin statutes, as judicially interpreted; and upon the consummation
of the Transactions will conform in all material respects to the
description thereof contained in the Offering Memorandum. Upon
consummation of the Transactions, all of the outstanding shares of capital
stock of Neenah and its subsidiaries will be owned directly or indirectly
by Holdings, free and clear of any lien, charge, encumbrance, security
interest, restriction
<PAGE> 4
4
upon voting or transfer or any other claim of any third party, other than
liens arising under the Senior Bank Facilities.
(f) Each of the Company, Neenah and the Guarantors have full right,
power and authority to execute and deliver any of this Agreement, the
Neenah Letter Agreement (as defined in Section 5(q) hereof), the
Indenture, the Supplemental Indenture, the Registration Rights Agreement,
the Securities and the Merger Agreement (collectively, the "Transaction
Documents") to which it is or will be a party and to perform its
respective obligations hereunder and thereunder; and all corporate action
required to be taken for the due and proper authorization, execution and
delivery of each of the Transaction Documents and the consummation of the
transactions contemplated thereby have been duly and validly taken.
(g) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding agreement of
the Company (and has been or will be duly authorized by Neenah and the
Guarantors and will be the valid and legally binding agreement of Neenah
and each of the Guarantors upon the execution and delivery of the Neenah
Letter Agreement by each party thereto).
(h) The Registration Rights Agreement has been or will be duly
authorized by Neenah and each of the Guarantors and, when duly executed
and delivered in accordance with its terms by Neenah, the Guarantors and
the Initial Purchasers, will constitute a valid and legally binding
agreement of Neenah and each of the Guarantors, enforceable against Neenah
and each of the Guarantors in accordance with its terms, except to the
extent that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law).
(i) The Indenture has been duly authorized by the Company and, when
duly executed and delivered in accordance with its terms by the Company
and the Trustee, will constitute a valid and legally binding agreement of
the Company (and upon the execution and delivery of the Supplemental
Indenture by each party thereto, of Neenah, as primary obligor, and of the
Guarantors, as note guarantors) enforceable against the Company (and
Neenah and each of the Guarantors, as aforesaid) in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law). On the Closing Date, the Indenture will conform in all
material respects to the requirements of the Trust
<PAGE> 5
5
Indenture Act and the rules and regulations of the Commission applicable
to an indenture which is qualified thereunder.
(j) The Supplemental Indenture has been or will be duly authorized
by Neenah and each of the Guarantors and, when duly executed and delivered
in accordance with the terms thereof by each party thereto, will
constitute the valid and legally binding agreement of Neenah and the
Guarantors, enforceable against each of them in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity
or at law).
(k) The Neenah Letter Agreement has been or will be duly authorized
by Neenah and each of the Guarantors and when duly executed and delivered
in accordance with the terms thereof by each party thereto, will
constitute the valid and legally binding agreement of Neenah and each of
the Guarantors, enforceable against Neenah and each of the Guarantors in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(l) The Securities have been duly authorized by the Company and,
when duly executed, authenticated, issued and delivered as provided in the
Indenture and paid for as provided herein, will be duly and validly issued
and outstanding and will constitute valid and legally binding obligations
of the Company (and upon execution and delivery of the Supplemental
Indenture by each party thereto, of Neenah, as primary obligor, and of
each of the Guarantors, as note guarantors) entitled to the benefits of
the Indenture and enforceable against the Company (and Neenah and each of
the Guarantors, as aforesaid) in accordance with their terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity
or at law).
(m) The Merger Agreement has been duly authorized, executed and
delivered by the Company, Holdings and Neenah and constitutes a valid and
legally binding agreement of the Company, Holdings and Neenah enforceable
against each of them in accordance with its terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law).
<PAGE> 6
6
(n) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(o) The execution, delivery and performance by the Company, Neenah
and each of the Guarantors of each of the Transaction Documents to which
it is or will be a party, the issuance, authentication, sale and delivery
of the Securities and compliance by the Company, Neenah and each of the
Guarantors with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents (i) will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company,
Neenah or any of Neenah's subsidiaries pursuant to, any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which any of them is a party or by which any of
them is bound or to which any of their respective properties or assets are
subject, except where such conflict, breach, violation or default would
not (A) result in a Material Adverse Effect on the Company, Neenah or any
of Neenah's subsidiaries, or (B) have a material adverse effect on the
Company's ability to perform its obligations under any of the Transaction
Documents to which it is a party, and (ii) such actions will not result in
any violation of (A) the provisions of the charter or by-laws of the
Company, Neenah or any of Neenah's subsidiaries or (B) to the Company's
best knowledge, any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body
having jurisdiction over the Company, Neenah or any of Neenah's
subsidiaries or any of their properties or assets; and no consent,
approval, authorization or order of, or filing or registration with, any
such court or arbitrator or governmental agency or body under any such
statute, judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by each of the Company, Neenah and
each of the Guarantors of each of the Transaction Documents to which it is
or will be a party, the issuance, authentication, sale and delivery of the
Securities and compliance by the Company, Neenah and the Guarantors (as
applicable) with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents, except for such
consents, approvals, authorizations, filings, registrations or
qualifications (i) which shall have been obtained or made prior to the
Closing Date and (ii) as may be required to be obtained or made under the
Securities Act and applicable state securities laws as provided in the
Registration Rights Agreement.
(p) Ernst & Young LLP are independent certified public accountants
with respect to the Company and its subsidiaries within the meaning of
Rule 101 of the Code of Professional Conduct of the American Institute of
Certified Public Accountants ("AICPA") and its interpretations and rulings
thereunder. The historical financial statements (including the related
notes) contained in the Offering Memorandum comply in all material
respects with the requirements
<PAGE> 7
7
applicable to a registration statement on Form S-1 under the Securities
Act (except that certain consolidated financial statement schedules and
net income per common share data are omitted); such financial statements
have been prepared in accordance with generally accepted accounting
principles consis tently applied throughout the periods covered thereby
and fairly present the financial position of the entities purported to be
covered thereby at the re spective dates indicated and the results of
their operations and their cash flows for the respective periods
indicated; and the financial information contained in the Offering
Memorandum under the headings "Summary--Summary Consolidated Financial and
Other Data", "Capitalization", "Selected Consolidated Financial and Other
Data", "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Management--Compensation of Executive
Officers" are derived from the accounting records of the Company and its
subsidiaries and fairly present the information purported to be shown
thereby. The pro forma financial information contained in the Offering
Memorandum has been prepared on a basis consistent with the histori cal
financial statements contained in the Offering Memorandum (except for the
pro forma adjustments specified therein), includes all material
adjustments to the historical financial information required by Rule 11-02
of Regulation S-X under the Securities Act and the Exchange Act to reflect
the transactions described in the Offering Memorandum, gives effect to
assumptions made on a reasonable basis and fairly presents the historical
and proposed transactions contemplated by the Offering Memorandum and the
Transaction Documents. The other historical financial and statistical
information and data included in the Offering Memorandum are, in all
material respects, fairly presented.
(q) There are no legal or governmental proceedings pending to which
the Company, Neenah or any of Neenah's subsidiaries is a party or of which
any of their respective property or assets is the subject which,
singularly or in the aggregate, if determined adversely to the Company,
Neenah or any of Neenah's subsidiaries, could reasonably be expected to
have a Material Adverse Effect; and to the best knowledge of the Company,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(r) To the best knowledge of the Company, no action has been taken
and no statute, rule, regulation or order has been enacted, adopted or
issued by any governmental agency or body which prevents the issuance of
the Securities or suspends the sale of the Securities in any jurisdiction;
to the best knowledge of the Company, no injunction, restraining order or
order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to the Company, Neenah or any of
<PAGE> 8
8
Neenah's subsidiaries which would prevent or suspend the issuance or sale
of the Securities or the use of the Preliminary Offering Memorandum or the
Offering Memorandum in any jurisdiction; no action, suit or proceeding is
pending against or, to the best knowledge of the Company, threatened
against or affecting the Company, Neenah or any of Neenah's subsidiaries
before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to
interfere with or adversely affect the issuance of the Securities or in
any manner draw into question the validity or enforceability of any of the
Transaction Documents or any action taken or to be taken pursuant thereto;
and the Company has complied with any and all requests by any securities
authority in any jurisdiction for additional information to be included in
the Preliminary Offering Memorandum and the Offering Memorandum.
(s) None of the Company, Holdings, Neenah or any of Neenah's
subsidiaries is (i) in violation of its charter or by-laws, (ii) in
default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it is bound or
to which any of its properties or assets are subject or (iii) in violation
in any material respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its properties or assets may be
subject, except for any violation or default under clauses (ii) or (iii)
that would not have a Material Adverse Effect.
(t) Neenah and each of Neenah's subsidiaries possess all material
licenses, certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate federal, state or
foreign regulatory agencies or bodies which are necessary or desirable for
the ownership of their respective properties or the conduct of their
respective businesses as described in the Offering Memorandum, except
where the failure to possess or make the same would not, singularly or in
the aggregate, have a Material Adverse Effect, and none of the Company,
Neenah or any of Neenah's subsidiaries has received notification of any
revocation or modification of any such license, certificate, authorization
or permit or has any reason to believe that any such license, certificate,
authorization or permit will not be renewed in the ordinary course.
(u) Neenah and each of Neenah's subsidiaries have filed all federal,
state, local and foreign income and franchise tax returns required to be
filed through the date hereof and have paid all taxes due thereon, and no
tax deficiency has been determined adversely to Neenah or any of Neenah's
subsidiaries which has had (nor does the Company have any knowledge of any
tax deficiency which, if determined adversely to Neenah or any of Neenah's
subsidiaries, could reasonably be expected to have) a Material Adverse
Effect.
(v) None of the Company, Neenah or any of Neenah's 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"), and the rules and regulations of
the Commission
<PAGE> 9
9
thereunder 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.
(w) Neenah and each of Neenah's subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(x) Neenah and each of its subsidiaries have insurance covering
their respective properties, operations, personnel and businesses, which
insurance is in amounts and insures against such losses and risks as are
adequate to protect Neenah and its subsidiaries and their respective
businesses. Neither Neenah nor any of its subsidiaries has received notice
from any insurer or agent of such insurer that capital improvements or
other expenditures are required or necessary to be made in order to
continue such insurance.
(y) Neenah and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses and know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of their
respective businesses; and the Company has no reason to believe that the
conduct of their respective businesses will conflict in any material
respect with, and Neenah and its subsidiaries have not received any notice
of any claim of conflict with, any such rights of others.
(z) Neenah and each of its subsidiaries have good and marketable
title in fee simple to, or have valid rights to lease or otherwise use,
all items of real and personal property which are material to the business
of Neenah and its subsidiaries, in each case free and clear of all liens
(other than liens arising under the Senior Bank Facilities), encumbrances,
claims and defects and imperfections of title except such as (i) do not
materially interfere with the use made and proposed to be made of such
property by Neenah and its subsidiaries or (ii) could not reasonably be
expected to have a Material Adverse Effect.
(aa) No material labor disturbance by or dispute with the employees
of Neenah or any of its subsidiaries exists or, to the best knowledge of
the Company, is contemplated or threatened.
<PAGE> 10
10
(bb) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan of Neenah or any of its subsidiaries which could
reasonably be expected to have a Material Adverse Effect; each such
employee benefit plan is in compliance in all material respects with
applicable law, including ERISA and the Code; Neenah and each of its
subsidiaries have not incurred and do not expect to incur liability under
Title IV of ERISA with respect to the termination of, or withdrawal from,
any pension plan for which Neenah or any of its subsidiaries would have
any liability; and each such pension plan that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects
and nothing has occurred, whether by action or by failure to act, which
could reasonably be expected to cause the loss of such qualification.
(cc) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of any
kind of toxic or other wastes or other hazardous substances by, due to or
caused by Neenah or any of its subsidiaries (or, to the best knowledge of
the Company, any other entity (including any predecessor) for whose acts
or omissions the Company, Neenah or any of Neenah's subsidiaries is or
could reasonably be expected to be liable) upon any of the property now or
previously owned or leased by Neenah or any of its subsidiaries, or upon
any other property, in violation of any statute or any ordinance, rule,
regulation, order, judgment, decree or permit or which would, under any
statute or any ordinance, rule (including rule of common law), regulation,
order, judgment, decree or permit, give rise to any liability, except for
any violation or liability could not reasonably be expected to have,
singularly or in the aggregate with all such violations and liabilities, a
Material Adverse Effect; and there has been no disposal, discharge,
emission or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes or
other hazardous substances with respect to which the Company has
knowledge, except for any such disposal, discharge, emission or other
release of any kind which could not reasonably be expected to have,
singularly or in the aggregate with all such discharges and other
releases, a Material Adverse Effect.
(dd) Neither Neenah nor, to the best knowledge of the Company, any
director, officer, agent, employee or other person associated with or
acting on behalf of Neenah or any of its subsidiaries has (i) used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; (ii) made any
direct or indirect unlawful payment to any
<PAGE> 11
11
foreign or domestic government official or employee from corporate funds;
(iii) violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(ee) On and immediately after the Closing Date, Neenah (on a
consolidated basis, after giving effect to the issuance of the Securities
and to the other Transactions as described in the Offering Memorandum)
will be Solvent. As used in this paragraph, the term "Solvent" means, with
respect to a particular date, that on such date (i) the present fair
market value (or present fair saleable value) of the assets of Neenah is
not less than the total amount required to pay the probable liabilities of
Neenah on its total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured, (ii) Neenah is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and commitments as they mature and become due in
the normal course of business, (iii) assuming the sale of the Securities
as contemplated by this Agreement, the Neenah Letter Agreement and the
Offering Memorandum, Neenah is not incurring debts or liabilities beyond
its ability to pay as such debts and liabilities mature and (iv) Neenah is
not engaged in any business or transaction, and is not about to engage in
any business or transaction, for which its property would constitute
unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which Neenah is engaged. In
computing the amount of such contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount that, in the
light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability.
(ff) Except as described in the Offering Memorandum, there are no
outstanding subscriptions, rights, warrants, calls or options to acquire,
or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity or other ownership interest in Holdings,
the Company, Neenah or any of Neenah's subsidiaries.
(gg) Neither Neenah nor any of its subsidiaries owns any "margin
securities" as that term is defined in Regulations G and U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Securities will be used, directly
or indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Securities to be considered
a "purpose credit" within the meanings of Regulation G, T, U or X of the
Federal Reserve Board.
<PAGE> 12
12
(hh) None of the Company, Neenah or any of Neenah's subsidiaries is
a party to any contract, agreement or understanding with any person that
would give rise to a valid claim against the Company, Neenah or the
Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Securities.
(ii) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(jj) None of the Company, Neenah, any of their respective affiliates
or any person acting on behalf of any of them has engaged or will engage
in any directed selling efforts (as such term is defined in Regulation S
under the Securities Act ("Regulation S")), and all such persons have
complied and will comply with the offering restrictions requirement of
Regulation S to the extent applicable.
(kk) None of the Company, Neenah or any of their respective
affiliates has, directly or through any agent, sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as such term is defined in the Securities Act), which is or will
be integrated with the sale of the Securities in a manner that would
require registration of the Securities under the Securities Act.
(ll) None of the Company, Neenah or any of their respective
affiliates or any other person acting on behalf of any of them has
engaged, in connection with the offering of the Securities, in any form of
general solicitation or general advertising within the meaning of Rule
502(c) under the Securities Act.
(mm) There are no securities of the Company or Neenah registered
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or listed on a national securities exchange or quoted in a U.S.
automated inter-dealer quotation system.
(nn) Neither the Company nor Neenah has taken or will take, directly
or indirectly, any action prohibited by Regulation M under the Exchange
Act in connection with the offering of the Securities.
(oo) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in
the Preliminary Offering Memorandum or the Offering Memorandum has been
made or reaffirmed without a reasonable basis or has been disclosed other
than in good faith.
<PAGE> 13
13
(pp) None of Neenah or any of its subsidiaries does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Florida Statutes Section 517.075.
(qq) Since the date as of which information is given in the Offering
Memorandum, except as contemplated by the Transactions, (i) there has been
no material adverse change or any development involving a prospective
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs, management or business prospects of Neenah
or any of its subsidiaries, whether or not arising in the ordinary course
of business, (ii) neither Neenah nor any of the subsidiaries have incurred
any material liability or obligation, direct or contingent, other than in
the ordinary course of business, (iii) neither Neenah nor any of its
subsidiaries have entered into any material transaction other than in the
ordinary course of business and (iv) there has not been any change in the
capital stock or long-term debt of Neenah or any of its subsidiaries, or
any dividend or distribution of any kind declared, paid or made by Neenah
on any class of its capital stock.
(rr) The Company and Holdings have not conducted business prior to
the date hereof other than the transactions contemplated by this
Agreement.
2. Purchase and Resale of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to 97.00% of
the principal amount thereof. The Company shall not be obligated to deliver any
of the Securities except upon payment for all of the Securities to be purchased
as provided herein.
(b) The Initial Purchasers have advised the Company that they
propose to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents and warrants to, and agrees
with, the Company that (i) it is purchasing the Securities pursuant to a private
sale exempt from registration under the Securities Act, (ii) it has not
solicited offers for, or offered or sold, and will not solicit offers for, or
offer or sell, the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D under the
Securities Act ("Regulation D") or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (iii) it has
solicited and will solicit offers for the Securities only from, and has offered
or sold and will offer, sell or deliver the Securities, as part of its initial
offering, only to persons whom it reasonably believes to be qualified
institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A
under the Securities Act, or if any such person is buying for one or more
<PAGE> 14
14
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to it that each such account is a
Qualified Institutional Buyer to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A and in each case, in
transactions in accordance with Rule 144A. In addition to the foregoing, each
Initial Purchaser acknowledges and agrees that the Company and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Sections 5(d)
and (e), counsel for the Company and for the Initial Purchasers, respectively,
may rely upon the accuracy of the representations and warranties of the Initial
Purchasers and their compliance with their agreements contained in this Section
2, and each Initial Purchaser hereby consents to such reliance.
(c) The Company acknowledges and agrees that the Initial Purchasers
may sell Securities to any affiliate of an Initial Purchaser and that any such
affiliate may sell Securities purchased by it to an Initial Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery of and
payment for the Securities shall be made at the offices of Cravath, Swaine &
Moore ("CSM"), New York, New York, or at such other place as shall be agreed
upon by the Initial Purchasers and the Company, at 10:00 A.M., New York City
time, on April 30, 1997, or at such other time or date, not later than seven
full business days thereafter, as shall be agreed upon by the Initial Purchasers
and the Company (such date and time of payment and delivery being referred to
herein as the "Closing Date").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior to
the Closing Date or by such other means as the parties hereto shall agree prior
to the Closing Date against delivery to the Initial Purchasers of the
certificates evidencing the Notes. Time shall be of the essence, and delivery at
the time and place specified pursuant to this Agreement is a further condition
of the obligations of the Initial Purchasers hereunder. Upon delivery, the Notes
shall be in global form, registered in such names and in such denominations as
CSI on behalf of the Initial Purchasers shall have requested in writing not less
than two full business days prior to the Closing Date. The Company agrees to
make one or more global certificates evidencing the Notes available for
inspection by CSI on behalf of the Initial Purchasers in New York, New York at
least 24 hours prior to the Closing Date.
4. Further Agreements of the Company. The Company agrees with each
of the several Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event which makes
any statement of a material fact made in the Offering Memorandum untrue or
which requires the making of any additions to or changes in the Offering
Memorandum (as amended or supplemented from time to time) in order to make
the statements
<PAGE> 15
15
therein, in the light of the circumstances under which they were made, not
misleading; to advise the Initial Purchasers promptly of any order
preventing or suspending the use of the Preliminary Offering Memorandum or
the Offering Memorandum, of any suspension of the qualification of the
Securities for offering or sale in any jurisdiction and of the initiation
or threatening of any proceeding for any such purpose; and to use its best
efforts to prevent the issuance of any such order preventing or suspending
the use of the Preliminary Offering Memorandum or the Offering Memorandum
or suspending any such qualification and, if any such suspension is
issued, to obtain the lifting thereof at the earliest possible time;
(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers
and counsel for the Initial Purchasers and not to effect any such
amendment or supplement to which the Initial Purchasers shall reasonably
object by notice to the Company after a reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the Initial Purchasers or counsel for the Company, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, to promptly prepare such
amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act and are not saleable pursuant to Rule 144(k) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request of
such holders or such prospective purchasers, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless
the Company is then subject to and in compliance with Section 13 or 15(d)
of the Exchange Act (the foregoing agreement being for the benefit of the
holders from time to time of the Securities and prospective purchasers of
the Securities designated by such holders);
<PAGE> 16
16
(f) for so long as the Securities are outstanding, to furnish to the
Initial Purchasers copies of any annual reports, quarterly reports and
current reports filed by the Company with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as shall be
furnished by the Company to the Trustee or to the holders of the
Securities pursuant to the Indenture or the Exchange Act or any rule or
regulation of the Commission thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchasers may designate and to continue such qualifications
in effect for so long as required for the resale of the Securities; and to
arrange for the determination of the eligibility for investment of the
Securities under the laws of such jurisdictions as the Initial Purchasers
may reasonably request; provided that the Company, Neenah and Neenah's
subsidiaries shall not be obligated to qualify as foreign corporations in
any jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction;
(h) to assist the Initial Purchasers in arranging for the Securities
to be designated Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. ("NASD") relating to trading in the PORTAL Market and for the
Securities to be eligible for clearance and settlement through the
Depository Trust Company ("DTC");
(i) not to, and to cause their affiliates not to, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as such term is defined in the Securities Act) which could be
integrated with the sale of the Securities in a manner which would require
registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause their affiliates not to, and not to authorize
or knowingly permit any person acting on their behalf to, solicit any
offer to buy or offer to sell the Securities by means of any form of
general solicitation or general advertising within the meaning of
Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and not to offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or
disposition would cause the exemption afforded by Section 4(2) of the
Securities Act to cease to be applicable to the offering and sale of the
Securities as contemplated by this Agreement and the Offering Memorandum;
<PAGE> 17
17
(k) for a period of 180 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for,
or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by the Company or any of its
subsidiaries (other than the Securities or the Exchange Securities)
without the prior written consent of the Initial Purchasers;
(l) during the period from the Closing Date until two years after
the Closing Date, without the prior written consent of the Initial
Purchasers, not to, and not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Securities that
have been reacquired by them, except for Securities purchased by the
Company or any of its affiliates and resold in a transaction registered
under the Securities Act;
(m) not to, for so long as the Securities are outstanding, be or
become, or be or become owned by, an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the Investment Company Act, and to not
be or become, or be or become owned by, a closed-end investment company
required to be registered, but not registered thereunder;
(n) in connection with the offering of the Securities, until CSI on
behalf of the Initial Purchasers shall have notified the Company of the
completion of the resale of the Securities, not to, and to use its
reasonable best efforts to cause its affiliated purchasers (as defined in
Rule 100 of Regulation M under the Exchange Act) not to, directly or
indirectly, either alone or with one or more other persons, bid for,
purchase, or attempt to induce any person to bid for or purchase, a
covered security during the applicable restricted period;
(o) in connection with the offering of the Securities, to make the
officers, employees, independent accountants and legal counsel of the
Company, Holdings, Neenah and Neenah's subsidiaries reasonably available
upon request by the Initial Purchasers;
(p) to furnish to each of the Initial Purchasers on the date hereof
a copy of the independent accountants' report included in the Offering
Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and performed
by it under this Agreement that are within its control prior to or after
the Closing Date, and to use its best efforts to satisfy all conditions
precedent to the delivery of the Securities;
<PAGE> 18
18
(r) to not take, and to use best efforts to cause Holdings, Neenah
and each of Neenah's subsidiaries to not take, any action prior to the
execution and delivery of the Indenture which, if taken after such
execution and delivery, would have violated any of the covenants contained
in the Indenture;
(s) to not take, and to use best efforts to cause Holdings, Neenah
and each of Neenah's subsidiaries to not take, any action prior to the
Closing Date which would require the Offering Memorandum to be amended or
supplemented pursuant to Section 4(d);
(t) prior to the Closing Date, not to issue, and to use best efforts
to cause Holdings, Neenah and each of Neenah's subsidiaries not to issue,
any press release or other communication directly or indirectly or hold
any press conference with respect to the Company, Neenah or Neenah's
subsidiaries, their respective conditions, financial or otherwise, or
earnings, business affairs or business prospects (except for routine oral
marketing communications in the ordinary course of business and consistent
with the past practices of Neenah and of which the Initial Purchasers are
notified), without the prior written consent of the Initial Purchasers,
unless in the judgment of the Company and its counsel, and after
notification to the Initial Purchasers, such press release or
communication is required by law; and
(u) to apply the net proceeds from the sale of the Securities as set
forth in the Offering Memorandum under the heading "Use of Proceeds".
5. Conditions of Initial Purchasers' Obligations. The respective
obligations of the several Initial Purchasers hereunder are subject to (i) the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company contained herein, (ii) the
accuracy of the representations and warranties of Neenah and the Guarantors
contained in the Neenah Letter Agreement, (iii) the accuracy of the statements
of the Company, Neenah and the Guarantors and their respective officers made in
any certificates delivered pursuant hereto, (iv) the performance by the Company
of its obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchasers and the Company may agree; and no stop order suspending the
sale of the Securities in any jurisdiction shall have been issued and no
proceeding for that purpose shall have been commenced or shall be pending
or threatened.
(b) Neither of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the Offering
Memorandum
<PAGE> 19
19
or any amendment or supplement thereto contains an untrue statement of a
fact which, in the opinion of counsel for the Initial Purchasers, is
material or omits to state any fact which, in the opinion of such counsel,
is material and is required to be stated therein or is necessary to make
the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of the Transaction Documents
and the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
satisfactory in all material respects to the Initial Purchasers, and the
Company, Holdings, Neenah and the Guarantors shall have furnished to the
Initial Purchasers all documents and information that they or their
counsel may reasonably request to enable them to pass upon such matters.
(d) Kirkland & Ellis ("K&E"), as counsel to the Company, Foley &
Lardner, as counsel for the Company and Neenah, and Quarles and Brady
("Q&B"), as counsel to Neenah and the Guarantors, shall have furnished to
the Initial Purchasers their written opinions, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set
forth in Annex B-1, Annex B-2 and Annex B-3 hereto, respectively.
(e) The Initial Purchasers shall have received from CSM, such
opinion or opinions, dated the Closing Date, with respect to such matters
as the Initial Purchasers may reasonably require, and the Company,
Holdings, Neenah and the Guarantors shall have furnished to such counsel
such documents and information as CSM requests for the purpose of enabling
them to pass upon such matters.
(f) Neenah shall have furnished to the Initial Purchasers a letter
(the "Initial Letter") of Ernst & Young LLP, addressed to the Initial
Purchasers and dated April 24, 1997, in form and substance satisfactory to
the Initial Purchasers, substantially to the effect set forth in Annex C
hereto.
(g) Neenah shall have furnished to the Initial Purchasers a letter
(the "Bring-Down Letter") of Ernst & Young LLP, addressed to the Initial
Purchasers and dated the Closing Date (i) confirming that they are
independent public accountants with respect to Neenah and its subsidiaries
within the meaning of Rule 101 of the Code of Professional Conduct of the
AICPA and its interpretations and rulings thereunder, (ii) stating, as of
the date of the Bring-Down Letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Offering Memorandum, as of a date
not more than three business days prior to the date of the Bring-Down
Letter), that the conclusions and findings of such
<PAGE> 20
20
accountants with respect to the financial information and other matters
covered by the Initial Letter are accurate and (iii) confirming in all
material respects the conclusions and findings set forth in the Initial
Letter. In addition, Neenah shall have received letters from such
accountants consenting to the use, in connection with the offering of the
Securities, of the audited consolidated financial statements of Neenah
prepared by such accountants and included in the Offering Memorandum.
(h) Each of the Company, Neenah and the Guarantors shall have
furnished to the Initial Purchasers a certificate, dated the Closing Date,
of its chief executive officer or president and its chief financial
officer stating that (A) such officers have carefully examined the
Offering Memorandum, (B) in their opinion, the Offering Memorandum, as of
its date, did not include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and since the
date of the Offering Memorandum, no event has occurred which should have
been set forth in a supplement or amendment to the Offering Memorandum so
that the Offering Memorandum (as so amended or supplemented) would not
include any untrue statement of a material fact and would not omit to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading and (C) as of the Closing Date, the
representations and warranties of the Company in this Agreement and of
Neenah and the Guarantors in the Neenah Letter Agreement are true and
correct in all material respects, the Company, Neenah and each of the
Guarantors have complied with all agreements and satisfied all conditions
on their part to be performed or satisfied hereunder or under the Neenah
Letter Agreement on or prior to the Closing Date, and subsequent to the
date of the most recent financial statements contained in the Offering
Memorandum, there has been no material adverse change in the financial
position or results of operation of Neenah or any of its subsidiaries, or
any change, or any development including a prospective change, in or
affecting the condition (financial or otherwise), results of operations,
business or prospects of Neenah and its subsidiaries taken as a whole.
(i) The Indenture shall have been duly executed and delivered by the
Company and the Trustee and the Notes shall have been duly executed and
delivered by the Company and duly authenticated by the Trustee.
(j) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(k) If any event shall have occurred that requires the Company under
Section 4(d) to prepare an amendment or supplement to the Offering
<PAGE> 21
21
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to
comment thereon, and copies thereof shall have been delivered to the
Initial Purchasers reasonably in advance of the Closing Date.
(l) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment
thereof by the Commission which in the judgment of the Initial Purchasers
would materially impair the ability of the Initial Purchasers to purchase,
hold or effect resales of the Securities as contemplated hereby.
(m) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock or long-term debt or any
change, or any development involving a prospective change, in or affecting
the condition (financial or otherwise), results of operations, business or
prospects of Neenah and its subsidiaries taken as a whole, the effect of
which, in any such case described above, is, in the judgment of the
Initial Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Securities on the
terms and in the manner contemplated by this Agreement and the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(n) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance
or sale of the Securities; and no injunction, restraining order or order
of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Securities.
(o) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Securities
by any "nationally recognized statistical rating organization", as such
term is defined by the Commission for purposes of Rule 436(g)(2) of the
rules and regulations of the Commission under the Securities Act and (ii)
no such organization shall have publicly announced that it has under
surveillance or review (other than an announcement with positive
implications of a possible upgrading), its rating of the Securities.
(p) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange, the
<PAGE> 22
22
NASDAQ market or the over-the-counter market shall have been suspended or
limited, or minimum prices shall have been established on any such
exchange or market by the Commission, by any such exchange or by any other
regulatory body or governmental authority having jurisdiction, or (ii) any
moratorium on commercial banking activities shall have been declared by
federal or New York state authorities or (iii) an outbreak or escalation
of hostilities or a declaration by the United States of a national
emergency or war or (iv) a material adverse change in general economic,
political or financial conditions (or the effect of international
conditions on the financial markets in the United States shall be such)
the effect of which, in the case of this clause (iv), is, in the judgment
of the Initial Purchasers, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or the delivery of
the Securities on the terms and in the manner contemplated by this
Agreement and in the Offering Memorandum (exclusive of any amendment or
supplement thereto).
(q) Substantially simultaneously with the sale of the Securities
hereunder (i) the Merger shall have been consummated, (ii) the Initial
Purchasers shall have received a counterpart of an agreement in the form
of Exhibit D hereto (the "Neenah Letter Agreement") which shall have been
executed and delivered by a duly authorized officer of Neenah and each of
the Guarantors, whereby, among other things, Neenah (as the surviving
entity after the Merger) and the Guarantors will become parties to this
Agreement and be subject to the obligations of the Company under this
Agreement, including, but not limited to, the obligations under Sections
8, 9, 10 and 12 hereof, (iii) the Initial Purchasers shall have received a
counterpart of the Supplemental Indenture which shall have been executed
and delivered by the parties thereto and pursuant to the terms thereof
Neenah shall have become the primary obligor under the Indenture and the
Guarantors shall have become note guarantors under the Indenture and (iv)
the Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of Neenah and each of the Guarantors.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Section
5(l), (m), (n), (o) or (p) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-
<PAGE> 23
23
defaulting Initial Purchaser may make arrangements for the purchase of the
Securities which such defaulting Purchaser agreed but failed to purchase by
other persons satisfactory to the Company and the non-defaulting Initial
Purchaser, but if no such arrangements are made within 36 hours after such
default, this Agreement shall terminate without liability on the part of the
non-defaulting Initial Purchasers or the Company, except that the Company will
continue to be liable for the payment of expenses to the extent set forth in
Sections 8 and 12 and except that the provisions of Sections 9 and 10 shall not
terminate and shall remain in effect. As used in this Agreement, the term
"Initial Purchasers" includes, for all purposes of this Agreement unless the
context otherwise requires, any party not listed in Schedule 1 hereto that,
pursuant to this Section 7, purchases Securities which a defaulting Initial
Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company or any non-defaulting
Initial Purchaser for damages caused by its default. If other persons are
obligated or agree to purchase the Securities of a defaulting Initial Purchaser,
either the non-defaulting Initial Purchaser or the Company may postpone the
Closing Date for up to seven full business days in order to effect any changes
that in the opinion of counsel for the Company or counsel for the Initial
Purchasers may be necessary in the Offering Memorandum or in any other document
or arrangement, and the Company agrees to promptly prepare any amendment or
supplement to the Offering Memorandum that effects any such changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6 or Section 7, (b) the
Company shall fail to tender the Securities for delivery to the Initial
Purchasers for any reason permitted under this Agreement or (c) the Initial
Purchasers shall decline to purchase the Securities for any reason permitted
under this Agreement, the Company shall reimburse the Initial Purchasers for
such out-of-pocket expenses (including reasonable fees and disbursements of
counsel) as shall have been reasonably incurred by the Initial Purchasers in
connection with this Agreement and the proposed purchase and resale of the
Securities. If this Agreement is terminated pursuant to Section 7 by reason of
the default of one or more of the Initial Purchasers, the Company shall not be
obligated to reimburse any defaulting Initial Purchaser on account of such
expenses.
9. Indemnification. (a) The Company shall indemnify and hold
harmless each Initial Purchaser, its affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls any Initial Purchaser within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 9(a) and
Section 10 as an Initial Purchaser), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of the Securities), to which that Initial Purchaser may
become subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other federal or state statutory law or regulation, at common
law or
<PAGE> 24
24
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum or in any amendment or supplement thereto or in any information
provided by the Company pursuant to Section 4(e) or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and shall reimburse
each Initial Purchaser promptly upon demand for any legal or other expenses
reasonably incurred by that Initial Purchaser in connection with investigating
or defending or preparing to defend against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Initial Purchasers'
Information; and provided, further, that with respect to any such untrue
statement in or omission from the Preliminary Offering Memorandum, the indemnity
agreement contained in this Section 9(a) shall not inure to the benefit of any
such Initial Purchaser to the extent that the sale to the person asserting any
such loss, claim, damage, liability or action was an initial resale by such
Initial Purchaser and any such loss, claim, damage, liability or action of or
with respect to such Initial Purchaser results from the fact that both (A) to
the extent required by applicable law, a copy of the Offering Memorandum was not
sent or given to such person at or prior to the written confirmation of the sale
of such Securities to such person and (B) the untrue statement in or omission
from the Preliminary Offering Memorandum was corrected in the Offering
Memorandum unless, in either case, such failure to deliver the Offering
Memorandum was a result of non-compliance by the Company with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 9(b) and
Section 10 as the Company), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with any Initial
<PAGE> 25
25
Purchasers' Information, and shall reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 9(a) or 9(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 9 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 9. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in
<PAGE> 26
26
Sections 9(a) and 9(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), 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.
The obligations of the Company and the Initial Purchasers in this
Section 9 and in Section 10 are in addition to any other liability that the
Company or the Initial Purchasers, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9
is unavailable or insufficient to hold harmless an indemnified party under
Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Initial Purchasers on the other from the offering of the Securities 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 Company on the one hand and the Initial Purchasers on the other with respect
to the statements or omissions that resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Initial Purchasers on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities purchased under this Agreement (before deducting expenses)
received by or on behalf of the Company, on the one hand, and the total
discounts and commissions received by the Initial Purchasers with respect to the
Securities purchased under this Agreement, on the other, bear to the total gross
proceeds from the sale of the Securities under this Agreement, in each case as
set forth in the table on the cover page of the Offering Memorandum. The
relative fault 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 the Company or information
supplied by the Company on the one hand or to any Initial Purchasers'
Information on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission.
<PAGE> 27
27
The Company and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be determined by
pro rata allocation (even if the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation that does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 10
shall be deemed to include, for purposes of this Section 10, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 10, no Initial Purchaser shall be
required to contribute any amount in excess of the amount by which the total
discounts and commissions received by such Initial Purchaser with respect to the
Securities purchased by it under this Agreement exceeds the amount of any
damages which such Initial Purchaser has otherwise paid or become liable to pay
by reason of any 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 as provided in this Section 10 are several
in proportion to their respective purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except as provided in
Sections 9 and 10 with respect to affiliates, officers, directors, employees,
representatives, agents and controlling persons of the Company and the Initial
Purchasers and in Section 4(e) with respect to holders and prospective
purchasers of the Securities. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
11, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
12. Expenses. The Company agrees with the Initial Purchasers to pay
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the Preliminary
Offering Memorandum, the Offering Memorandum and any amendments or supplements
thereto; (c) the costs of reproducing and distributing each of the Transaction
Documents; (d) the costs incident to the preparation, printing and delivery of
the certificates evidencing the Securities, including stamp duties and transfer
taxes, if any, payable upon issuance of the Securities; (e) the fees and
expenses of the Company's counsel and independent accountants; (f) the fees and
expenses of qualifying the Securities under the securities laws of the several
jurisdictions as provided in Section 4(h) and of preparing, printing and
distributing Blue Sky Memoranda (including related fees and expenses of counsel
for the Initial Purchasers); (g) any fees charged by rating agencies for rating
the
<PAGE> 28
28
Securities; (h) the fees and expenses of the Trustee and any paying agent
(including related fees and expenses of any counsel to such parties); (i) all
expenses and application fees incurred in connection with the application for
the inclusion of the Securities on the PORTAL Market and the approval of the
Securities for book-entry transfer by DTC; and (j) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement which are not otherwise specifically provided for in this Section 12;
provided, however, that except as provided in this Section 12 and Section 8, the
Initial Purchasers shall pay their own costs and expenses.
13. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Initial
Purchasers contained in this Agreement or made by or on behalf of the Company or
the Initial Purchasers pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the Securities and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
of them or any of their respective affiliates, officers, directors, employees,
representatives, agents or controlling persons.
14. Notices, etc.. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New
York, New York 10017, Attention: Gerard J. Murray (telecopier no.: (212)
270-0994); or
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the
Offering Memorandum, Attention: James K. Hildebrand (telecopier no.:
614-889-8308);
provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
16. Initial Purchasers' Information. The parties hereto acknowledge
and agree that the Initial Purchasers' Information consists solely of the
following
<PAGE> 29
29
information in the Preliminary Offering Memorandum and the Offering Memorandum:
(i) the last paragraph on the front cover page concerning the terms of the
offering by the Initial Purchasers; (ii) the first paragraph on the inside front
cover page concerning over-allotment and trading activities by the Initial
Purchasers; and (iii) the statements concerning the Initial Purchasers contained
in the third, fourth, sixth and seventh paragraphs under the heading "Plan of
Distribution".
17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
19. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
20. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE> 30
30
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the several
Initial Purchasers in accordance with its terms.
Very truly yours,
NC MERGER COMPANY
By
------------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By
----------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
MORGAN STANLEY & CO. INCORPORATED
By
----------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
1585 Broadway (33rd Floor)
New York, NY 10036
Attention: Legal Department
<PAGE> 31
31
SCHEDULE 1
Principal
Amount
Initial Purchasers of Securities
------------------ -------------
Chase Securities Inc. $ 112,500,000
Morgan Stanley & Co. Incorporated 37,500,000
-----------
Total $ 150,000,000
<PAGE> 32
32
ANNEX A
[Form of Exchange and Registration Rights Agreement]
<PAGE> 33
33
ANNEX B-1
[Form of Opinion of Counsel for the Company]
Kirkland & Ellis shall have furnished to the Initial Purchasers
their written opinion, as counsel to the Company, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth
below:
(i) Holdings has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its businesses requires such qualification, and
has all power and authority necessary to own or hold its properties and to
conduct the businesses in which it is engaged (except where the failure to
so qualify or have such power or authority would not, singularly or in the
aggregate, have a Material Adverse Effect);
(ii) all of the outstanding shares of capital stock of Holdings have
been, and upon the consummation of the Merger all of the outstanding
shares of capital stock of Holdings will be, duly and validly authorized
and issued and fully paid and non-assessable;
(iii) the statements in the Offering Memorandum under the heading
"Certain United States Federal Income Tax Considerations", to the extent
that they constitute summaries of matters of law or regulation or legal
conclusions, have been reviewed by such counsel and fairly summarize the
matters described therein in all material respects; and such counsel does
not have actual knowledge of any current or pending legal or governmental
actions, suits or proceedings which would be required to be described in
the Offering Memorandum if the Offering Memorandum were a prospectus
included in a registration statement on Form S-1 which are not described
as so required;
(iv) the Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder;
(v) Holdings has full right, power and authority to execute and
deliver each of the Transaction Documents to which is a party and to
perform its obligations thereunder; and all corporate action required to
be taken for the due and proper authorization, execution and delivery of
each of the Transaction
<PAGE> 34
34
Documents to which Holdings is a party and the consummation of the
transactions contemplated thereby have been duly and validly taken;
(vi) assuming the due authorization, execution and delivery of the
Purchase Agreement by the Company, the Purchase Agreement constitutes a
valid and legally binding agreement of the Company (and, upon the due
authorization, execution, and delivery of the Neenah Letter Agreement by
the parties thereto, of Neenah and the Guarantors) enforceable against the
Company (and Neenah and each of the Guarantors) in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law) and except to the extent that the indemnification
provisions thereof may be limited by applicable law;
(vii) upon the due authorization, execution and delivery of the
Registration Rights Agreement by Neenah and the Guarantors, the
Registration Rights Agreement will constitute a valid and legally binding
agreement of the Neenah and each of the Guarantors, enforceable against
each of them in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law) and except to the
extent that the indemnification provisions thereof may be limited by
applicable law;
(viii) assuming the due authorization, execution and delivery of the
Indenture by the Company and the Trustee, the Indenture constitutes a
valid and legally binding agreement of the Company (and, upon the due
authorization, execution and delivery of the Supplemental Indenture by the
parties thereto, of Neenah and the Guarantors) enforceable against the
Company (and Neenah as primary obligor and each of the Guarantors as note
guarantors) in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law);
(ix) assuming the due authorization and execution of the Securities
by the Company and, assuming due authentication thereof by the Trustee and
upon payment and delivery in accordance with the Purchase Agreement, the
Securities constitute valid and legally binding obligations of the Company
(and, upon the due authorization, execution and delivery of the
Supplemental Indenture by the parties thereto, of Neenah and the
Guarantors) entitled to the benefits of the Indenture and enforceable
against the Company (and Neenah as primary obligor
<PAGE> 35
35
and each of the Guarantors as note guarantors) in accordance with their
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law);
(x) the Merger Agreement has been duly authorized, executed and
delivered by Holdings;
(xi) each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum;
(xii) the execution, delivery and performance by Holdings of each of
the Transaction Documents to which it is a party, the compliance by
Holdings with the terms of each of the Transaction Documents to which it
is a party and the consummation of the Transactions will not conflict with
or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of Holdings
pursuant to, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which Holdings is a party or by which it
is bound or to which its property or assets is subject, nor will such
actions result in any violation of the provisions of the charter or
by-laws of Holdings or any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body
having jurisdiction over Holdings or any of its properties or assets; and
no consent, approval, authorization or order of, or filing or registration
with, any such court or arbitrator or governmental agency or body under
any such statute, judgment, order, decree, rule or regulation is required
for the execution, delivery and performance by Holdings of each of the
Transaction Documents to which it is a party, the compliance by Holdings
with the terms of each of the Transaction Documents to which it is a party
and the consummation of the Transactions, except for such consents,
approvals, authorizations, filings, registrations or qualifications (i)
which have been obtained or made prior to the Closing Date and (ii) as may
be required to be obtained or made under the Securities Act and applicable
state securities laws as provided in the Registration Rights Agreement;
(xiii) to the best knowledge of such counsel, there are no pending
actions or suits or judicial, arbitral, rule-making, administrative or
other proceedings to which Holdings is a party or of which any property or
assets of Holdings is the subject which (A) singularly or in the
aggregate, if determined adversely to Holdings, could reasonably be
expected to have a Material Adverse Effect or (B) questions the validity
or enforceability of any of the Transaction Documents or any action taken
or to be taken pursuant thereto; and to the best
<PAGE> 36
36
knowledge of such counsel, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(xiv) Holdings is not (A) in violation of its charter or by-laws,
(B) in default in any material respect, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which it is a party
or by which it is bound or to which any of its property or assets is
subject or (C) in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property
or assets may be subject;
(xv) neither the consummation of the transactions contemplated by
the Purchase Agreement nor the sale, issuance, execution or delivery of
the Securities will violate Regulation G, T, U or X of the Federal
Reserve Board; and
(xvi) assuming the accuracy of the representations, warranties and
agreements of the Company (and, upon the due authorization, execution and
delivery of the Neenah Letter Agreement, of Neenah and the Guarantors) and
of the Initial Purchasers contained in the Purchase Agreement, the
issuance and sale of the Securities and the offer, resale and delivery of
the Securities in the manner contemplated by the Purchase Agreement and
the Offering Memorandum, are exempt from the registration requirements of
the Securities Act, and it is not necessary to qualify the Indenture under
the Trust Indenture Act.
Such counsel shall also state that they have participated in
conferences with representatives of the Company and Neenah and with
representatives of Neenah's independent accountants and counsel at which
conferences the contents of the Offering Memorandum and any amendment and
supplement thereto and related matters were discussed and, although such counsel
assume no responsibility for the accuracy, completeness or fairness of the
Offering Memorandum, any amendment or supplement thereto (except as expressly
provided above), nothing has come to the attention of such counsel to cause such
counsel to believe that the Offering Memorandum or any amendment or supplement
thereto (other than the financial statements and other financial and statistical
information contained therein, as to which such counsel need express no belief)
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of Neenah and public officials which are furnished to the Initial
Purchasers.
<PAGE> 37
37
ANNEX B-2
[Form of Opinion of Counsel for the Company and Neenah]
Foley & Lardner shall have furnished to the Initial Purchasers their
written opinion, as counsel to the Company and to Neenah, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth
below:
(i) The Company has been, and upon consummation of the Merger each
of Neenah and each of the Guarantors will be, duly incorporated and
validly existing as corporations under the laws of the State of Wisconsin;
(ii) all of the outstanding shares of capital stock of the Company
have been, and upon the consummation of the Merger all of the outstanding
shares of capital stock of Neenah will be, duly and validly authorized and
issued and fully paid and non-assessable, except as set forth in Section
180.0622(2)(b) of the Wisconsin Statutes, as judicially interpreted; and
upon the consummation of the Merger and the other Transactions the capital
stock of Neenah will conform in all material respects to the description
thereof contained in the Offering Memorandum;
(iii) each of the Company, Neenah and each of the Guarantors has
full right, power and authority to execute and deliver each of the
Transaction Documents to which is a party and to perform its obligations
thereunder; and all corporate action required to be taken for the due and
proper authorization, execution and delivery of each of the Transaction
Documents to which any of the Company, Neenah or any of the Guarantors is
a party and the consummation of the transactions contemplated thereby have
been duly and validly taken;
(iv) the Purchase Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company (and, upon the due authorization, execution, and
delivery of the Neenah Letter Agreement by the parties thereto, of Neenah
and the Guarantors) enforceable against the Company (and Neenah and each
of the Guarantors) in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law) and except to the
extent that the indemnification provisions thereof may be limited by
applicable law;
<PAGE> 38
38
(v) the Indenture has been duly authorized, executed and delivered
by the Company and, assuming due authorization, execution and delivery
thereof by the Trustee, constitutes a valid and legally binding agreement
of the Company (and, upon the due authorization, execution and delivery of
the Supplemental Indenture by the parties thereto, of Neenah and the
Guarantors) enforceable against the Company (and Neenah as primary obligor
and each of the Guarantors as note guarantors) in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insol vency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law);
(vi) the Securities have been duly authorized and issued by the
Compa ny and, assuming due authentication thereof by the Trustee and upon
payment and delivery in accordance with the Purchase Agreement, will
constitute valid and legally binding obligations of the Company (and, upon
the due authorization, execution and delivery of the Supplemental
Indenture by the parties thereto, of Neenah and the Guarantors) entitled
to the benefits of the Indenture and enforceable against the Company (and
Neenah as primary obligor and each of the Guarantors as note guarantors)
in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law);
(vii) the Merger Agreement has been duly authorized, executed and
delivered by the Company, and assuming due authorization, execution and
delivery by Neenah and Holdings, will constitute a valid and legally
binding agreement of Neenah, the Company and Holdings enforceable against
Neenah, the Company and Holdings in accordance with its terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity
or at law);
(viii) the execution, delivery and performance by each of the
Company, Neenah and each of the Guarantors of each of the Transaction
Documents, the issuance, authentication, sale and delivery of the
Securities by the Company, the compliance by each of the Company, Neenah
and each of the Guarantors with the terms of each of the Transaction
Documents to which each is a party and the consummation of the
Transactions will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company, Neenah or any of the
Guarantors pursuant to any indenture, mortgage, deed of trust, loan
agreement or other agreement or
<PAGE> 39
39
instrument to which the Company, Neenah or any of the Guarantors is a
party or by which any of them are bound or to which the property or assets
of any of them is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws of any of the Company, Neenah
or any of the Guarantors or any statute or any judgment, order, decree,
rule or regulation of any court or arbitrator or governmental agency or
body having jurisdiction over any of the Company, Neenah or any of the
Guarantors or any of their properties or assets; and no consent, approval,
authorization or order of, or filing or registration with, any such court
or arbitrator or governmental agency or body under any such statute,
judgment, order, decree, rule or regulation is required for the execution,
delivery and performance by each of the Company, Neenah and each of the
Guarantors of each of the Transaction Documents to which each is a party,
the issuance, authentication, sale and delivery of the Securities by the
Company, the compliance by each of the Company, Neenah and each of the
Guarantors with the terms of each of the Transaction Documents to which
each is a party and the consummation of the Transactions, except for such
consents, approvals, authorizations, filings, registrations or
qualifications (i) which have been obtained or made prior to the Closing
Date and (ii) as may be required to be obtained or made under the
Securities Act and applicable state securities laws as provided in the
Registration Rights Agreement;
(ix) to the best knowledge of such counsel, there are no pending
actions or suits or judicial, arbitral, rule-making, administrative or
other proceedings to which the Company is a party or of which any property
or assets of the Company is the subject which (A) singularly or in the
aggregate, if determined adversely to the Company, could reasonably be
expected to have a Material Adverse Effect or (B) questions the validity
or enforceability of any of the Transaction Documents or any action taken
or to be taken pursuant thereto; and to the best knowledge of such
counsel, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(x) the Company is not (A) in violation of its charter or by-laws,
(B) in default in any material respect, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which it is a party
or by which it is bound or to which any of its property or assets is
subject or (C) in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property
or assets may be subject;
(xi) neither the Company, Neenah nor any of Neenah's subsidiaries is
(A) an "investment company" or a company "controlled by" an investment
company within the meaning of the Investment Company Act and the rules and
regulations of the Commission thereunder, without taking account of any
<PAGE> 40
40
exemption under the Investment Company Act arising out of the number of
holders of securities of the Company, Neenah or Neenah's subsidiaries or
(B) 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;
(xii) each of the Letter Agreement, the Supplemental Indenture and
the Registration Rights Agreement has been duly authorized, executed and
delivered by Neenah and each of the Guarantors, and each of the Letter
Agreement, the Supplemental Indenture and the Registration Rights
Agreement is enforceable against Neenah and each of the Guarantors in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law);
(xii) neither the consummation of the transactions contemplated by
the Purchase Agreement nor the assumption of the Notes by Neenah or the
guarantee of the Notes by the Guarantors will violate Regulation G, T, U
or X of the Federal Reserve Board.
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
the Company, Neenah and public officials which are furnished to the Initial
Purchasers.
<PAGE> 41
41
ANNEX B-3
[Form of Opinion of Counsel for Neenah]
Quarles & Brady shall have furnished to the Initial Purchasers their
written opinion, as counsel to Neenah and the Guarantors, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth
below:
(i) Neenah and each of the Guarantors has been duly incorporated and
is validly existing as a corporation under the laws of Wisconsin, is duly
qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which its ownership or lease of property or the
conduct of its businesses requires such qualification, and has all power
and authority necessary to own or hold its properties and to conduct the
businesses in which it is engaged (except where the failure to so qualify
or have such power or authority would not, singularly or in the aggregate,
have a Material Adverse Effect),
(ii) all of the outstanding shares of capital stock of Neenah and
each of the Guarantors have been duly and validly authorized and issued
and are fully paid and non-assessable, except as set forth in Section
180.0622(2)(b) of the Wisconsin Statutes, as judicially interpretated.
Upon consummation of and by virtue of the Merger, each outstanding share
of the Company's common stock, without par value, will be converted into
one share of the Class A Common Stock of Neenah, and each outstanding
share of the Common Stock of Neenah will be converted into cash as
provided in the Merger Agreement;
(iii) to the best knowledge of such counsel, there are not any
current or pending legal or governmental actions, suits or proceedings
which would be required to be described in the Offering Memorandum if the
Offering Memorandum were a prospectus included in a registration
statement on Form S-1 which are not described as so required;
(iv) the Merger Agreement has been duly authorized, executed and
delivered by Neenah, and assuming due authorization, execution and
delivery by the Company and Holdings, will constitute a valid and legally
binding agreement of Neenah enforceable against Neenah in accordance with
its terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law);
<PAGE> 42
42
(v) the execution, delivery and performance by Neenah of the Merger
Agreement and compliance by Neenah with the terms thereof will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of Neenah or any of its subsidiaries pursuant to, any material indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which Neenah or any of its subsidiaries is a party or by
which Neenah or any of its subsidiaries is bound or to which any of the
property or assets of Neenah or any of its subsidiaries is subject, nor
will such actions result in any violation of the provisions of the charter
or by-laws of Neenah or any of its subsidiaries or any statute or any
judgment, order, decree, rule or regulation of any court or arbitrator or
governmental agency or body having jurisdiction over Neenah or any of its
subsidiaries or any of their properties or assets; and no consent,
approval, authorization or order of, or filing or registration with, any
such court or arbitrator or governmental agency or body under any such
statute, judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by Neenah of the Merger Agreement, and
compliance by Neenah with the terms thereof and the consummation of the
Merger, except for such consents, approvals, authorizations, filings,
registrations or qualifications which have been obtained or made prior to
the Closing Date;
(vi) to the best knowledge of such counsel, there are no pending
actions or suits or judicial, arbitral, rule-making, administrative or
other proceedings to which Neenah or any of its subsidiaries is a party or
of which any property or assets of Neenah or any of its subsidiaries is
the subject which (A) singularly or in the aggregate, if determined
adversely to Neenah or any of its subsidiaries, could reasonably be
expected to have a Material Adverse Effect or (B) questions the validity
or enforceability of any of the Transaction Documents or any action taken
or to be taken pursuant thereto; and to the best knowledge of such
counsel, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(vii) neither Neenah nor any of its subsidiaries is (A) in violation
of its charter or by-laws, (B) in default in any material respect, and no
event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any material indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument to
which it is a party or by which it is bound or to which any of its
property or assets is subject or (C) in violation in any material respect
of any law, ordinance, governmental rule, regulation or court decree to
which it or its property or assets may be subject;
[Such counsel shall also state that they have participated in conferences
with representatives of Neenah and with representatives of Neenah's independent
<PAGE> 43
43
accountants and counsel at which conferences the contents of the Offering
Memorandum and any amendment and supplement thereto and related matters were
discussed and, although such counsel assume no responsibility for the accuracy,
completeness or fairness of the Offering Memorandum, any amendment or supplement
thereto (except as expressly provided above), nothing has come to the attention
of such counsel to cause such counsel to believe that the Offering Memorandum or
any amendment or supplement thereto (other than the financial statements and
other financial and statistical information contained therein, as to which such
counsel need express no belief) contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.]
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
Neenah and public officials which are furnished to the Initial Purchasers.
<PAGE> 44
44
ANNEX C
[Form of Initial Comfort Letter]
Neenah shall have furnished to the Initial Purchasers a letter of
Ernst & Young LLP, addressed to the Initial Purchasers and dated the date of the
Purchase Agreement, in form and substance satisfactory to the Initial
Purchasers, substantially to the effect set forth below:
(i) they are independent certified public accountants with respect
to the Company within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings;
(ii) in their opinion, the audited financial statements and pro
forma financial information included in the Offering Memorandum and
reported on by them comply in form in all material respects with the
accounting requirements of the Exchange Act and the related published
rules and regulations of the Commission thereunder that would apply to the
Offering Memorandum if the Offering Memorandum were a prospectus included
in a registration statement on Form S-1 under the Securities Act (except
that certain supporting schedules are omitted);
(iii) based upon a reading of the latest unaudited financial
statements made available by Neenah, the procedures of the AICPA for a
review of interim financial information as described in Statement of
Auditing Standards No. 71, reading of minutes and inquiries of certain
officials of Neenah who have responsibility for financial and accounting
matters and certain other limited procedures requested by the Initial
Purchasers and described in detail in such letter, nothing has come to
their attention that causes them to believe that (A) any unaudited
consolidated financial statements included in the Offering Memorandum do
not comply as to form in all material respects with applicable accounting
requirements, (B) any material modifications should be made to the
unaudited consolidated financial statements included in the Offering
Memorandum for them to be in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited consolidated financial statements included in the Offering
Memorandum or (C) the information included under the headings
["Summary--Summary Consolidated Financial and Other Data",
"Capitalization", "Selected Consolidated Financial and Other Data",
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" and "Management--Compensation of Executive
Officers"] is not in conformity with the disclosure requirements of
Regulation S-K that would apply to the Offering Memorandum
<PAGE> 45
45
if the Offering Memorandum were a prospectus included in a registration
statement on Form S-1 under the Securities Act;
(iv) based upon the procedures detailed in such letter with respect
to the period subsequent to the date of the last available balance sheet,
including reading of minutes and inquiries of certain officials of Neenah
who have responsibility for financial and accounting matters, nothing has
come to their attention that causes them to believe that (A) at a
specified date not more than three business days prior to the date of such
letter, there was any change in capital stock, increase in long-term debt
or decrease in net current assets as compared with the amounts shown in
the December 31, 1996 unaudited balance sheet included in the Offering
Memorandum or (B) for the period from December 31, 1996 to a specified
date not more than three business days prior to the date of such letter,
there were any decreases, as compared with the corresponding period in the
preceding year, in net sales, income from operations, EBITDA or net
income, except in all instances for changes, increases or decreases that
the Offering Memorandum discloses have occurred or which are set forth in
such letter, in which case the letter shall be accompanied by an
explanation by Neenah as to the significance thereof unless said
explanation is not deemed necessary by the Initial Purchasers;
(v) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company) set forth in the Offering Memorandum agrees with the
accounting records of Neenah, excluding any questions of legal
interpretation; and
(vi) on the basis of a reading of the unaudited pro forma financial
information included in the Offering Memorandum, carrying out certain
specified procedures, reading of minutes and inquiries of certain
officials of Neenah who have responsibility for financial and accounting
matters and proving the arithmetic accuracy of the application of the pro
forma adjustments to the historical amounts in the pro forma financial
information, nothing came to their attention which caused them to believe
that the pro forma financial information does not comply in form in all
material respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of such
information.
<PAGE> 46
46
EXHIBIT D
April__, 1997
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
c/o CHASE SECURITIES INC.
270 Park Avenue
New York, NY 10017
Dear Sirs:
Reference is hereby made to the Purchase Agreement dated April__, 1997
(the "Purchase Agreement"), between NC Merger Company, a Wisconsin corporation
(the "Company"), and you pursuant to which the Company has agreed to issue and
sell and you have agreed to purchase the Securities described therein on the
terms set forth therein. Capitalized terms used herein but not otherwise defined
herein have meanings assigned thereto in the Purchase Agreement (including by
reference therein to the Offering Memorandum). This is the letter agreement
referred to in Section 5(q) of the Purchase Agreement.
The parties hereto agree that this Letter Agreement is being executed and
delivered in connection with the issue and sale of the Securities pursuant to
the Purchase Agreement and to induce the Initial Purchasers to purchase the
Securities thereunder.
Neenah (as the Company's successor after the Merger) and each of the
Guarantors hereby confirm their agreement with you as follows:
SECTION 1. In accordance with Section 5(q) of the Purchase Agreement,
Neenah and each of the Guarantors by their respective signatures below each
becomes a party to the Purchase Agreement on the same terms and with the same
ongoing obligations and rights as the Company thereunder with the same force and
effect as if originally named therein as a party and Neenah and each of the
Guarantors jointly and severally agrees to all the terms and provisions of the
Purchase Agreement applicable to the Company thereunder including, but not
limited to, under Sections 8, 9, 10 and 12 thereof.
SECTION 2. Neenah and each of the Guarantors hereby represents and
warrants to, and agrees with, each of you as of the date hereof that:
<PAGE> 47
47
(a) each of them has full right, power and authority to execute and
deliver this Letter Agreement and perform its obligations hereunder and
all corporate action required to be taken by each of them for the due and
proper authorization, execution, delivery and performance of this Letter
Agreement and the consummation of the transactions contemplated hereby has
been duly and validly taken and this Letter Agreement has been duly
authorized and validly executed and delivered by each of them and is the
valid and legally binding agreement of each of them enforceable against
each of them in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
and similar laws affecting creditors' rights and remedies generally and to
general principles of equity (regardless of whether enforcement is sought
in a proceeding at law or in equity), and except as rights to indemnity
and contribution may be limited under applicable law;
(b) each of them has full right, power and authority to execute and
deliver the Supplemental Indenture and perform its obligations thereunder
and all corporate action required to be taken by each of them for the due
and proper authorization, execution, delivery and performance of the
Supplemental Indenture and the consummation of the transactions
contemplated thereby have been duly and validly taken; the Supplemental
Indenture has been duly authorized by each of them, and, when duly
executed and delivered in accordance with its terms by each party thereto,
the Supplemental Indenture will constitute the valid and legally binding
agreement of Neenah, as primary obligor, and of each of the Guarantors, as
note guarantors, and will be enforceable against Neenah and each of the
Guarantors in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity); and
(c) the representations, warranties and agreements set forth in
Section 1 of the Purchase Agreement are true and accurate on the date
hereof as if made on such date by Neenah and each of the Guarantors, and
each reference therein to the knowledge of the Company shall be deemed to
be a reference to the knowledge of Neenah and each of the Guarantors.
SECTION 3. THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 4. This Letter Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
<PAGE> 48
48
SECTION 5. The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Letter Agreement.
If the foregoing is in accordance with your understanding of the agreement
among the parties hereto, kindly indicate your acceptance in the space provided
for that purpose below.
Very truly yours,
NEENAH CORPORATION,
By
----------------------
Name:
Title:
NEENAH FOUNDRY
COMPANY,
By
----------------------
Name:
Title:
HARTLEY CONTROLS
CORPORATION,
By
----------------------
Name:
Title:
NEENAH TRANSPORT, INC.,
By
----------------------
Name:
Title:
<PAGE> 49
49
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
By CHASE SECURITIES INC.,
By _________________
Name:
Title:
<PAGE> 1
EXHIBIT 4.3
EXECUTION COPY
NEENAH CORPORATION
$150,000,000
11-1/8 % Senior Subordinated Notes due 2007
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
April 30, 1997
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
NC Merger Company, a Wisconsin corporation (" NC Merger"), proposes
to issue and sell to you (the "Initial Purchasers"), upon the terms and subject
to the conditions set forth in a purchase agreement dated April 23, 1997 (the
"Purchase Agreement"), $150,000,000 aggregate principal amount of its 11-1/8 %
Senior Subordinated Notes due 2007 (the "Notes"). The Notes will be issued
pursuant to an Indenture to be dated as of April 30, 1997 (the "Indenture")
between NC Merger and United States Trust Company of New York, as Trustee (the
"Trustee"). Immediately following the consummation of the sale of the Notes
under the Purchase Agreement and pursuant to the Agreement and Plan of
Reorganization dated November 20, 1996, as amended, among NFC Castings, Inc., a
Delaware corporation, NC Merger and Neenah Corporation, a Wisconsin corporation
(the "Company"), NC Merger will merge (the "Merger") with and into the Company,
with the Company being the surviving corporation. Upon consummation of the
Merger, the Company will assume, by supplemental indenture, all of the
obligations of NC Merger under the Indenture and the Notes. The Company will
become the primary obligor on the Notes and the Notes will be fully guaranteed
(the "Guarantees", and collectively with the Notes, the "Securities") on an
unsecured senior subordinated basis as to payment, premium, if any, and interest
by the Company's principal operating subsidiaries, Neenah Foundry Company,
Hartley Controls Corporation and Neenah Transport, Inc. (the "Guarantors").
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Purchase Agreement.
<PAGE> 2
2
Pursuant to the Purchase Agreement, substantially simultaneously
with (i) the sale of the Notes to the Initial Purchasers and (ii) the Merger,
the Company and the Guarantors are required to enter into an exchange and
registration rights agreement in the form hereof. Accordingly, the Company and
the Guarantors hereby agree with you, for the benefit of the holders of the
Securities (including the Initial Purchasers) (the "Holders"), as follows:
1. Registered Exchange Offer. The Company and the Guarantors shall
(i) prepare and, not later than 45 days following the date of original issuance
of the Securities (the "Issue Date"), file with the Commission a registration
statement (the "Exchange Offer Registration Statement") on an appropriate form
under the Securities Act with respect to a proposed offer to the Holders (the
"Registered Exchange Offer") to issue and deliver to such Holders, in exchange
for the Securities, a like aggregate principal amount of debt securities of the
Company (the "Exchange Securities") identical in all material respects to the
Securities, except for the transfer restrictions relating to the Securities,
(ii) use their reasonable best efforts to cause the Exchange Offer Registration
Statement to become effective under the Securities Act no later than 105 days
after the Issue Date and the Registered Exchange Offer to be consummated no
later than 135 days after the Issue Date, and (iii) keep the Exchange Offer
Registration Statement effective for not less than 30 days (or longer, if
required by applicable law) after the date that notice of the Registered
Exchange Offer is mailed to the Holders (such period being called the "Exchange
Offer Registration Period"). The Exchange Securities will be issued under the
Indenture or an indenture (the "Exchange Securities Indenture") between the
Company, the Guarantors and the Trustee or such other bank or trust company
reasonably satisfactory to you, as trustee (the "Exchange Securities Trustee"),
such indenture to be identical in all material respects to the Indenture except
for the transfer restrictions relating to the Securities (as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company and the Guarantors shall promptly commence the Registered Exchange
Offer, it being the objective of such Registered Exchange Offer to enable each
Holder to elect to exchange Securities for Exchange Securities (assuming that
such Holder (a) is not an affiliate of the Company, a Guarantor or an Exchanging
Dealer (as defined below) not complying with the requirements of the next
sentence, (b) acquires the Exchange Securities in the ordinary course of such
Holder's business and (c) has no arrangements or understandings with any person
to participate in the distribution of the Exchange Securities) and to trade such
Exchange Securities from and after their receipt without any limitations or
restrictions under the Securities Act and without material restrictions under
the securities laws of the several states of the United States. The Company, the
Guarantors, the Initial Purchasers and each Exchanging Dealer acknowledge that,
pursuant to current interpretations by the Commission's staff of Section 5 of
the Securities Act,
<PAGE> 3
3
(i) each Holder which is a broker-dealer electing to exchange Securities,
acquired for its own account as a result of market making activities or other
trading activities, for Exchange Securities (an "Exchanging Dealer"), is
required to deliver a prospectus containing the information set forth in Annex A
hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures"
section and the "Purpose of the Exchange Offer" section and in Annex C hereto in
the "Plan of Distribution" section of such prospectus in connection with a sale
of any such Exchange Securities received by such Exchanging Dealer pursuant to
the Registered Exchange Offer and (ii) if either Initial Purchaser elects to
sell Exchange Securities acquired in exchange for Securities constituting any
unsold portion of the original offering, it is required to deliver a prospectus
containing the information required by Items 507 or 508 of Regulation S-K under
the Securities Act and the Exchange Act ("Regulation S-K"), as applicable, in
connection with such a sale.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 20
business days after the date that notice of the Registered Exchange Offer
is mailed to the Holders (or longer if required by applicable law);
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
and
(d) otherwise comply in all respects with all laws applicable to the
Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(a) accept for exchange all Securities validly tendered and not
validly withdrawn pursuant to the Registered Exchange Offer;
(b) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder of
Securities,
<PAGE> 4
4
Exchange Securities equal in principal amount to the Securities of such
Holder so accepted for exchange.
The Company shall make available, for a period of 180 days after the
consummation of the Registered Exchange Offer, a copy of the prospectus forming
part of the Exchange Offer Registration Statement to any broker-dealer for use
in connection with any resale of any Exchange Securities.
Interest on each Exchange Security issued pursuant to the Registered
Exchange Offer will accrue from the last interest payment date on which interest
was paid on the Securities surrendered in exchange therefor or, if no interest
has been paid on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act and (iii) such Holder is not an affiliate of the Company or
any of the Guarantors, or, if it is such an affiliate, it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
Notwithstanding any other provisions hereof, the Company and the
Guarantors will ensure that (i) any Exchange Offer Registration Statement and
any amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Exchange Offer
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Exchange
Offer Registration Statement, and any supplement to such prospectus, does not
include, as of the consummation of the Registered Exchange Offer, an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
2. Shelf Registration. If (i) because of any change in law or
applicable interpretations of the Commission's staff the Company is not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (ii) for any other reason the Registered Exchange Offer is not
consummated within 135 days after the Issue Date, or (iii) either of the Initial
Purchasers so request with respect to Securities not
<PAGE> 5
5
eligible to be exchanged for Exchange Securities in the Registered Exchange
Offer and held by such Initial Purchaser following the consummation of the
Registered Exchange Offer, or (iv) any applicable law or interpretations do not
permit any Holder to participate in the Registered Exchange Offer, or (v) any
Holder that participates in the Registered Exchange Offer does not receive
freely transferable Exchange Securities in exchange for tendered Securities, or
(vi) the Company so elects, then the following provisions shall apply:
(a) The Company and the Guarantors shall use their reasonable best
efforts to file as promptly as practicable with the Commission, and thereafter
shall use their reasonable best efforts to cause to be declared effective, a
shelf registration statement on an appropriate form under the Securities Act
relating to the offer and sale of the Transfer Restricted Securities (as defined
below) by the Holders from time to time in accordance with the methods of
distribution set forth in such registration statement (hereafter, a "Shelf
Registration Statement" and, together with any Exchange Offer Registration
Statement, a "Registration Statement").
(b) The Company and the Guarantors shall use their reasonable best
efforts to keep the Shelf Registration Statement continuously effective in order
to permit the prospectus forming part thereof to be used by Holders for a period
of two years from the Issue Date or such shorter period that will terminate when
all the Securities and Exchange Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement (in any
such case, such period being called the "Shelf Registration Period"). The
Company and the Guarantors shall be deemed not to have used their reasonable
best efforts to keep the Shelf Registration Statement effective during the
requisite period if any one of them voluntarily takes any action that would
result in Holders of Securities or Exchange Securities covered thereby not being
able to offer and sell such Securities or Exchange Securities during that
period, unless such action is required by applicable law
(c) Notwithstanding any other provisions hereof, the Company and the
Guarantors will ensure that (i) any Shelf Registration Statement and any
amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Shelf Registration
Statement and any amendment thereto (in either case, other than with respect to
information included therein in reliance upon or in conformity with written
information furnished to the Company by or on behalf of any Holder specifically
for use therein (the "Holders' Information")) does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Shelf
Registration Statement, and any supplement
<PAGE> 6
6
to such prospectus (in either case, other than with respect to Holders'
Information), does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the Holders
of Securities will suffer damages if the Company and the Guarantors fail to
fulfill their obligations under Section 1 or Section 2, as applicable, and that
it would not be feasible to ascertain the extent of such damages. Accordingly,
if (i) the applicable Registration Statement is not filed with the Commission on
or prior to 45 days after the Issue Date, (ii) the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, is not
declared effective within 105 days after the Issue Date (or in the case of a
Shelf Registration Statement required to be filed in response to a change in law
or the applicable interpretations of Commission's staff, if later, within 45
days after publication of the change in law or interpretation), (iii) the
Registered Exchange Offer is not consummated on or prior to 135 days after the
Issue Date, or (iv) the Shelf Registration Statement is filed and declared
effective within 105 days after the Issue Date (or in the case of a Shelf
Registration Statement required to be filed in response to a change in law or
the applicable interpretations of Commission's staff, if later, within 45 days
after publication of the change in law or interpretation) but shall thereafter
cease to be effective (at any time that the Company is obligated to maintain the
effectiveness thereof) without being succeeded within 30 days by an additional
Registration Statement filed and declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company and the
Guarantors will be obligated to pay liquidated damages to each holder of
Transfer Restricted Securities, during the period of one or more such
Registration Defaults, in an amount equal to $ 0.192 per week per $1,000
principal amount of the Securities constituting Transfer Restricted Securities
held by such Holder until (i) the applicable Registration Statement is filed,
(ii) the Exchange Offer Registration Statement is declared effective and the
Registered Exchange Offer is consummated, (iii) the Shelf Registration Statement
is declared effective or (iv) the Shelf Registration Statement again becomes
effective, as the case may be. Following the cure of all Registration Defaults,
the accrual of liquidated damages will cease. As used herein, the term "Transfer
Restricted Securities" means each Security or Exchange Security until (i) the
date on which such Security or Exchange Security has been exchanged for a freely
transferable Exchange Security in the Registered Exchange Offer, (ii) the date
on which such Security or Exchange Security has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) the date on which such Security or Exchange
Security is distributed to the public pursuant to Rule 144 under the Securities
Act or is saleable pursuant to Rule 144(k) under the Securities Act.
Notwithstanding anything to the contrary in this Section 3(a), the Company and
the Guarantors shall not be required to pay liquidated damages to the holder of
Transfer
<PAGE> 7
7
Restricted Securities if such holder failed to comply with its obligations to
make the representations set forth in the second to last paragraph of Section 1
or failed to provide the information required to be provided by it, if any,
pursuant to Section 4(n).
(b) The Company shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every Registration
Default. The Company and the Guarantors shall pay the liquidated damages due on
the Transfer Restricted Securities by depositing with the Paying Agent (which
may not be the Company for these purposes), in trust, for the benefit of the
holders thereof, prior to 10:00 a.m., New York City time, on the next interest
payment date specified by the Indenture and the Securities, sums sufficient to
pay the liquidated damages then due. The liquidated damages due shall be payable
on each interest payment date specified by the Indenture and the Securities to
the record holder entitled to receive the interest payment to be made on such
date. Each obligation to pay liquidated damages shall be deemed to accrue from
and including the date of the applicable Registration Default.
(c) The parties hereto agree that the liquidated damages provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to remain effective or (iii) the Exchange Offer
Registration Statement to be declared effective and the Registered Exchange
Offer to be consummated, in each case to the extent required by this Agreement.
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to you, prior to the filing
thereof with the Commission, a copy of the Registration Statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and, in the event that either Initial Purchaser (with respect to any
portion unsold from the original offering) is participating in the Registered
Exchange Offer or the Shelf Registration, shall use its reasonable best efforts
to reflect in each such document, when so filed with the Commission, such
comments as you reasonably (as determined by the Company) may propose; (ii) if
applicable, include the information set forth in Annex A hereto on the cover, in
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution"
section of the prospectus forming a part of the Exchange Offer Registration
Statement, and include the information set forth in Annex D hereto in the Letter
of Transmittal delivered pursuant to the Registered Exchange Offer; and (iii) if
requested by either Initial Purchaser, include
<PAGE> 8
8
the information required by Items 507 or 508 of Regulation S-K, as applicable,
in the prospectus forming a part of the Exchange Offer Registration Statement.
(b) The Company shall advise you and the Holders (if applicable)
and, if requested by you or any such Holder, confirm such advice in writing
(which advice pursuant to clauses (ii)-(v) hereof shall be accompanied by an
instruction to suspend the use of the prospectus until the requisite changes
have been made):
(i) when any Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements
to any Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of any Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Securities or the Exchange
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of any
changes in any Registration Statement or the prospectus included therein
so that, as of such date, the statements therein are not misleading and do
not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(c) The Company and the Guarantors will make every reasonable effort
to obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement at the earliest possible time.
(d) The Company will furnish to each holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
and, if the Holder so requests in writing, all exhibits (including those
incorporated by reference).
<PAGE> 9
9
(e) The Company will, during the Shelf Registration Period, promptly
deliver to each holder of Transfer Restricted Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company consents to the use of such prospectus
or any amendment or supplement thereto by each of the selling holders of
Transfer Restricted Securities in connection with the offer and sale of the
Transfer Restricted Securities covered by such prospectus or any amendment or
supplement thereto.
(f) The Company will furnish to each Exchanging Dealer and to each
Initial Purchaser, as applicable, which so requests, without charge, at least
one copy of the Exchange Offer Registration Statement and any post-effective
amendment thereto, including financial statements and schedules and, if the
Exchanging Dealer or the Initial Purchaser, as applicable, so requests in
writing, all exhibits (including those incorporated by reference).
(g) The Company will, during the Exchange Offer Registration Period
or the Shelf Registration Period, as applicable, promptly deliver to each
Exchanging Dealer and to each Initial Purchaser, as applicable, without charge,
as many copies of the prospectus included within the coverage of the Exchange
Offer Registration Statement or the Shelf Registration Statement and any
amendment or supplement thereto as such Exchanging Dealer or such Initial
Purchaser, as applicable, may reasonably request for delivery by (i) such
Exchanging Dealer in connection with a sale of Exchange Securities received by
it pursuant to the Registered Exchange Offer or (ii) such Initial Purchaser in
connection with a sale of Exchange Securities received by it in exchange for
Securities constituting any unsold portion of the original offering; and the
Company consents to the use of such prospectus or any amendment or supplement
thereto by any such Exchanging Dealer or by such Initial Purchaser, as
applicable, as aforesaid.
(h) Prior to any public offering of Securities or Exchange
Securities pursuant to any Registration Statement, the Company and the
Guarantors will use their reasonable best efforts to register or qualify, or
cooperate with the Holders of Securities included therein and their respective
counsel in connection with the registration or qualification of, such Securities
or Exchange Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as any such Holder reasonably requests in writing and do
any and all other acts or things necessary or advisable to enable the offer and
sale in such jurisdictions of the Securities or Exchange Securities covered by
such Registration Statement; provided that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any
<PAGE> 10
10
action which would subject it to general service of process or to taxation in
any such jurisdiction where it is not then so subject.
(i) The Company and the Guarantors will cooperate with the Holders
of Securities or Exchange Securities to facilitate the timely preparation and
delivery of certificates representing Securities or Exchange Securities to be
sold pursuant to any Registration Statement free of any restrictive legends and
in such denominations and registered in such names as Holders may request in
writing prior to sales of Securities or Exchange Securities pursuant to such
Registration Statement.
(j) If any event contemplated by paragraphs (b)(ii) through (v)
above occurs during the period for which the Company is required to maintain an
effective Registration Statement, the Company and the Guarantors will promptly
prepare a post-effective amendment to the Registration Statement or a supplement
to the related prospectus or file any other required document so that, as
thereafter delivered to purchasers of the Securities or purchasers of Exchange
Securities from a Holder, the prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities or
Exchange Securities, as the case may be, and provide the applicable trustee with
printed certificates for the Securities or Exchange Securities, as the case may
be, in a form eligible for deposit with The Depository Trust Company.
(l) The Company and the Guarantors will comply with all applicable
rules and regulations of the Commission and will make generally available to its
security holders as soon as practicable after the effective date of the
applicable Registration Statement an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act; provided that in no event
shall such earnings statement be delivered later than 45 days after the end of a
12-month period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter commencing after the effective
date of the applicable Registration Statement, which statement shall cover such
12-month period.
(m) The Company and the Guarantors will cause the Indenture or the
Exchange Securities Indenture, as the case may be, to be qualified under the
Trust Indenture Act as required by applicable law in a timely manner.
<PAGE> 11
11
(n) The Company may require each holder of Transfer Restricted
Securities to be sold pursuant to any Shelf Registration Statement to furnish to
the Company such information concerning the Holder and the distribution of such
Transfer Restricted Securities as the Company may from time to time reasonably
require for inclusion in such Registration Statement, and the Company may
exclude from such registration the Transfer Restricted Securities of any Holder
that fails to furnish such information within a reasonable time after receiving
such request.
(o) In the case of a Shelf Registration Statement, each holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice of the Company pursuant to Section 4(b)(ii) through (v) hereof, such
holder will discontinue disposition of such Transfer Restricted Securities until
such holder's receipt of copies of the supplemental or amended prospectus
contemplated by Section 4(j) hereof or until advised in writing (the "Advice")
by the Company that the use of the applicable prospectus may be resumed. If the
Company shall give any notice under Section 4(b)(ii) through (v) during the
period that the Company is required to maintain an effective Registration
Statement (the "Effectiveness Period"), such Effectiveness 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 Transfer
Restricted Securities covered by such Registration Statement shall have received
(x) the copies of the supplemental or amended prospectus contemplated by Section
4(j) (if an amended or supplemental prospectus is required) or (y) the Advice
(if no amended or supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Company and
the Guarantors shall enter into such customary agreements (including, if
requested, an underwriting agreement in customary form) and take all such other
action, if any, as Holders of a majority in aggregate principal amount of the
Securities or Exchange Securities being sold or the managing underwriters (if
any) shall reasonably request in order to facilitate any disposition of
Securities pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, each of the
Company and the Guarantors shall (i) make reasonably available for inspection by
a representative of, and Special Counsel (as defined in Section 5 below) acting
for, Holders of a majority in aggregate principal amount of the Securities or
Exchange Securities being sold and any underwriter participating in any
disposition of Securities or Exchange Securities pursuant to such Shelf
Registration Statement, all relevant financial and other records, pertinent
corporate documents and properties of the Company and and the Guarantors and
(ii) use its reasonable best efforts to have its officers, directors, employees,
accountants and counsel supply all relevant information reasonably requested by
such representative,
<PAGE> 12
12
Special Counsel or any such underwriter (an "Inspector") in connection with such
Shelf Registration Statement.
(r) In the case of a Shelf Registration Statement, the Company and
the Guarantors shall, if requested by Holders of a majority in aggregate
principal amount of the Securities or Exchange Securities being sold, their
Special Counsel or the managing underwriters (if any) in connection with such
Shelf Registration Statement, use their reasonable best efforts to cause (i)
their counsel to deliver an opinion relating to the Shelf Registration Statement
and the Securities or Exchange Securities, as applicable, in customary form,
(ii) their officers to execute and deliver all customary documents and
certificates requested by Holders of a majority in aggregate principal amount of
the Securities or Exchange Securities being sold, their Special Counsel or the
managing underwriters (if any) and (iii) their independent public accountants to
provide a comfort letter in customary form, subject to receipt of appropriate
documentation as contemplated, and only if permitted, by Statement of Auditing
Standards No. 72.
5. Registration Expenses. The Company and the Guarantors will bear
all expenses incurred in connection with the performance of their obligations
under Sections 1, 2, 3 and 4 and the Company and the Guarantors will reimburse
the Initial Purchasers and the Holders for the reasonable fees and disbursements
of one firm of attorneys (in addition to any local counsel) chosen by the
Holders of a majority in aggregate principal amount of the Securities and the
Exchange Securities to be sold pursuant to each Registration Statement (the
"Special Counsel") acting for the Initial Purchasers or Holders in connection
therewith.
6. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Exchanging Dealer or an Initial Purchaser, as
applicable, the Company and the Guarantors shall jointly and severally indemnify
and hold harmless each Holder, its affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls such Holder within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of this Section 6 and Section 7 as a
Holder) from and against any loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, without limitation, any loss,
claim, damage, liability or action relating to purchases and sales of Securities
or Exchange Securities), to which that Holder may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state
<PAGE> 13
13
therein a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and shall reimburse each Holder promptly upon demand
for any legal or other expenses reasonably incurred by that Holder in connection
with investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company and
the Guarantors shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, an
untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with any Holders'
Information; and provided, further, that with respect to any such untrue
statement in or omission from any related preliminary prospectus, the indemnity
agreement contained in this Section 6(a) shall not inure to the benefit of any
Holder from whom the person asserting any such loss, claim, damage, liability or
action received Securities or Exchange Securities to the extent that such loss,
claim, damage, liability or action of or with respect to such Holder results
from the fact that both (A) to the extent required by applicable law, a copy of
the final prospectus was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities or Exchange Securities to
such person and (B) the untrue statement in or omission from the related
preliminary prospectus was corrected in the final prospectus unless, in either
case, such failure to deliver the final prospectus was a result of
non-compliance by the Company with Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder
shall indemnify and hold harmless the Company, the Guarantors, their affiliates,
their respective officers, directors, employees, representatives and agents, and
each person, if any, who controls the Company or the Guarantors within the
meaning of the Securities Act or the Exchange Act (collectively referred to for
purposes of this Section 6(b) and Section 7 as the Company), from and against
any loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Company may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
any such Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with any Holders' Information
furnished to the Company by such Holder, and shall reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or
<PAGE> 14
14
defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that no such Holder
shall be liable for any indemnity claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Securities or Exchange
Securities pursuant to such Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 6 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 6. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more
<PAGE> 15
15
than one separate firm of attorneys (in addition to any local counsel) at any
one time for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 6(a) and 6(b), shall
use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party(which consent shall not be unreasonably withheld), 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.
7. Contribution. If the indemnification provided for in Section 6 is
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, in such proportion as shall be appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party on the
other with respect to the actions, statements or omissions that resulted in such
loss, claim, damage or liability, or action in respect thereof, 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 any action in question, including any untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact, has been taken or made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section 7 were
to be determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to above in
this Section 7 shall be deemed to include, for purposes of this Section 7, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 7, an
indemnifying party that is a holder of Transfer Restricted Securities or
Exchange Securities shall not be required to contribute any amount in excess of
the amount by which the total price at which the
<PAGE> 16
16
Transfer Restricted Securities or Exchange Securities sold by such indemnifying
party to any purchaser exceeds the amount of any damages which such indemnifying
party has otherwise paid or become liable to pay by reason of any 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.
8. Rules 144 and 144A. The Company and the Guarantors shall use
their reasonable 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 Guarantors are not required to file such reports, they
will, upon the written request of any holder of Transfer Restricted Securities,
make publicly available other information so long as necessary to permit sales
of their securities pursuant to Rules 144 and 144A. The Company and the
Guarantors covenant that they will take such further action as any holder of
Transfer Restricted Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Transfer Restricted
Securities 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)). Notwithstanding the foregoing, nothing in
this Section 8 shall be deemed to require the Company to register any of its
securities pursuant to the Exchange Act.
9. Underwritten Registrations. If any of the Transfer Restricted
Securities 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 Transfer Restricted Securities
included in such offering, subject to the consent of the Company (which shall
not be unreasonably withheld or delayed), and such holders shall be responsible
for all underwriting commissions and discounts in connection therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
lock-up letters, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions of
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the
<PAGE> 17
17
Securities and the Exchange Securities, taken as a single class. 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 the Holders of
Securities or Exchange Securities whose Securities or Exchange Securities are
being sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of a
majority in aggregate principal amount of the Securities or Exchange Securities
being sold by such Holders pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 10(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy
in like manner to each Initial Purchaser;
(2) if to an Initial Purchaser, initially at its address set forth
in the Purchase Agreement; and
(3) if to the Company or a Guarantor, initially at the address of
the Company set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) 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.
(e) Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the
<PAGE> 18
18
Securities Act and (c) except where otherwise expressly provided, the term
"affiliate" has the meaning set forth in Rule 405 under the Securities Act.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(h) Remedies. In the event of a breach by the Company or the
Guarantors, or by any holder of Transfer Restricted Securities, of any of their
obligations under this Agreement, each holder of Transfer Restricted Securities
or the Company and each Guarantor, as the case may be, in addition to being
entitled to exercise all rights granted by law, including recovery of damages
(other than the recovery of damages for a breach by the Company or any of the
Guarantors of any of their obligations under Sections 1 or 2 hereof for which
liquidated damages have been paid pursuant to Section 3 hereof), will be
entitled to specific performance of its rights under this Agreement. The
Company, the Guarantors and each holder of Transfer Restricted Securities 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 agree 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.
(i) No Inconsistent Agreements. The Company and each of the
Guarantors represents, warrants and agrees that (i) it has not entered into and
shall not, on or after the date of this Agreement, enter into any agreement that
is inconsistent with the rights granted to the holders of Transfer Restricted
Securities in this Agreement or otherwise conflicts with the provisions hereof,
(ii) it has not previously entered into any agreement which remains in effect
granting any registration rights with respect to any of its debt securities to
any person and (iii) 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 Transfer Restricted Securities, it shall not grant to
any person the right to request the Company to register any debt securities of
the Company under the Securities Act unless the rights so granted are not in
conflict or inconsistent with the provisions of this Agreement.
(j) No Piggyback on Registrations. Neither the Company nor any of
its security holders (other than the holders of Transfer Restricted Securities
in such capacity) shall have the right to include any securities of the Company
in any Shelf Registration or Registered Exchange Offer other than Transfer
Restricted Securities.
<PAGE> 19
19
(k) 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 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 best 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.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and you.
Very truly yours,
NEENAH CORPORATION
By
------------------------------
Name:
Title:
NEENAH FOUNDRY COMPANY
By
------------------------------
Name:
Title:
<PAGE> 20
20
HARTLEY CONTROLS CORPORATION
By
------------------------------
Name:
Title:
NEENAH TRANSPORT, INC.
By
------------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
By Chase Securities Inc.
By
----------------------------
Authorized Signatory
<PAGE> 21
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company and the
Guarantors have agreed that, for a period of 180 days after the Expiration Date
(as defined herein) they will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
<PAGE> 22
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE> 23
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company and
the Guarantors have agreed that, for a period of 180 days after the Expiration
Date, they will make this prospectus, as amended or supplemented, available to
any broker-dealer for use in connection with any such resale. In addition, until
_______________, 1997, all dealers effecting transactions in the Exchange
Securities may be required to deliver a prospectus.(1)
Neither the Company nor the Guarantors will receive any proceeds
from any sale of Exchange Securities by broker-dealers. Exchange Securities
received by broker-dealers for their own account pursuant to the Registered
Exchange Offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Securities or a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for its
own account pursuant to the Registered Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be deemed to
be an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of Exchange Securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of 180 days after the Expiration Date, the Company and
the Guarantors will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company and the Guarantors have
agreed to pay all expenses
- ----------
(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Registered Exchange Offer prospectus.
<PAGE> 24
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
<PAGE> 25
ANNEX D
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name: __________________________________________________
Address: __________________________________________________
__________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE> 1
EXHIBIT 4.4
EXECUTION COPY
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE (this "Supplemental
Indenture"), dated as of April 30, 1997, among NEENAH
CORPORATION, a Wisconsin corporation ("Neenah"),
NEENAH FOUNDRY COMPANY, NEENAH TRANSPORT, INC. and
HARTLEY CONTROLS CORPORATION, each a Wisconsin
corporation and a wholly owned subsidiary of Neenah
(collectively, the "Initial Guarantors"), and UNITED
STATES TRUST COMPANY OF NEW YORK, a New York
corporation, as trustee under the indenture referred
to below (the "Trustee").
W I T N E S S E T H
WHEREAS NC Merger, a Delaware corporation (the "Company"), as issuer,
has heretofore executed and delivered to the Trustee an indenture (the
"Indenture"), dated as of April 30, 1997, providing for the issuance of an
aggregate principal amount of $150,000,000 of 11-1/8% Senior Subordinated Notes
due 2007 of the Company (the "Securities");
WHEREAS, immediately after the execution of the Indenture and the
issuance of the Securities, the Company was merged with and into Neenah in the
Neenah Merger, with Neenah as the surviving corporation;
WHEREAS, (i) pursuant to the terms of the Neenah Merger, Neenah
succeeded to the obligations of the Company under the Indenture and (ii) the
Guarantors have agreed to become Guarantor Subsidiaries under the Indenture, and
WHEREAS, pursuant to Section 9.01 of the Indenture, the parties hereto
are requested to execute and deliver this Supplemental Indenture;
<PAGE> 2
2
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, Neenah,
each of the Guarantors and the Trustee mutually covenant and agree for the equal
and ratable benefit of the holders of the Securities as follows:
1. Definitions. (a) Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
(b) For all purposes of this Supplement, except as otherwise herein
expressly provided or unless the context otherwise requires: (i) the terms and
expressions used herein shall have the same meanings as corresponding terms and
expressions used in the Indenture; and (ii) the words "herein", "hereof" and
"hereby" and other words of similar import used in this Supplement refer to this
Supplement as a whole and not to any particular section hereof.
2. Express Assumption of Obligations under the Indenture. Neenah
acknowledges and agrees that as a result of its being the surviving corporation
in the Merger with NC Merger it has succeeded to all of the obligations and
duties of NC Merger under the Securities and the Indenture on the terms and
subject to the conditions set forth in the Securities and the Indenture. Neenah
agrees to be bound by all provisions of the Securities and the Indenture.
3. Agreement To Guarantee. Each of the Guarantors hereby agrees to,
jointly and severally guarantee Neenah's obligations under the Securities on the
terms and subject to the conditions set forth in Article XI of the Indenture and
to be bound by all other applicable provisions of the Indenture.
4. Ratification of Indenture; Supplemental Indenture, Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and
<PAGE> 3
3
confirmed by the parties hereto and all the terms, conditions and provisions
thereof shall remain in full force and effect. This Supplemental Indenture shall
form a part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
5. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
6. Trustee Makes No Representation. The Trustee makes no representation
as to the validity or sufficiency of this Supplemental Indenture.
7. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
8. Effect of Headings. The Section headings herein are for convenience
only and shall not effect the construction thereof.
<PAGE> 4
4
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
NEENAH CORPORATION,
by __________________________________
Name:
Title:
NEENAH FOUNDRY COMPANY,
by __________________________________
Name:
Title:
NEENAH TRANSPORT, INC.,
by __________________________________
Name:
Title:
HARTLEY CONTROLS CORPORATION,
by __________________________________
Name:
Title:
<PAGE> 5
5
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee,
by __________________________________
Name:
Title:
<PAGE> 1
Exhibit 4.5
April 30, 1997
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
c/o CHASE SECURITIES INC.
270 Park Avenue
New York, NY 10017
Dear Sirs:
Reference is hereby made to the Purchase Agreement dated April 23, 1997
(the "Purchase Agreement"), between NC Merger Company, a Wisconsin corporation
(the "Company"), and you pursuant to which the Company has agreed to issue and
sell and you have agreed to purchase the Securities described therein on the
terms set forth therein. Capitalized terms used herein but not otherwise defined
herein have meanings assigned thereto in the Purchase Agreement (including by
reference therein to the Offering Memorandum). This is the letter agreement
referred to in Section 5(q) of the Purchase Agreement.
The parties hereto agree that this Letter Agreement is being executed
and delivered in connection with the issue and sale of the Securities pursuant
to the Purchase Agreement and to induce the Initial Purchasers to purchase the
Securities thereunder.
Neenah (as the Company's successor after the Merger) and each of the
Guarantors hereby confirm their agreement with you as follows:
SECTION 1. In accordance with Section 5(q) of the Purchase Agreement,
Neenah and each of the Guarantors by their respective signatures below each
becomes a party to the Purchase Agreement on the same terms and with the same
ongoing obligations and rights as the Company thereunder with the same force and
effect as if originally named therein as a party and Neenah and each of the
Guarantors jointly and severally agrees to all the terms and provisions of the
Purchase Agreement applicable to
<PAGE> 2
2
the Company thereunder including, but not limited to, under Sections 8, 9, 10
and 12 thereof.
SECTION 2. Neenah and each of the Guarantors hereby represents and
warrants to, and agrees with, each of you as of the date hereof that:
(a) each of them has full right, power and authority to
execute and deliver this Letter Agreement and perform its obligations
hereunder and all corporate action required to be taken by each of them
for the due and proper authorization, execution, delivery and
performance of this Letter Agreement and the consummation of the
transactions contemplated hereby has been duly and validly taken and
this Letter Agreement has been duly authorized and validly executed and
delivered by each of them and is the valid and legally binding
agreement of each of them enforceable against each of them in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity), and except as rights to indemnity and
contribution may be limited under applicable law;
(b) each of them has full right, power and authority to
execute and deliver the Supplemental Indenture and perform its
obligations thereunder and all corporate action required to be taken by
each of them for the due and proper authorization, execution, delivery
and performance of the Supplemental Indenture and the consummation of
the transactions contemplated thereby have been duly and validly taken;
the Supplemental Indenture has been duly authorized by each of them,
and, when duly executed and delivered in accordance with its terms by
each party thereto, the Supplemental Indenture will constitute the
valid and legally binding agreement of Neenah, as primary obligor, and
of each of the Guarantors, as note guarantors, and will be enforceable
against Neenah and each of the Guarantors in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws affecting creditors'
rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or
in equity); and
(c) the representations, warranties and agreements set forth
in Section 1 of the Purchase Agreement are true and accurate on the
date hereof as if made on such date by Neenah and each of the
Guarantors, and each reference therein to the knowledge of the Company
shall be deemed to be a reference to the knowledge of Neenah and each
of the Guarantors.
<PAGE> 3
3
SECTION 3. THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 4. This Letter Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
SECTION 5. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Letter Agreement.
If the foregoing is in accordance with your understanding of the
agreement among the parties hereto, kindly indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
NEENAH CORPORATION,
By ______________________
Name:
Title:
NEENAH FOUNDRY
COMPANY,
By ______________________
Name:
Title:
HARTLEY CONTROLS
CORPORATION,
By ______________________
Name:
Title:
NEENAH TRANSPORT, INC.,
<PAGE> 4
4
By ______________________
Name:
Title:
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
By CHASE SECURITIES INC.,
By ___________________________
Name:
Title:
<PAGE> 1
EXHIBIT 4.6
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("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.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE 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.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
<PAGE> 2
2
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
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 WITHIN THE MEANING OF REGULATIONS UNDER THE SECURITIES ACT, (E)
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 SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PURCHASE PRICE OF $250,000 FOR
SUCH SECURITIES FOR INVESTMENT PURPOSES 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 THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF ANY OF THE FOREGOING CASES, A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY
IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE COMPANY AND THE TRUSTEE.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
NC MERGER COMPANY
<PAGE> 3
3
11-1/8% SENIOR SUBORDINATED NOTE DUE 2007
No. # CUSIP No. [ ]
$[ ]
NC MERGER COMPANY, a Wisconsin corporation, promises to pay to
[ ], or registered assigns, the principal sum of $[ ] on May 1, 2007.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: April 30, 1997
NC MERGER COMPANY,
by
________________________
Name:
Title:
________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
<PAGE> 4
4
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee, certifies [Seal]
that this is one of
the Securities referred
to in the Indenture,
by
________________________________
Authorized Signatory
Assumed and Guaranteed
pursuant to the First
Supplemental Indenture
NEENAH CORPORATION,
by
______________________________
Name:
Title:
NEENAH FOUNDRY COMPANY,
by
______________________________
Name:
Title:
NEENAH TRANSPORT, INC.,
<PAGE> 5
5
by
______________________________
Name:
Title:
HARTLEY CONTROLS CORPORATION,
by
______________________________
Name:
Title:
<PAGE> 6
6
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
11-1/8% Senior Subordinated Note due 2007
1. Interest
NC Merger Company, a Wisconsin corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above. The Company and the
Guarantor Subsidiaries will use their best efforts to have the Exchange Offer
Registration Statement or, if applicable, the Shelf Registration Statement (each
a "Registration Statement") declared effective by the Commission as promptly as
practicable after the filing thereof. If (i) the Shelf Registration Statement or
Exchange Offer Registration Statement, as applicable under the Exchange and
Registration Rights Agreement is not filed with the Commission on or prior to 45
days after the Issue Date, (ii) the Exchange Offer Registration Statement or, as
the case may be, the Shelf Registration Statement, is not declared effective
within 105 days after the Issue Date, (iii) the Exchange Offer is not
consummated on or prior to 135 days after the Issue Date, or (iv) the Shelf
Registration Statement is filed and declared effective within 105 days after the
Issue Date but shall thereafter cease to be effective (at any time that the
Company is obligated to maintain the effectiveness thereof) without being
succeeded within 30 days by an additional Registration Statement filed and
declared effective (each such event referred to in clauses (i) through (iv), a
"Registration Default"), the Company will pay liquidated damages to each holder
of Transfer Restricted Securities, during the period of such Registration
Default, in an amount equal to $0.192 per week per $1,000 principal amount of
the Securities constituting Transfer Restricted Securities held by such holder
until the applicable Registration Statement is filed
<PAGE> 7
7
or declared effective, the Exchange Offer is consummated or the Shelf
Registration Statement again becomes effective, as the case may be. All accrued
liquidated damages shall be paid to holders in the same manner as interest
payments on the Securities on semi-annual payment dates which correspond to
interest payment dates for the Securities. Following the cure of all
Registration Defaults, the accrual of liquidated damages will cease. The Trustee
shall have no responsibility with respect to the determination of the amount of
any such liquidated damages. For purposes of the foregoing, "Transfer Restricted
Securities" means each Initial Security until (i) the date on which such Initial
Security has been exchanged for a freely transferable Exchange Security in the
Exchange Offer, (ii) the date on which such Initial Security has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iii) the date on which such Initial
Security is distributed to the public pursuant to Rule 144 under the Securities
Act or is saleable pursuant to Rule 144(k) under the Securities Act.
The Company will pay interest and liquidated damages, if any,
semiannually on May 1 and November 1 of each year. Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from April 30, 1997. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay interest
on overdue principal at the rate borne by the Securities plus 1% per annum, and
it shall pay interest on overdue installments of interest at the same rate to
the extent lawful.
2. Method of Payment
The Company will pay interest (except defaulted interest) on
and liquidated damages, if any, in respect of the Securities to the Persons who
are registered holders of Securities at the close of business on the April 15 or
<PAGE> 8
8
October 15 next preceding the interest payment date even if Securities are
canceled after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money or by wire transfer of federal funds.
<PAGE> 9
9
3. Paying Agent and Registrar
Initially, UNITED STATES TRUST COMPANY OF NEW YORK, a New York
banking corporation ("Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice to the Holders. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture and First Supplemental Indenture
The Company issued the Securities under an Indenture dated as
of April 30, 1997 ("Indenture"), between the Company and the Trustee. The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
Pursuant to the First Supplemental Indenture dated as of April
30, 1997, among Neenah Corporation, the Initial Guarantors and the Trustee,
Neenah Corporation assumed the Company's obligations under the Indenture and the
Securities and each of the Initial Guarantors agreed to guarantee those
obligations under the Indenture and the Securities.
The Securities are unsecured senior subordinated obligations
of the Company limited to $150,000,000 aggregate principal amount at any one
time outstanding (subject to Section 2.07 of the Indenture). This Security is
one of the Initial Securities referred to in the Indenture. The Securities
include the Initial Securities and any Exchange Securities issued in exchange
for the Initial Securities
<PAGE> 10
10
pursuant to the Indenture. The Initial Securities and the Exchange Securities
are treated as a single class of securities under the Indenture. The Indenture
imposes certain limitations on the Incurrence of Indebtedness by the Company and
its Restricted Subsidiaries; the payment of dividends on, and redemption of,
Capital Stock of the Company and its Restricted Subsidiaries and the redemption
of certain Subordinated Obligations of the Company and its Restricted
Subsidiaries; Investments; sales of assets and Restricted Subsidiary Capital
Stock; certain transactions with Affiliates of the Company; the sale or issuance
of Capital Stock of the Restricted Subsidiaries; the creation of Liens; the
lines of business in which the Company and its Restricted Subsidiaries may
operate; Sale/Leaseback Transactions and consolidations, mergers and transfers
of all or substantially all of the Company's assets. In addition, the Indenture
prohibits certain restrictions on distributions and dividends from Restricted
Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture (as supplemented by the First
Supplemental Indenture), the Initial Guarantors have guaranteed the Company's
obligations under the Indenture on a senior subordinated basis pursuant to the
terms of the Indenture.
5. Optional Redemption
Except as set forth in the next two paragraphs, the Securities
may not be redeemed prior to May 1, 2002. On and after that date, the Company
may redeem the Securities in whole at any time or in part from time to time at
the following redemption prices (expressed in percentages of principal amount),
plus accrued and unpaid interest, if any,
<PAGE> 11
11
to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date that is on or prior to the date of redemption), if redeemed during the
12-month period beginning on or after May 1 of the years set forth below:
<TABLE>
<CAPTION>
Redemption
Period Price
- ------ ----------
<S> <C>
2002.................................... 105.5625%
2003.................................... 103.7083%
2004.................................... 101.8542%
2005 and thereafter..................... 100.0000%
</TABLE>
Notwithstanding the foregoing, at any time prior to May 1,
2000, the Company may redeem in the aggregate up to 40% of the original
aggregate principal amount of Securities with the proceeds of one or more Public
Equity Offerings by the Company at a redemption price (expressed as a percentage
of principal amount) of 111.125% plus accrued interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
provided, however, that at least 60% of the original aggregate principal amount
of the Securities must remain outstanding after each such redemption.
At any time prior to May 1, 2002, the Securities may be
redeemed, in whole or in part, at the option of the Company within 180 days
after a Change of Control, at a redemption price equal to the sum of (i) the
principal amount thereof plus (ii) accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date that
is on or prior to the date of redemption) plus (iii) the Applicable Premium.
<PAGE> 12
12
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. Put Provisions
Upon a Change of Control, unless the Company has elected to
redeem the Securities pursuant to paragraph 5, any Holder of Securities will
have the right, subject to certain conditions specified in the Indenture, to
cause the Company to repurchase all or any part of the Securities of such Holder
at a purchase price equal to 101% of the principal amount of the Securities to
be repurchased plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of purchase) as provided in, and subject to the terms of, the
Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid before the Securities may be
<PAGE> 13
13
paid. In addition, each Subsidiary Guaranty is subordinated to Senior
Indebtedness of the relevant Guarantor Subsidiary, as defined in the Indenture.
The Company and each Guarantor Subsidiary agrees, and each Securityholder by
accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the Trustee
as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay
any taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written
<PAGE> 14
14
request unless an abandoned property law designates another Person. After any
such payment, Holders entitled to the money must look only to the Company and
not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any past default or noncompliance with any provision may be waived
with the consent of the Holders of a majority in principal amount then
outstanding of the Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company and the
Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article V of the Indenture,
or to provide for uncertificated Securities in addition to or in place of
certificated Securities, or to add guarantees with respect to the Securities or
to secure the Securities, or to release Guarantor Subsidiaries when permitted by
the Indenture, or to add additional covenants or surrender rights and powers
conferred on the Company, or to comply with any request of the SEC in connection
with qualifying the Indenture under the Act, or to make any other change that
does not adversely affect the rights of any
<PAGE> 15
15
Securityholder, or to provide for the issuance and authorization of the Exchange
Securities.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph
5 of the Securities, or failure by the Company to redeem or purchase, upon
declaration or otherwise (whether or not such payment is prohibited by Article
X), Securities when required; (iii) failure by the Company or any Guarantor
Subsidiary to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds
$5,000,000 or its foreign currency equivalent; (v) certain events of bankruptcy,
insolvency or reorganization with respect to the Company and its Restricted
Subsidiaries; (vi) certain judgments or decrees not covered by insurance for the
payment of money in excess of $5,000,000 or its foreign currency equivalent
against the Company or a Restricted Subsidiary; and (vii) a Subsidiary Guaranty
ceasing to be in full force and effect (other than in accordance with its terms)
or any Guarantor Subsidiary denies or disaffirms its obligations under the
Indenture or any Subsidiary Guaranty and such Default continues for 10 days. If
an Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Securities may declare all the Securities
to be due and payable immediately. Certain events of bankruptcy or insolvency
are Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default.
<PAGE> 16
16
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may with hold from Securityholders notice of any continuing
Default (except a Default in payment of principal, premium, if any, or interest)
if and so long as a committee of its Trust Officers in good faith determines
that withholding notice is in the interest of the Holders.
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may other wise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Guarantor Subsidiary shall not have any liability for any
obligations of the Company or a Guarantor Subsidiary under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Governing Law
<PAGE> 17
17
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. Authentication
This Security shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TENENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
<PAGE> 18
18
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITY HOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
NC MERGER COMPANY
2121 BROOKS AVENUE
NEENAH, WI 54957
ATTENTION OF CHIEF FINANCIAL OFFICER
<PAGE> 19
19
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
________________________________________________________________________________
Date: _____________________ Your Signature: ____________________________________
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
<PAGE> 20
20
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
[ ] has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depository a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated
above);
[ ] has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such
<PAGE> 21
21
Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW:
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration
statement under the Securities Act of 1933;
or
(3) [ ] inside the United States to a "qualified
institutional buyer" (as defined in Rule
144A under the Securities Act of 1933) that
purchases for its own account or for the
account of a qualified institutional buyer
to whom notice is given that such transfer
is being made in reliance on Rule 144A, in
each case pursuant to and in compliance with
Rule 144A under the Securities Act of 1933;
or
(4) [ ] outside the United States in an offshore
transaction within the meaning of Regulation
S under the Securities Act in compliance
with Rule 904 under the Securities Act of
1933; or
(5) [ ] pursuant to another available exemption from
registration provided by Rule 144 under the
Securities Act of 1933.
<PAGE> 22
22
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however,
that if box (4) or (5) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act.
____________________________
Signature
Signature Guarantee:
______________________________________ ____________________________
Signature must be guaranteed Signature
________________________________________________________________________________
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has
<PAGE> 23
23
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated: ________________ ______________________________
NOTICE: To be executed by
an executive officer
<PAGE> 24
24
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase) Custodian
</TABLE>
<PAGE> 25
25
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture,
state the amount: $
Date: ________________________ Your Signature: _________________________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
<PAGE> 26
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
[Global Securities Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("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 OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN. 2/
NEENAH CORPORATION
11-1/8% SERIES B SENIOR SUBORDINATED NOTE DUE 2007
No. Cusip No. [ ]
$[ ]
NEENAH CORPORATION, a Wisconsin corporation, promises to pay
to [ ], or registered assigns, the principal sum of $ on May 1, 2007.
Interest Payment Dates: May 1 and November
Record Dates: April 15 and October 15
- ----------
2 This paragraph should only be added if the Security is
issued in global form.
<PAGE> 27
2
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
NEENAH CORPORATION,
by
__________________________
Name:
Title:
__________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee, certifies [Seal]
that this is one of
the Securities referred
to in the Indenture,
by
_____________________________
Authorized Signatory
<PAGE> 28
3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
11-1/8% Series B Senior Subordinated Note due 2007
1. Interest
NEENAH CORPORATION, a Wisconsin corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above. The Company will pay
interest and liquidated damages, if any, semiannually on May 1 and November 1 of
each year. Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from April 30,
1997. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the April 15 or October 15 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal and
interest by check payable in such money or by wire transfer of federal funds.
<PAGE> 29
4
3. Paying Agent and Registrar
Initially, UNITED STATES TRUST COMPANY OF NEW YORK, a New York
banking corporation ("Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice to the Holders. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture; First Supplemental Indenture
NC Merger Company, a Wisconsin corporation ("NC Merger"),
issued the Securities under an Indenture dated as of April 30, 1997
("Indenture"), among NC Merger and the Trustee. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
Pursuant to the First Supplemental Indenture dated as of April
30, 1997, among the Company, the Initial Guarantors and the Trustee, the Company
assumed NC Merger's obligations under the Indenture and the Securities and each
of the Initial Guarantors agreed to guarantee those obligations under the
Indenture and the Securities.
The Securities are unsecured senior subordinated obligations
of the Company limited to $150,000,000 aggregate principal amount at any one
time outstanding (subject to Section 2.07 of the Indenture). This Security is
one of the Exchange Securities referred to in the Indenture. The Securities
include the Initial Securities and any Exchange Securities issued in exchange
for the Initial Securities pursuant to the Indenture.
<PAGE> 30
5
The Initial Securities and the Exchange Securities are treated as a single class
of securities under the Indenture. The Indenture imposes certain limitations on
the Incurrence of Indebtedness by the Company and its Restricted Subsidiaries;
the payment of dividends on, and redemption of, Capital Stock of the Company and
its Restricted Subsidiaries and the redemption of certain Subordinated
Obligations of the Company and its Restricted Subsidiaries; Investments; sales
of assets and Restricted Subsidiary Capital Stock; certain transactions with
Affiliates of the Company; the sale or issuance of Capital Stock of the
Restricted Subsidiaries; the creation of Liens; the lines of business in which
the Company and its Restricted Subsidiaries may operate; Sale/Leaseback
Transactions and consolidations, mergers and transfers of all or substantially
all of the Company's assets. In addition, the Indenture prohibits certain
restrictions on distributions and dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Guarantor Subsidiaries have
guaranteed the Company's obligations under the Indenture on a senior
subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the next two paragraphs, the Securities
may not be redeemed prior to May 1, 2002. On and after that date, the Company
may redeem the Securities in whole at any time or in part from time to time at
the following redemption prices (expressed in percentages of principal amount),
plus accrued and unpaid interest, if any, to the redemption date
<PAGE> 31
6
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption), if redeemed during the 12-month period beginning on
or after May 1 of the years set forth below:
<TABLE>
<CAPTION>
Redemption
Period Price
- ------ ----------
<S> <C>
2002........................................ 105.5625%
2003........................................ 103.7083%
2004........................................ 101.8542%
2005 and thereafter......................... 100.0000%
</TABLE>
Notwithstanding the foregoing, at any time on or prior to May
1, 2000, the Company may redeem in the aggregate up to 40% of the original
aggregate principal amount of Securities with the proceeds of one or more Public
Equity Offerings at a redemption price (expressed as a percentage of principal
amount thereof) of 111.125% plus accrued and unpaid interest, if any, to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date that
is on or prior to the date of redemption); provided, however, that at least 60%
of the original aggregate principal amount of the Securities must remain
outstanding after each such redemption.
At any time prior to May 1, 2002, the Securities may be
redeemed, in whole or in part, at the option of the Company within 180 days
after a Change of Control, at a redemption price equal to the sum of (i) the
principal amount thereof plus (ii) accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date that
is on or prior to the date of redemption) plus (iii) the Applicable Premium.
<PAGE> 32
7
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. Put Provisions
Upon a Change of Control, unless the Company has elected to
redeem the Securities pursuant to paragraph 5, any Holder of Securities will
have the right, subject to certain conditions specified in the Indenture, to
cause the Company to purchase all or any part of the Securities of such Holder
at a repurchase price equal to 101% of the principal amount of the Securities to
be repurchased plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of purchase) as provided in, and subject to the terms of, the
Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid before the Securities may be
paid. In addition, each Subsidiary Guaranty is subordinated to Senior
Indebtedness
<PAGE> 33
8
of the relevant Guarantor Subsidiary, as defined in the Indenture. The Company
and each Guarantor Subsidiary agrees, and each Securityholder by accepting a
Security agrees, to the subordination provisions contained in the Indenture and
authorizes the Trustee to give it effect and appoints the Trustee as
attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
<PAGE> 34
9
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any past default or noncompliance with any provision may be waived with
the consent of the Holders of a majority in principal amount then outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article V of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add guarantees with respect to the Securities or to secure the Securities,
or to release Guarantor Subsidiaries when permitted by the Indenture or to add
additional covenants or surrender rights and powers conferred on the Company, or
to comply with any request of the SEC in connection with qualifying the
Indenture under the Act, or to make certain changes in the subordination
provisions, or to make any change that does not adversely affect the rights of
any Securityholder.
<PAGE> 35
10
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities, or failure by the Company to redeem or purchase, upon
declaration or otherwise (whether or not such payment is prohibited by Article
X), Securities when required; (iii) failure by the Company or any Guarantor
Subsidiary to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds
$5,000,000 or its foreign currency equivalent; (v) certain events of bankruptcy,
insolvency or reorganization with respect to the Company and its Restricted
Subsidiaries; and (vi) certain judgments or decrees not covered by insurance for
the payment of money in excess of $5,000,000 or its foreign currency equivalent
against the Company or a Restricted Subsidiary; and (vii) a Subsidiary Guaranty
ceasing to be in full force and effect (other than in accordance with its terms)
or any Guarantor Subsidiary denies or disaffirms its obligations under the
Indenture or any Subsidiary Guaranty and such Default continues for 10 days. If
an Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Securities may declare all the Securities
to be due and payable immediately. Certain events of bankruptcy or insolvency
are Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of
<PAGE> 36
11
any continuing Default (except a Default in payment of principal, premium, if
any, or interest) if and so long as a committee of its Trust Officers in good
faith determines that withholding notice is in the interest of the Holders.
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Guarantor Subsidiary shall not have any liability for any
obligations of the Company or a Guarantor Subsidiary under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Governing Law
<PAGE> 37
12
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TENENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
<PAGE> 38
13
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture which
has in it the text of this Security in larger type. Requests may be made to:
NEENAH CORPORATION
2121 Brooks Avenue
Neenah, WI 54957
Attention of Chief Financial Officer
<PAGE> 39
14
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on
the books of the Company. The agent may substitute another to act for him.
________________________________________________________________________________
Date: _______________________ Your Signature: __________________________________
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
<PAGE> 40
15
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase) Custodian
</TABLE>
<PAGE> 41
16
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture,
state the amount: $
Date: ______________________ Your Signature: ___________________________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
<PAGE> 42
EXHIBIT C
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS TO NON-QIB
INSTITUTIONAL ACCREDITED INVESTORS]
Transferee Letter of Representation
Neenah Corporation
c/o United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Dear Ladies and Gentlemen:
This certificate is delivered to request a transfer of $
principal amount of the 11-1/8% Senior Subordinated Notes due 2007 (the
"Securities") of Neenah Corporation (the "Company").
Upon transfer, the Securities would be registered in the name
of the new beneficial owner as follows:
Name: ___________________________________
Address: ________________________________
Taxpayer ID Number: _____________________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended
(the "Securities Act")) purchasing for our own account or for the account of
such an institutional "accredited investor" at least $250,000 principal amount
of the Securities, and we are acquiring the Securities not with a view to, or
for offer or sale in connection with, any distribution in violation of the
Securities Act. We have such knowledge and experience in financial and business
matters as to be capable of
<PAGE> 43
2
evaluating the merits and risk of our investment in the Securities and invest in
or purchase securities similar to the Securities in the normal course of our
business. We and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
2. We understand that the Securities have not been registered
under the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf of
any investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date which is two years after
the later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company, (b) pursuant to a registration statement which has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act, to a person we reasonably
believe is a qualified institutional buyer under Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB and 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 within the meaning of
Regulation S under the Securities Act or (e) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is purchasing for its own account or for the account of such
an institutional "accredited investor", in each case in a transaction involving
a minimum principal amount of Securities of $250,000 or (f) pursuant to any
other available exemption from the registration requirements of the Securities
Act, subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or accounts
be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Securities is proposed to be made pursuant to
<PAGE> 44
3
clause (e) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the form
of this letter to the Company and the Trustee, which shall provide, among other
things, that the transferee is an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it
is acquiring such Securities for investment purposes and not for distribution in
violation of the Securities Act. Each purchaser acknowledges that the Company
and the Trustee reserve the right prior to any offer, sale or other transfer
prior to the Resale Termination Date of the Securities pursuant to clause (d),
(e) or (f) above to require the delivery of an opinion of counsel,
certifications and/or other information satisfactory to the Company and the
Trustee.
TRANSFEREE:___________________
BY____________________________
<PAGE> 45
EXHIBIT D
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE (this
"Supplemental Indenture"), dated as of April 30,
1997, among NEENAH CORPORATION, a Wisconsin
corporation ("Neenah"), NEENAH FOUNDRY COMPANY,
NEENAH TRANSPORT, INC. and HARTLEY CONTROLS
CORPORATION, each a Wisconsin corporation and a
wholly owned subsidiary of Neenah (collectively, the
"Initial Guarantors"), and UNITED STATES TRUST
COMPANY OF NEW YORK, a New York corporation, as
trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H
WHEREAS NC Merger Company, a Wisconsin corporation (the
"Company"), as issuer, has heretofore executed and delivered to the Trustee an
indenture (the "Indenture"), dated as of April 30, 1997, providing for the
issuance of an aggregate principal amount of $150,000,000 of 11-1/8% Senior
Subordinated Notes due 2007 of the Company (the "Securities");
WHEREAS, immediately after the execution of the Indenture and
the issuance of the Securities, the Company was merged with and into Neenah in
the Neenah Merger, with Neenah as the surviving corporation;
WHEREAS, (i) pursuant to the terms of the Neenah Merger,
Neenah succeeded to the obligations of the Company under the Indenture and (ii)
the Guarantors have agreed to become Guarantor Subsidiaries under the Indenture;
and
WHEREAS, pursuant to Section 9.01 of the Indenture, the
parties hereto are required to execute and deliver this Supplemental Indenture;
<PAGE> 46
2
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, Neenah, each of the Guarantors and the Trustee mutually covenant
and agree for the equal and ratable benefit of the holders of the Securities as
follows:
1. Definitions. (a) Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
(b) For all purposes of this Supplemental Indenture, except as
otherwise herein expressly provided or unless the context otherwise requires:
(i) the terms and expressions used herein shall have the same meanings as
corresponding terms and expressions used in the Indenture; and (ii) the words
"herein", "hereof" and "hereby" and other words of similar import used in this
Supplement refer to this Supplement as a whole and not to any particular section
hereof.
2. Express Assumption of Obligations under the Indenture.
Neenah acknowledges and agrees that as a result of its being the surviving
corporation in the Merger with NC Merger it has succeeded to all of the
obligations and duties of NC Merger under the Securities and the Indenture on
the terms and subject to the conditions set forth in the Securities and the
Indenture. Neenah agrees to be bound by all provisions of the Securities and the
Indenture.
3. Agreement To Guarantee. Each of the Guarantors hereby
agrees to, jointly and severally guarantee Neenah's obligations under the
Securities on the terms and subject to the conditions set forth in Article XI of
the Indenture and to be bound by all other applicable provisions of the
Indenture.
4. Ratification of Indenture; Supplemental Indenture, Part of
Indenture. Except as expressly amended
<PAGE> 47
3
hereby, the Indenture is in all respects ratified and confirmed by the parties
hereto and all the terms, conditions and provisions thereof shall remain in full
force and effect. This Supplemental Indenture shall form a part of the Indenture
for all purposes, and every holder of Securities heretofore or hereafter
authenticated and delivered shall be bound hereby.
5. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
6. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental Indenture.
7. Counterparts. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
<PAGE> 48
4
8. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above written.
NEENAH CORPORATION,
by
_________________________________
Name:
Title:
NEENAH FOUNDRY COMPANY,
by
_________________________________
Name:
Title:
NEENAH TRANSPORT, INC.,
by
_________________________________
Name:
Title:
<PAGE> 49
5
HARTLEY CONTROLS CORPORATION,
by
_________________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee,
by
_________________________________
Name:
Title:
<PAGE> 50
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental
Indenture"), dated as of [ ], among [NEW GUARANTOR
SUBSIDIARY] (the "New Guarantor Subsidiary"), a
subsidiary of NEENAH CORPORATION (or its successor),
a Wisconsin corporation (the "Company"), THE COMPANY,
on behalf of itself and the Guarantor Subsidiaries
(the "Existing Guarantor Subsidiaries") under the
Indenture referred to below, and UNITED STATES TRUST
COMPANY OF NEW YORK, a New York banking association,
as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H :
WHEREAS NC Merger Company, a Wisconsin corporation ("NC Merger"), has
heretofore executed and delivered to the Trustee an Indenture (the "Indenture"),
dated as of April 30, 1997, providing for the issuance of an aggregate principal
amount of $150,000,000 of 11-1/8% Senior Subordinated Notes due 2007 (the
"Securities") and the Company and the Initial Guarantors have executed and
delivered the First Supplemental Indenture pursuant to which the Company assumed
NC Merger's obligations under the Indenture and the Securities and the Initial
Guarantors agreed to guarantee those obligations;
WHEREAS Section 4.15 of the Indenture provides that under certain
circumstances the Company is required to cause the New Guarantor Subsidiary to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the New Guarantor Subsidiary shall unconditionally guarantee all
<PAGE> 51
2
of the Company's obligations under the Securities pursuant to a Subsidiary
Guaranty on the terms and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the
Company and Existing Guarantor Subsidiaries are authorized to execute and
deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor Subsidiary, the Company, the Existing Guarantor Subsidiaries and the
Trustee mutually covenant and agree for the equal and ratable benefit of the
holders of the Securities as follows:
1. Definitions. (a) Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
(b) For all purposes of this Supplemental Indenture, except as
otherwise herein expressly provided or unless the context otherwise requires:
(i) the terms and expressions used herein shall have the same meanings as
corresponding terms and expressions used in the Indenture; and (ii) the words
"herein," "hereof" and "hereby" and other words of similar import used in this
Supplement refer to this Supplement as a whole and not to any particular section
hereof.
2. Agreement to Guarantee. The New Guarantor Subsidiary hereby agrees,
jointly and severally with all other Guarantor Subsidiaries, to Guarantee the
Company's obligations under the Securities on the term and subject to the
conditions set forth in Article 11 of the Indenture and to be bound by all other
applicable provisions of the Indenture.
<PAGE> 52
3
3. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
4. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
5. Trustee Makes No Representation. The Trustee makes no representation
as to the validity or sufficiency of this Supplemental Indenture.
6. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
<PAGE> 53
4
7. Effect of Headings. The Section headings herein are for convenience
only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW GUARANTOR SUBSIDIARY],
by __________________________________
Name:
Title:
NEENAH CORPORATION, on behalf
of itself and the Existing
Guarantor Subsidiaries,
by __________________________________
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK as Trustee,
by __________________________________
Name:
Title:
<PAGE> 54
EXHIBIT F
[FORM OF CERTIFICATE TO BE DELIVERED
UPON TERMINATION OF RESTRICTED PERIOD]
On or after June 8, 1997
Neenah Corporation
c/o United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: [ ]
Re: Neenah Corporation (the "Company") 11-1/8%
Senior Subordinated Notes due 2007 (the
"Initial Securities") and 11-1/8% Series B
Senior Subordinated Notes due 2007 (the
"Exchange Securities" and, together with the
Initial Securities, the "Securities")
Ladies and Gentlemen:
This letter relates to Securities represented by a temporary global
note certificate (the "Temporary Certificate"). Pursuant to Section 2.01 of the
Indenture dated as of April 30, 1997 relating to the Securities (the
"Indenture"), we hereby certify that (1) we are the beneficial owner of $[ ]
principal amount of Initial Securities represented by the Temporary Certificate
and (2) we are a person outside the United States to whom the Initial Securities
could be transferred in accordance with Rule 904 of Regulation S promulgated
under the Securities Act of 1933, as amended. Accordingly, you are hereby
requested to issue a Certificated Note representing the undersigned's interest
in the principal amount of Initial Securities represented by the Temporary
Certificate, all in the manner provided by the Indenture.
<PAGE> 55
2
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:___________________________
Authorized Signature
<PAGE> 56
EXHIBIT G
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS PURSUANT TO RULE 144A]
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: [ ]
[date]
Re: Neenah Corporation (the "Company") 11-1/8%
Senior Subordinated Notes due 2007 (the
"Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $_______ aggregate principal
amount at maturity of the Securities, we hereby certify that such transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, we hereby further certify that the Securities are being transferred
to a person that we reasonably believe is purchasing the Securities for its own
account, or for one or more accounts with respect to which such person exercises
sole investment discretion, and such person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Securities are being transferred
in compliance with any applicable blue sky securities laws of any state of the
United States.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter
<PAGE> 57
2
or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.
Very truly yours,
____________________________
[Name of Transferor]
By:_________________________
Authorized Signature
<PAGE> 58
EXHIBIT H
[Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S]
[date]
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: [ ]
Re: Neenah Corporation (the "Company") 11-1/8%
Senior Subordinated Notes due 2007 (the
"Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate principal
amount of the Securities, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy order was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States or
(b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting
on our behalf knows that the transaction has been prearranged with a buyer
in the United States;
<PAGE> 59
2
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_______________________
Authorized Signature
<PAGE> 1
EXHIBIT 4.7
EXECUTION COPY
NEENAH CORPORATION
11-1/8% Series C Senior Subordinated Notes due 2007
Obligations to be guaranteed by Neenah Transport, Inc. and
Hartley Controls Corporation
INDENTURE
Dated as of July 1, 1997
Trustee,
United States Trust Company of New York
<PAGE> 2
1
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions ................................................ 1
SECTION 1.02. Other Definitions .......................................... 29
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act ............................................ 30
SECTION 1.04. Rules of Construction ...................................... 30
ARTICLE II
The Securities
SECTION 2.01. Form and Dating ............................................ 31
SECTION 2.02. Execution and Authentication ............................... 32
SECTION 2.03. Registrar and Paying Agent ................................. 33
SECTION 2.04. Paying Agent To Hold Money in Trust ........................ 34
SECTION 2.05. Securityholder Lists ....................................... 35
SECTION 2.06. Transfer and Exchange ...................................... 35
SECTION 2.07. Replacement Securities ..................................... 36
SECTION 2.08. Outstanding Securities ..................................... 37
SECTION 2.09. Temporary Securities ....................................... 37
SECTION 2.10. Cancellation ............................................... 38
SECTION 2.11. Defaulted Interest ......................................... 38
SECTION 2.12. CUSIP Numbers .............................................. 38
SECTION 2.13. Book-Entry Provisions for U.S. Global
Security ................................................. 39
SECTION 2.14. Special Transfer Provisions ................................ 40
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee ......................................... 46
SECTION 3.02. Selection of Securities
to be Redeemed ........................................... 46
SECTION 3.03. Notice of Redemption ....................................... 47
<PAGE> 3
2
SECTION 3.04. Effect of Notice of Redemption ............................. 48
SECTION 3.05. Deposit of Redemption Price ................................ 48
SECTION 3.06. Securities Redeemed in Part ................................ 48
SECTION 3.07. Optional Redemption ........................................ 48
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities ...................................... 50
SECTION 4.02. SEC Reports ................................................ 50
SECTION 4.03. Limitation on Indebtedness ................................. 50
SECTION 4.04. Limitation on Restricted Payments .......................... 54
SECTION 4.05. Limitation on Restrictions on
Distributions from Subsidiaries .......................... 57
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock ......................................... 60
SECTION 4.07. Limitation on Transactions with
Affiliates ............................................... 64
SECTION 4.08. Change of Control .......................................... 65
SECTION 4.09. Compliance Certificate ..................................... 67
SECTION 4.10. Further Instruments and Acts ............................... 67
SECTION 4.11. Limitation on the Sale or Issuance of
Capital Stock of Restricted
Subsidiaries ............................................. 67
SECTION 4.12. Limitation on Liens ........................................ 67
SECTION 4.13. Limitation on Sale/Leaseback
Transactions ............................................. 68
SECTION 4.14. Limitation on Lines of Business ............................ 68
SECTION 4.15. Future Guarantor Subsidiaries .............................. 68
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets ................................................... 69
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default .......................................... 70
SECTION 6.02. Acceleration ............................................... 72
SECTION 6.03. Other Remedies ............................................. 73
<PAGE> 4
3
SECTION 6.04. Waiver of Past Defaults .................................... 73
SECTION 6.05. Control by Majority ........................................ 73
SECTION 6.06. Limitation on Suits ........................................ 74
SECTION 6.07. Rights of Holders to
Receive Payment .......................................... 74
SECTION 6.08. Collection Suit by Trustee ................................. 74
SECTION 6.09. Trustee May File Proofs of Claim ........................... 75
SECTION 6.10. Priorities ................................................. 75
SECTION 6.11. Undertaking for Costs ...................................... 76
SECTION 6.12. Waiver of Stay or Extension Laws ........................... 76
SECTION 6.13. Restoration of Rights and Remedies ......................... 76
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee .......................................... 76
SECTION 7.02. Rights of Trustee .......................................... 78
SECTION 7.03. Individual Rights of Trustee ............................... 79
SECTION 7.04. Trustee's Disclaimer ....................................... 79
SECTION 7.05. Notice of Defaults ......................................... 79
SECTION 7.06. Reports by Trustee to Holders .............................. 79
SECTION 7.07. Compensation and Indemnity ................................. 80
SECTION 7.08. Replacement of Trustee ..................................... 81
SECTION 7.09. Successor Trustee by Merger ................................ 82
SECTION 7.10. Eligibility; Disqualification .............................. 82
SECTION 7.11. Preferential Collection of Claims
Against Company .......................................... 82
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance ............................................... 83
SECTION 8.02. Conditions to Defeasance ................................... 84
SECTION 8.03. Application of Trust Money ................................. 85
SECTION 8.04. Repayment to Company ....................................... 86
SECTION 8.05. Indemnity for Government
Obligations .............................................. 86
SECTION 8.06. Reinstatement .............................................. 86
SECTION 8.07. Concurrent Defeasance of Securities
and Original Securities .................................. 86
<PAGE> 5
4
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders ................................. 87
SECTION 9.02. With Consent of Holders .................................... 87
SECTION 9.03. Compliance with Trust Indenture Act ........................ 89
SECTION 9.04. Revocation and Effect of Consents and
Waivers .................................................. 89
SECTION 9.05. Notation on or Exchange
of Securities ............................................ 90
SECTION 9.06. Trustee to Sign Amendments ................................. 90
SECTION 9.07. Payment for Consent ........................................ 90
ARTICLE X
Subordination of the Securities
SECTION 10.01. Agreement to Subordinate .................................. 90
SECTION 10.02. Liquidation, Dissolution, Bankruptcy ...................... 91
SECTION 10.03. Default on Senior Indebtedness of
the Company ............................................. 91
SECTION 10.04. Acceleration of Payment of Securities ..................... 92
SECTION 10.05. When Distribution Must Be Paid Over ....................... 93
SECTION 10.06. Subrogation ............................................... 93
SECTION 10.07. Relative Rights ........................................... 93
SECTION 10.08. Subordination May Not Be Impaired by
Company ................................................. 93
SECTION 10.09. Rights of Trustee and Paying Agent ........................ 94
SECTION 10.10. Distribution or Notice to Representative .................. 94
SECTION 10.11. Article X Not To Prevent Events of Default or Limit
Right To Accelerate ..................................... 94
SECTION 10.12. Trust Moneys Not Subordinated ............................. 94
SECTION 10.13. Trustee Entitled to Rely .................................. 95
SECTION 10.14. Trustee to Effectuate Subordination ....................... 95
SECTION 10.15. Trustee Not Fiduciary for Holders of
Senior Indebtedness of the Company ...................... 96
SECTION 10.16. Reliance by Holders of Senior
Indebtedness of the Company on
Subordination Provisions ................................ 96
SECTION 10.17. Trustee's Compensation Not Prejudiced ..................... 96
<PAGE> 6
5
ARTICLE XI
Subsidiary Guaranties
SECTION 11.01. Subsidiary Guaranties .................................... 96
SECTION 11.02. Limitation on Liability .................................. 98
SECTION 11.03. Successors and Assigns ................................... 99
SECTION 11.04. No Waiver ................................................ 99
SECTION 11.05. Modification ............................................. 99
SECTION 11.06. Execution of Supplemental Indenture
for Future Guarantor Subsidiaries ...................... 100
ARTICLE XII
Subordination of the Subsidiary Guaranties
SECTION 12.01. Agreement to Subordinate ................................. 100
SECTION 12.02. Liquidation, Dissolution, Bankruptcy ..................... 100
SECTION 12.03. Default on Senior Indebtedness of a
Guarantor Subsidiary ................................... 101
SECTION 12.04. Demand for Payment ....................................... 102
SECTION 12.05. When Distribution Must Be Paid Over ...................... 102
SECTION 12.06. Subrogation .............................................. 103
SECTION 12.07. Relative Rights .......................................... 103
SECTION 12.08. Subordination May Not Be Impaired by a
Guarantor Subsidiary ................................... 103
SECTION 12.09. Rights of Trustee and Paying Agent ....................... 103
SECTION 12.10. Distribution or Notice to Representative ................. 104
SECTION 12.11. Article XII Not To Prevent Events
of Default or Limit
Right To Accelerate .................................... 104
SECTION 12.12. Trustee Entitled to Rely ................................. 104
SECTION 12.13. Trustee to Effectuate Subordination ...................... 105
SECTION 12.14. Trustee Not Fiduciary for Holders of
Senior Indebtedness of a Guarantor
Subsidiary ............................................. 105
SECTION 12.15. Reliance by Holders of Senior
Indebtedness of a Guarantor Subsidiary
on Subordination Provisions ............................ 105
<PAGE> 7
6
ARTICLE XIII
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls ............................. 106
SECTION 13.02. Notices .................................................. 106
SECTION 13.03. Communication by Holders with Other
Holders ................................................ 107
SECTION 13.04. Certificate of Opinion as to Conditions
Precedent .............................................. 107
SECTION 13.05. Statements Required in Certificate or
Opinion ................................................ 107
SECTION 13.06. When Securities Disregarded .............................. 108
SECTION 13.07. Rules by Trustee, Paying Agent and
Registrar .............................................. 108
SECTION 13.08. Legal Holidays ........................................... 108
SECTION 13.09. Governing Law ............................................ 108
SECTION 13.10. No Recourse Against Others ............................... 108
SECTION 13.11. Successors ............................................... 109
SECTION 13.12. Multiple Originals ....................................... 109
SECTION 13.13. Table of Contents; Headings .............................. 109
Exhibit A - Form of Face of Initial Security
Exhibit B - Form of Face of Exchange Security
Exhibit C - Form of Transferee Letter of Representation
Exhibit D - Form of Supplemental Indenture
Exhibit E - Form of Certificate to be Delivered upon
Termination of Restricted Period
Exhibit F - Form of Certificate to be Delivered in Connection
with Transfers to Non-QIB Institutional Accredited
Investors
Exhibit G - Form of Certificate to be Delivered in Connection
with Transfers pursuant to Regulation S
<PAGE> 8
7
CROSS-REFERENCE ABLE
TIA Indenture
Section Section
- ------- -------
310(a)(1) ..................................................... 7.10
(a)(2) ..................................................... 7.10
(a)(3) ..................................................... N.A.
(a)(4) ..................................................... N.A.
(b) ........................................................ 7.08; 7.10
(c) ........................................................ N.A.
311(a) ........................................................ 7.11
(b) ........................................................ 7.11
(c) ........................................................ N.A.
312(a) ........................................................ 2.05
(b) ........................................................ 11.03
(c) ........................................................ 11.03
313(a) ........................................................ 7.06
(b)(1) ..................................................... N.A.
(b)(2) ..................................................... 7.06
(c) ........................................................ 11.02
(d) ........................................................ 7.06
314(a) ........................................................ 4.02; 4.09;
11.02
(b) ........................................................ N.A.
(c)(1) ..................................................... 11.04
(c)(2) ..................................................... 11.04
(c)(3) ..................................................... N.A.
(d) ........................................................ N.A.
(e) ........................................................ 13.05
(f) ........................................................ 4.12
315(a) ........................................................ 7.01
(b) ........................................................ 7.05; 11.02
(c) ........................................................ 7.01
(d) ........................................................ 7.01
(e) ........................................................ 6.11
316(a)(last
sentence) ..................................................... 13.06
(a)(1)(A) .................................................. 6.05
(a)(1)(B) .................................................. 6.04
(a)(2) ..................................................... N.A.
(b) ........................................................ 6.07
317(a)(1) ..................................................... 6.08
(a)(2) ..................................................... 6.09
(b) ........................................................ 2.04
318(a) ........................................................ 11.01
N.A. means Not Applicable.
- ---------------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
CONFORMED COPY
<PAGE> 9
INDENTURE dated as of July 1, 1997, among NEENAH
CORPORATION, a Wisconsin corporation (the "Company")
Neenah Transport, Inc. and Hartley Controls Corporation
each a Wisconsin Corporation (the "Initial Guarantors"),
and United States Trust Company of New York, a New York
banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Company's 11-1/8%
Series C Senior Subordinated Notes due 2007 (the "Initial Securities") and, when
and if issued pursuant to a registered exchange for Initial Securities, the
Company's 11-1/8% Series D Senior Subordinated Notes due 2007 (the "Exchange
Securities").
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"ACP Holdings" means ACP Holding Company, a Delaware corporation.
"ACP Products, L.L.C." means ACP Products, L.L.C., a Delaware
limited liability company.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock), including improvements to existing assets, to
be used by the Company or a Restricted Subsidiary in a Related Business; (ii)
the Capital Stock of a Person that becomes a Restricted Subsidiary as a result
of the acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary; provided, however, that, in
the case of clauses (ii) and (iii), such Restricted Subsidiary is primarily
engaged in a Related Business.
"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 the purposes of this
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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;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of Section 4.07 only, "Affiliate" shall also mean any
beneficial owner of shares representing 5% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of the Company or of rights or
warrants to purchase such Voting Stock (whether or not currently exercisable)
and any Person who would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.
"Applicable Premium" means, with respect to a Security, the
greater of (i) 1.0% of the then outstanding principal amount of such Security
and (ii) the excess of (A) the present value of all remaining required interest
and principal payments due on such Security, computed using a discount rate
equal to the Treasury Rate plus 75 basis points, over (B) the then outstanding
principal amount of such Security.
"Asset Disposition" means any sale, lease, transfer or other
disposition of shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares), property or assets (each referred to for the
purposes of this definition as a "disposition") by the Company or any of its
Restricted Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction) other than: (i) a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Restricted Subsidiary; (ii) a disposition of inventory, in the
ordinary course of business consistent with past practices of the Company and
its Subsidiaries and (iii) dispositions with a fair market value of less than
$500,000 in the aggregate in any fiscal year; (iv) a disposition of properties
and assets that is governed by the provisions of Section 5.01(i)-(v); and (v)
for purposes of Section 4.06 only, a disposition subject to Section 4.04.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate assumed in making calculations in accordance with FAS 13) of the
total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
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"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or scheduled redemption or similar payment with respect to
such Preferred Stock multiplied by the amount of such payment by (ii) the sum of
all such payments.
"Bank Indebtedness" means any and all amounts payable under or in
respect of the Senior Bank Facilities or any refinancing or replacements thereof
including principal, premium (if any), interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Company whether or not a claim for post-filing interest is allowed in
such proceeding), fees, charges, expenses, reimbursement obligations, guarantees
and all other amounts payable thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the Company
or any committee thereof duly authorized to act on behalf of such Board.
"Borrowing Base" means, as of the date of determination, an
amount equal to the sum, without duplication, of (i) 80% of the net book value
of the Company's accounts receivable at such date and (ii) 50% of the net book
value of the Company's inventories at such date. Net book value shall be
determined in accordance with GAAP and shall be that reflected on the most
recent available balance sheet (it being understood that the accounts receivable
and inventories of an acquired business may be included if such acquisition has
been completed on or prior to the date of determination).
"Business Day" means a day other than a Saturday, Sunday or other
day on which banking institutions in New York State are authorized or required
by law to close.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted
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for as a capitalized lease for financial reporting purposes in accordance with
GAAP. The amount of Indebtedness represented by a Capitalized Lease Obligation
shall be the capitalized amount of such obligation determined in accordance with
GAAP, and the Stated Maturity thereof shall be the date of the last scheduled
payment of rent or any other amount due under the relevant lease.
"Change of Control" means the occurrence of any of the following
events:
(a) prior to the earlier to occur of the first public offering of
Voting Stock of ACP Holdings, the Company or Holdings, the Permitted
Holders cease to be entitled (by "beneficial ownership" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act) of Voting Stock, contract
or otherwise) to elect or cause the election of directors of the Company
having a majority of the total voting power of the Board of Directors of
the Company, whether as a result of issuance of securities of the
Company, any merger, consolidation, liquidation or dissolution of the
Company, any direct or indirect transfer of securities by any Permitted
Holder or otherwise (for purposes of this clause (a), the Permitted
Holders shall be deemed to beneficially own any Voting Stock of a
corporation (the "specified corporation") held by any other corporation
(the "parent corporation") so long as one or more of the Permitted
Holders beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the
parent corporation);
(b) after the first public offering of Voting Stock of ACP
Holdings, the Company or Holdings, any person or group (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act), other than
one or more of the Permitted Holders, is or becomes the beneficial owner
(as defined in clause (a) above), directly or indirectly, of Voting
Stock that represents more than 40% of the aggregate ordinary voting
power of all classes of the Voting Stock of ACP Holdings, the Company or
Holdings, voting together as a single class, and either (x) the
Permitted Holders beneficially own (as defined in clause (a) above),
directly or indirectly, in the aggregate Voting Stock that represents a
lesser percentage of the aggregate ordinary voting power of all classes
of the Voting Stock of ACP Holdings, the Company or Holdings, as the
case may be, voting together as a single class, than
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such other person or group and are not entitled (by voting power,
contract or otherwise) to elect directors of ACP Holdings, the Company
or Holdings having a majority of the total voting power of the board of
directors of ACP Holdings, Holdings or the Company, as the case may be,
or (y) such other person or group is entitled to elect directors of ACP
Holdings, the Company or Holdings having a majority of the total voting
power of the board of directors of ACP Holding, Holdings or the Company;
(c) after the first public offering of Voting Stock of ACP
Holdings, Holdings or the Company, during any period of not greater than
two consecutive years beginning after the Issue Date, individuals who at
the beginning of such period constituted the board of directors of ACP
Holdings, Holdings or the Company, as the case may be (together with any
new directors whose election by such board of directors or whose
nomination for election by shareholders was approved by the Permitted
Holders or by such board of directors, in each case by a vote of a
majority of the directors of ACP Holdings, the Company or Holdings, as
the case may be, then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved), cease for any reason to have a majority of
the total voting power of the board of directors of ACP Holdings,
Holdings or the Company, as the case may be; or
(d) any sale, lease, or other transfer (in one transaction or in
a series of related transactions) is made by the Company or its
Restricted Subsidiaries of all or substantially all of the consolidated
assets of the Company and its Restricted Subsidiaries to any Person.
"Citicorp" means Citicorp, a Delaware corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Agreement" means one or more of the following
agreements entered into by a Person and one or more financial institutions:
commodity future contracts, forward contracts, options or other similar
arrangements or agreements designed to protect against fluctuations in the price
of, or the shortage of supply of, commodities from time to time.
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"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the applicable provisions of this Indenture
and, thereafter, means the successor and, for purposes of any provision
contained herein and required by the TIA, each other obligor on the indenture
securities.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination (determined, for the four fiscal quarters ending
prior to the Original Issue Date, or any thereof, on a pro forma basis to give
effect to the Neenah Merger as if it had occurred at the beginning of such
period) to (ii) Consolidated Interest Expense for such four fiscal quarters
(determined, for the four fiscal quarters ending prior to the Original Issue
Date, or any thereof, on a pro forma basis to give effect to the Neenah Merger
as if it had occurred at the beginning of such period); provided, however, that
(1) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding
on such date of determination or if the transaction giving rise to the
need to calculate the Consolidated Coverage Ratio is an Incurrence of
Indebtedness, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving effect on a pro forma basis to such
Indebtedness and the application of the proceeds thereof as if such
Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if
such discharge had occurred on the first day of such period (except that
in the case of Indebtedness to finance seasonal fluctuations in working
capital needs Incurred under a revolving credit or similar arrangement,
the amount thereof shall be deemed to be the average daily balance of
such Indebtedness during such four quarter period);
(2) if since the beginning of such period the Company or any
Restricted Subsidiary shall have disposed of any assets constituting all
or substantially all of the assets of an operating unit of a business (a
"Disposal"), (x) the EBITDA for such period shall be reduced by an
amount equal to the EBITDA (if positive) directly attributable to the
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assets which are the subject of such Disposal for such period or
increased by an amount equal to the EBITDA (if negative) directly
attributable thereto for such period and (y) Consolidated Interest
Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness
of the Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its
continuing Restricted Subsidiaries in connection with such Disposal for
such period (or, if the Capital Stock of any Restricted Subsidiary is
sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the
extent the Company and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale);
(3) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction causing
a calculation to be made hereunder, which constitutes all or
substantially all of the assets of an operating unit of a business,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto (including the
Incurrence of any Indebtedness in connection therewith) as if such
Investment or acquisition occurred on the first day of such period; and
(4) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into
the Company or any Restricted Subsidiary since the beginning of such
period) shall have made any Disposal or any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (2) or
(3) above if made by the Company or a Restricted Subsidiary during such
period, EBITDA and Consolidated Interest Expense for such period shall
be calculated after giving pro forma effect thereto as if such Disposal,
Investment or acquisition of assets occurred on the first day of such
period.
For purposes of this definition, whenever pro forma effect is to
be given to an acquisition of assets, the
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amount of income or earnings relating thereto and the amount of Consolidated
Interest Expense associated with any Indebtedness Incurred in connection
therewith, the pro forma calculations shall be determined in good faith by a
responsible financial or accounting Officer of the Company. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term as at the date
of determination in excess of 12 months). If any Indebtedness bears, at the
option of the Company or a Restricted Subsidiary, a fixed or floating rate of
interest and is being given pro forma effect, then (i) if any interest had
accrued on such Indebtedness prior to the date of determination, the interest
expense on such Indebtedness shall be computed by applying a fixed or floating
rate of interest as selected by the Company or such Restricted Subsidiary for
the interest period immediately preceding such determination or (ii) if no
interest accrued on such Indebtedness prior to the date of determination, the
interest expense on such Indebtedness shall be computed by applying, at the
option of the Company or such Restricted Subsidiary, either a fixed or floating
rate. If any Indebtedness which is being given pro forma effect was Incurred
under a revolving credit facility that was in effect throughout the applicable
period, the interest expense on such Indebtedness shall be computed based upon
the average daily balance of such Indebtedness during the applicable period.
"Consolidated Interest Expense" means, for any period, the total
consolidated interest expense of the Company and its Restricted Subsidiaries for
such period, plus, to the extent Incurred by the Company and its Restricted
Subsidiaries in such period but not included in such interest expense: (i)
interest expense attributable to Capitalized Lease Obligations and Attributable
Debt; (ii) amortization of debt discount; (iii) capitalized interest; (iv)
noncash interest expense; (v) commissions, discounts and other fees and charges
with respect to letters of credit and bankers' acceptance financing; (vi) net
costs associated with Interest Rate Agreements; (vii) the interest portion of
any deferred payment obligation for goods or services; (viii) interest actually
paid by the Company or any Restricted Subsidiary on any Indebtedness of any
other Person that is Guaranteed by the Company or any Restricted Subsidiary;
(ix) the cash contributions to any employee
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stock ownership plan or similar trust to the extent such contributions are used
by such plan or trust to pay interest or fees to any Person (other than the
Company or a Wholly Owned Subsidiary) in connection with Indebtedness Incurred
by such plan or trust; and (x) the earned discount or yield with respect to the
sale of receivables (without duplication of amounts included in Consolidated Net
Income); but in no event shall include (i) amortization of debt issuance costs;
(ii) Preferred Stock dividends in respect of all Preferred Stock of Subsidiaries
of the Company and Disqualified Stock of the Company held by Persons other than
the Company or a Wholly Owned Subsidiary; or (iii) interest Incurred in
connection with Investments in discontinued operations.
"Consolidated Net Income" means, for any period, the consolidated
net income (loss) of the Company and its Subsidiaries for such period; provided,
however, that there shall not be included in such Consolidated Net Income:
(i) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the limitations
contained in clause (iv) below, the Company's equity in the net income
of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in
the case of a dividend or other distribution to a Restricted Subsidiary,
to the limitations contained in clause (iii) below) and (B) the
Company's equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period shall be included in
determining such Consolidated Net Income;
(ii) for purposes of Section 4.04(a)(3)(A) only, any net income
(loss) of any person acquired by the Company or a Subsidiary in a
pooling of interests transaction for any period prior to the date of
such acquisition;
(iii) any net income (loss) of any Restricted Subsidiary if such
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that (A)
subject to the limitations contained in (iv) below, the Company's equity
in the net income of any such Restricted Subsidiary for such period
shall be included in such Consolidated Net
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Income up to the aggregate amount of cash that could have been
distributed by such Restricted Subsidiary during such period to the
Company or another Restricted Subsidiary as a dividend (subject, in the
case of a dividend that could have been made to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Restricted Subsidiary for
such period shall be included in determining such Consolidated Net
Income;
(iv) any gain (or loss) realized upon the sale or other
disposition of any asset of the Company or its Consolidated Subsidiaries
(including pursuant to any Sale/Leaseback Transaction) which is not sold
or otherwise disposed of in the ordinary course of business and any gain
(or loss) realized upon the sale or other disposition of any Capital
Stock of any Person;
(v) any extraordinary gain or loss; and
(vi) the cumulative effect of a change in accounting principles
after the Original Issue Date.
Notwithstanding the foregoing, for the purpose of Section 4.04
only, there shall be excluded from Consolidated Net Income any dividends,
repayments of loans or advances or other transfers of assets from Unrestricted
Subsidiaries to the Company or a Restricted Subsidiary to the extent such
dividends, repayments or transfers increase the amount of Restricted Payments
permitted under Section 4.04(a)(3)(D). Notwithstanding anything to the contrary
in Section 4.04, all amounts paid to Holdings pursuant to Section 4.04(b)(xi)(B)
shall be deducted in computing Consolidated Net Income.
"Consolidated Net Worth" means the total of the amounts shown on
the balance sheet of the Company and the Restricted Subsidiaries, determined on
a Consolidated basis, as of the end of the most recent fiscal quarter of the
Company ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
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"Consolidated Non-Cash Charges" of any Person means, for any
period, the aggregate depreciation, amortization and other non-cash charges of
such Person and its Consolidated Subsidiaries for such period, on a Consolidated
basis, as determined in accordance with GAAP (excluding any such other non-cash
charge which requires an accrual or reserve for cash charges for any future
period).
"Consolidation" means the consolidation of the accounts of each
of the Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" shall not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary shall
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Currency Agreement" means with respect to any Person any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement as to which such Person is a party or a beneficiary.
"CVC" means Citicorp Venture Capital, Ltd., a New York
corporation.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Definitive Securities" means Securities that are in the form of
Exhibit A or Exhibit B attached hereto that do not include the information
called for by footnote 1 thereof.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
as the Depositary with respect to the Securities, until a successor shall have
been appointed and becomes such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness
and (ii) any other Senior Indebtedness of the Company which, at the date of
determination, has an aggregate principal amount outstanding of, or under which,
at the date of determination, the holders thereof are committed to lend at least
$25,000,000 and is specifically designated by the Company in the instrument
evidencing or
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governing such Senior Indebtedness as "Designated Senior Indebtedness" for
purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, 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 exercisable) or upon the
happening of any event (i) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise; (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock; or (iii) is redeemable at the option of the
holder thereof, in whole or in part, in each case on or prior to ninety-one days
after the Stated Maturity of the Securities. Disqualified Stock shall not
include any Capital Stock that is not otherwise Disqualified Stock if by its
terms the holders have the right to require the issuer to repurchase such stock
upon a Change of Control (or upon events substantially similar to a Change of
Control).
"Domestic Subsidiary" means a Subsidiary that is incorporated or
organized under the laws of the United States of America, any state thereof or
the District of Columbia.
"EBITDA" for any period means the Consolidated Net Income for
such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense; (ii) Consolidated Interest
Expense; and (iii) Consolidated Non-Cash Charges, in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization of, a Subsidiary of the
Company shall be added to Consolidated Net Income to compute EBITDA only to the
extent (and in the same proportion) that the net income (loss) of such
Subsidiary was included in calculating Consolidated Net Income.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange and Registration Rights Agreement" means the Exchange
and Registration Rights Agreement dated as of the Issue Date by and among the
Initial Purchaser, the Company and the Initial Guarantors, as such agreement may
be amended, modified, or supplemented from time to time in accordance with the
terms thereof.
"Exchange Offer" shall have the meaning set forth in the Exchange
and Registration Rights Agreement.
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"Exchange Offer Registration Statement" shall have the meaning
set forth in the Exchange and Registration Rights Agreement.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants, in statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
"Global Security" means a Security that is in the form of Exhibit
A or Exhibit B hereto that includes the information called for by footnote 1
thereof.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
through an agreement enforceable by or for the benefit of the holder of such
Indebtedness and any such obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation of such other
Person (whether arising to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for purposes of assuring in any other manner the obligee of such
Indebtedness or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part); provided,
however, that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Guarantor Subsidiary" means any Person that has issued a
Subsidiary Guaranty.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Commodity Agreement, Interest Rate Agreement or Currency
Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
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"Holdings" means NFC Castings, Inc., a Delaware corporation, any
Person acceding to its ownership, and successors thereto.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Person at the time it becomes a Restricted Subsidiary; provided
further, however, that in the case of a discount security, the accretion of
original issue discount on such security shall not be considered an Incurrence
of Indebtedness if (but only if) the Company elects to treat the whole face
amount of such security as Incurred at such time (and such Incurrence is then
permitted in accordance with the terms of this Indenture).
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal of indebtedness of such Person for borrowed
money;
(ii) the principal of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments;
(iii) all obligations of such Person in respect of letters of
credit or other similar instruments (including reimbursement obligations
with respect thereto) other than letters of credit or similar
instruments supporting Trade Payables entered into in the ordinary
course of business of such Person to the extent that such letters of
credit are not drawn upon or, if and to the extent drawn upon, such
drawing is reimbursed not later than the third business day following
such drawing;
(iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services (except Trade Payables),
which purchase price is due more than twelve months after the date of
placing such property in service or taking delivery and title thereto or
the completion of such services;
(v) all Capitalized Lease Obligations and all Attributable Debt
of such Person;
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(vi) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock or, with respect to any Subsidiary of the Company, any Preferred
Stock (but excluding, in each case, any accrued dividends);
(vii) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by
such Person; provided, however, that the amount of Indebtedness of such
Person shall be the lesser of (A) the fair market value of such asset at
such date of determination and (B) the amount of such Indebtedness of
such other Persons;
(viii) all Indebtedness of other Persons to the extent
Guaranteed by such Person; and
(ix) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Initial Purchaser" means Chase Securities Inc.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance
loan (other than advances or loans to customers or suppliers in the ordinary
course of business that are recorded as accounts receivable on the balance sheet
of the Person making such loan or advance) or other extension of credit
(including by way of Guarantee or similar arrangement) or capital contribution
to (by means of any transfer of cash or other property to others or any payment
for property or services for the account or use of others), or any purchase or
acquisition of Capital Stock,
<PAGE> 24
16
Indebtedness or other similar instruments issued by such Person. For purposes of
the definition of "Unrestricted Subsidiary" and Section 4.04 only, (i)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if
positive) equal to (x) the Company's "Investment" in such Subsidiary at the time
of such redesignation less (y) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net assets
of such Subsidiary at the time of such redesignation; and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined in good
faith by the Board of Directors.
"Issue Date" means the date on which the Initial Securities are
originally issued.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
"Management Investors" means the officers and employees of ACP
Products, L.L.C., ACP Holdings, Holdings, the Company or a Subsidiary of the
Company who acquire Voting Stock of ACP Products, L.L.C., ACP Holdings, Holdings
or the Company on or after the Issue Date.
"Moody's" means Moody's Investors Service, Inc., and its
successors.
"Neenah Merger" means the merger, consummated on April 30, 1997,
of NC Merger Company, a Delaware corporation, with and into the Company under
the terms of the Agreement and Plan of Reorganization (as amended) by and among
Holdings, the Company and NC Merger Company and dated November 20, 1996.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable, or from an
escrow account or otherwise, in each case only as and when received, but
<PAGE> 25
17
excluding any other consideration received in the form of assumption by the
acquiring person of Indebtedness or other obligations relating to the properties
or assets that are the subject of such Asset Disposition or received in any
other non-cash form) therefrom, in each case net of: (i) all legal, title and
recording expenses, commissions and other expenses (including fees and expenses
of counsel and investment bankers) incurred, and all Federal, state, provincial,
foreign and local taxes required to be paid or accrued as a liability under
GAAP, as a consequence of such Asset Disposition; (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition,
in accordance with the terms of any Lien upon such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law, be repaid out of the proceeds from such Asset Disposition;
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition; and (iv) appropriate amounts to be provided by the party or parties
making such Asset Disposition as a reserve, in accordance with GAAP, against any
liabilities associated with the assets disposed of in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of
Capital Stock, means the proceeds of such issuance or sale in the form of cash,
including payments in respect of deferred payment obligations when received in
form of, or stock or other assets when disposed for, cash, net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, filing and registration fees, trustee's fees,
consultant and other fees actually incurred in connection with such issuance or
sale and net of taxes paid or payable as a result thereof.
"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, one of whom shall be the principal executive, financial or accounting
officer of the Company.
<PAGE> 26
18
"Opinion of Counsel" means a written opinion from legal counsel
who is acceptable to the Trustee. The counsel may be an employee of or counsel
to the Company or the Trustee.
"Original Indenture" means the Indenture, dated as of April 30,
1997, as amended, between the Company and United States Trust Company of New
York as trustee, as in effect on the date of this Indenture.
"Original Issue Date" means the date of issuance of the Original
Securities, April 30, 1997.
"Original Securities" means the Company's 11-1/8% Senior
Subordinated Notes due 2007 issued under the Original Indenture and any of the
Company's Series B 11-1/8% Senior Subordinated Notes exchanged therefor.
"Permitted Holders" means (i) CVC and its Affiliates and
Permitted Transferees and (ii) the Management Investors and their Permitted
Transferees.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in: (i) the Company; (ii) a Restricted Subsidiary or a
Person which shall, upon the making of such Investment, become a Restricted
Subsidiary; provided, however, that the primary business of such Restricted
Subsidiary is a Related Business; (iii) another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that such Person's primary business is
a Related Business; (iv) Temporary Cash Investments; (v) receivables owing to
the Company or any Restricted Subsidiary, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms, provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances; (vi) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vii) loans or advances to employees made in the ordinary
course of business and not exceeding $1,000,000 in the aggregate outstanding at
any one time; (viii) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of
<PAGE> 27
19
judgments; (ix) securities received as consideration in sales of assets made in
compliance with Section 4.06; (x) other Investments, of any type, provided that
the amount of such Investments made after the Original Issue Date in reliance on
this clause (x) and outstanding at any time does not exceed 7.5% of Total
Assets; or (xi) Guarantees relating to Indebtedness which is permitted to be
Incurred under Section 4.03.
"Permitted Liens" means with respect to any Person, (a) Liens to
secure Indebtedness permitted under the provisions described under clause (b)(i)
or (ii) under Section 4.03; (b) pledges or deposits made or other Liens granted
by (1) such Person under workmen's compensation laws, unemployment insurance
laws or similar legislation, (2) in connection with bids, tenders, contracts
(other than for the payment of Indebtedness) or leases to which such Person is a
party, or (3) to secure public or statutory obligations of such Person or
deposits of cash or United States government bonds to secure surety or appeal
bonds to which such Person is a party, or deposits as security for contested
taxes or import duties or for the payment of rent, in each case Incurred in the
ordinary course of business, (c) Liens imposed by law, such as carriers',
warehousemen's, mechanics', employees' and other like Liens, in each case for
sums not yet due or being contested in good faith by appropriate proceedings or
other Liens arising out of judgments, awards, decrees or orders of any court or
other governmental authority against such Person with respect to which such
Person shall then be proceeding with an appeal or other proceedings for review;
(d) Liens for property taxes not yet due or payable or subject to penalties for
non-payment or which are being contested in good faith and by appropriate
proceedings; (e) Liens in favor of issuers of surety, performance, judgment,
appeal and other like bonds or letters of credit issued pursuant to the request
of and for the account of such Person in the ordinary course of its business;
(f) minor survey exceptions, minor encumbrances, easements or reservations of,
or rights of others for, licenses, rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning provisions,
carveouts, conditional waivers or other restrictions as to the use of real
properties or minor irregularities of title (and with respect to leasehold
interests, mortgages, obligations, Liens and other encumbrances incurred,
created, assumed or permitted to exist and arising by, through or under a
landlord or owner of the leased property, with or without consent of the lessee)
or Liens incidental to the conduct of the business of such Person or to the
ownership of its properties which
<PAGE> 28
20
were not Incurred in connection with Indebtedness and which do not in the
aggregate materially impair the use of such properties in the operation of the
business of such Person; (g) Liens existing or provided for under written
arrangements existing on the Original Issue Date; (h) Liens securing
Indebtedness or other obligations of a Subsidiary of such Person owing to such
Person or a wholly owned Subsidiary of such Person; (i) Liens securing Hedging
Obligations so long as the related Indebtedness is, and is permitted to be under
the Indenture, secured by a Lien on the same property securing such Hedging
Obligations; (j) Liens to secure any refinancing, refunding, replacement,
renewal, repayment or extension (or successive refinancings, refundings,
replacements, renewals, repayments or extensions) as a whole, or in part, of any
Indebtedness secured by any Lien referred to in clause (g), (i), (l), (m) or
(n); provided, however, that (x) such new Lien shall be limited to all or part
of the same property that secured the original Lien (plus improvements on such
property) and (y) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (A) the outstanding principal
amount or, if greater, committed amount of the Indebtedness described under
clauses (g), (i), (l), (m) or (n) at the time the original Lien became a
Permitted Lien and (B) an amount necessary to pay any fees and expenses,
including premiums, related to such refinancing, refunding, replacement,
renewal, repayment or extension; (k)(i) mortgages, liens, security interests,
restrictions or encumbrances that have been placed by any developer, landlord or
other third party on property over which the Company or any Restricted
Subsidiary or the Company has easement rights or on any real property leased by
the Company and subordination or similar agreements relating thereto and (ii)
any condemnation or eminent domain proceedings affecting any real property; (l)
Liens on property, assets or shares of stock of a Person at the time such Person
becomes a Subsidiary; provided, however, such Liens are not created, Incurred or
assumed by such Person in connection with, or in contemplation of, such other
Person becoming such a Subsidiary; provided further, however, that such Liens
may not extend to any other property owned by the Company or any Restricted
Subsidiary; (m) Liens on property or assets at the time the Company or a
Restricted Subsidiary acquired the property or assets, including any acquisition
by means of a merger or consolidation with or into the Company or a Restricted
Subsidiary; provided, however, that such Liens are not created in connection
with, or in contemplation of, such acquisition; provided further, however, that
the Liens may not extend to any other property owned by the Company or any
Restricted Subsidiary; and
<PAGE> 29
21
(n) any Lien on stock or other securities of an Unrestricted Subsidiary that
secures Indebtedness of such Unrestricted Subsidiary.
"Permitted Transferee" means (a) with respect to CVC (i)
Citicorp, any direct or indirect wholly owned subsidiary of Citicorp, and any
officer, director or employee of CVC, Citicorp or any wholly owned subsidiary of
Citicorp; (ii) any spouse or lineal descendant (including by adoption and
stepchildren) of the officers, directors and employees in clause (a)(i) above or
(iii) any trust, corporation or partnership 100% in interest of the
beneficiaries, stockholders or partners of which consists of one or more of the
persons described in clause (a)(i) or (ii) above and (b) with respect to any
officer or employee of ACP Products, L.L.C., ACP Holdings, Holdings, the Company
or a Subsidiary of the Company (i) any spouse or lineal descendant (including by
adoption and stepchildren) of such officer or employee and (ii) any trust,
corporation or partnership 100% in interest of the beneficiaries, stockholders
or partners of which consists of such officer or employee, any of the persons
described in clause (b)(i) above or any combination thereof.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security that is due or overdue or is
to become due at the relevant time.
"Private Placement Legend" means the legend set forth under such
caption in the form of Initial Security in Exhibit A hereto.
"Public Equity Offering" means an underwritten primary public
offering of common stock of ACP Holdings, Company or Holdings (or, for purposes
of Section 4.11(d),
<PAGE> 30
22
any Restricted Subsidiary) pursuant to an effective registration statement
(other than a registration statement on Form S-4, S-8 or any successor or
similar forms) under the Securities Act (whether alone or in conjunction with
any secondary public offering); provided, however, that if any such offering is
an offering of the common stock of ACP Holdings, only the net proceeds thereof
that are contributed to the Company shall be taken into consideration for
purposes of this definition.
"Public Market" means any time after (x) a Public Equity Offering
has been consummated and (y) at least 15% of the total issued and outstanding
common stock of ACP Holdings, the Company or Holdings (or, for purposes of
Section 4.11, any Restricted Subsidiary) has been distributed by means of an
effective registration statement under the Securities Act.
"Purchase Agreement" means the Purchase Agreement dated June 26,
1997 among the Company and the Initial Purchaser.
"Purchase Money Indebtedness" means Indebtedness (i) consisting
of the deferred purchase price of an asset or assets (including Capital Stock
and the assets of an ongoing business) including additions and improvements, any
conditional sale obligation, any obligation under any title retention agreement
or any other purchase money obligation or (ii) incurred to finance the
acquisition by the Company or a Restricted Subsidiary of an asset or assets
(including Capital Stock and the assets of a Related Business), including
additions and improvements; provided that in the case of clause (i) the Average
Life of such Indebtedness is less than the anticipated useful life of assets
having an aggregate fair market value representing more than 50% of the
aggregate fair market value of all assets so acquired and that in the case of
clauses (i) and (ii) such Indebtedness is incurred within 180 days after the
acquisition by the Company or Restricted Subsidiary of such asset or assets, or
is in existence with respect to any asset or other property at the time such
asset or property is acquired.
"Redemption Date" means the date on which the Securities are
optionally redeemed pursuant to Section 3.07.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances" and "refinanced"
<PAGE> 31
23
shall have a correlative meaning) any Indebtedness existing on the Original
Issue Date or Incurred in compliance with this Indenture and the Original
Indenture (including Indebtedness of the Company that refinances Indebtedness of
any Restricted Subsidiary (to the extent permitted in this Indenture and the
Original Indenture) and Indebtedness of any Restricted Subsidiary that
refinances Indebtedness of that or another Restricted Subsidiary of the
Company), including Indebtedness that refinances Refinancing Indebtedness;
provided, however, that (i) the Refinancing Indebtedness has a Stated Maturity
no earlier than the Stated Maturity of the Indebtedness being refinanced; (ii)
the Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average Life of
the Indebtedness being refinanced; (iii) such Refinancing Indebtedness is
Incurred in an aggregate principal amount (or, if issued with original issue
discount, an aggregate issue price) that is equal to or less than the aggregate
principal amount (or, if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being refinanced plus the
amount of any premium reasonably determined by the Company or such Restricted
Subsidiary, as applicable, as necessary at the time of such refinancing to
accomplish such refinancing or required pursuant to the terms thereof, plus the
amount of expenses of the Company or such Restricted Subsidiary, as applicable,
Incurred in connection with such refinancing; and (iv) if the Indebtedness being
refinanced is subordinated in right of payment to the Securities, such
Refinancing Indebtedness is subordinated in right of payment to the Securities
to the extent of the Indebtedness being refinanced; provided further, however,
that Refinancing Indebtedness shall not include Indebtedness of the Company or a
Restricted Subsidiary that refinances Indebtedness of an Unrestricted
Subsidiary.
"Registered Exchange Offer" shall have the meaning set forth in
the Exchange and Registration Rights Agreement.
"Related Business" means any business of the Company and the
Restricted Subsidiaries as conducted on the Original Issue Date and any business
related, ancillary or complementary thereto.
"Restricted Subsidiary" means any Subsidiary of
the Company other than an Unrestricted Subsidiary.
"S&P" means Standard and Poor's Ratings Group, a division of
McGraw-Hill, Inc., and its successors.
<PAGE> 32
24
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired by the Company or a Restricted
Subsidiary whereby the Company or such Restricted Subsidiary transfers such
property to a Person and the Company or such Restricted Subsidiary leases it
from such Person, other than leases between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" of the Company means any Indebtedness of
the Company secured by a Lien. "Secured Indebtedness" of any Guarantor
Subsidiary has a correlative meaning.
"Securities" means, collectively, the Initial Securities and,
when and if issued as provided in the Exchange and Registration Rights
Agreement, the Exchange Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depository), or any successor entity
thereto and shall initially be the Trustee.
"Senior Bank Facilities" means the credit agreement dated as of
the Original Issue Date, as amended, waived or otherwise modified from time to
time, among Holdings, the Company, the lenders party thereto from time to time,
and The Chase Manhattan Bank, a New York banking corporation, as agent (except
to the extent that any such amendment, waiver or other modification thereto
would be prohibited by the terms of this Indenture.
"Senior Indebtedness" of the Company means all principal of,
premium (if any), accrued interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not a claim for post-filing interest is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees and
other amounts owing with respect to all Indebtedness of the Company, and
including all Bank Indebtedness, whether outstanding on the Issue Date or
thereafter incurred, unless in the instrument creating or evidencing the same or
pursuant to which the same is
<PAGE> 33
25
outstanding it is expressly provided that such obligations are not superior in
right of payment to the Securities; provided, however, that Senior Indebtedness
shall not include (1) any obligation of the Company to any Subsidiary, (2) any
liability for federal, foreign, state, local or other taxes owed or owing by the
Company, (3) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities), (4) any Indebtedness or obligation of the Company
which is subordinate or junior in any respect (other than as a result of the
Indebtedness being unsecured) to any other Indebtedness or obligation of the
Company, including any Senior Subordinated Indebtedness and any Subordinated
Obligations, (5) any obligations with respect to any Capital Stock or (6) any
Indebtedness Incurred in violation of this Indenture. "Senior Indebtedness" of
any Guarantor Subsidiary has a correlative meaning.
"Senior Subordinated Indebtedness" means the Securities and any
other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Securities and is not subordinated
by its terms to any Indebtedness or other obligation of the Company which is not
Senior Indebtedness. "Senior Subordinated Indebtedness" of any Guarantor
Subsidiary has a correlative meaning.
"Shelf Registration Statement" shall have the meaning set forth
in the Exchange and Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of clause
(w)(1) or (2) of Rule 1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the purchase of
such security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" of the Company means any Indebtedness
of the Company (whether outstanding on the Original Issue Date or thereafter
Incurred) which is
<PAGE> 34
26
expressly subordinate in right of payment to the Securities pursuant to a
written agreement. "Subordinated Obligation" of any Guarantor Subsidiary shall
have a correlative meaning.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers, trustees or members of any other
governing body thereof is at the time owned or controlled, directly or
indirectly, by (i) such Person or (ii) one or more Subsidiaries of such Person.
"Subsidiary Guaranty" means any Guarantee of the Securities which
may from time to time be executed and delivered pursuant to the terms of this
Indenture. Each such Subsidiary Guaranty shall be in the form prescribed in this
Indenture.
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations (x) of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof or (y) of any foreign country recognized by the United States of
America rated at least "A" by S&P or "A-1" by Moody's; (ii) investments in time
deposit accounts, certificates of deposit and money market deposits maturing
within 365 days of the date of acquisition thereof issued by a bank or trust
company which is organized under the laws of the United States of America, any
state thereof or any foreign country recognized by the United States of America
having capital and surplus in excess of $250,000,000 (or the foreign currency
equivalent thereof) and whose long-term debt is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act); (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above; (iv) investments in
commercial paper, maturing not more than 365 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America or any foreign
country recognized by the United States of America with a rating at the time as
of which any investment therein is made of "P-1" (or higher)
<PAGE> 35
27
according to Moody's or "A-1" (or higher) according to S&P; (v) investments in
securities with maturities of six months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or "A" by Moody's; (vi) any money market deposit
accounts issued or offered by a domestic commercial bank or a commercial bank
organized and located in a country recognized by the United States of America,
in each case, having capital and surplus in excess of $250,000,000 (or the
foreign currency equivalent thereof), or investments in money market funds
complying with the risk limiting conditions of Rule 2a-7 (or any successor rule)
of the Commission under the Investment Company Act of 1940, as amended; and
(vii) similar investments approved by the Board of Directors in the ordinary
course of business.
"Total Assets" means, at any date of determination, the total
consolidated assets of the Company and its Restricted Subsidiaries, as set forth
on the Company's then most recent consolidated balance sheet.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section
Section 77aaa-77bbbb) as in effect on the date of this Indenture.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled by, and published in, the most recent Federal Reserve Statistical
Release H.15(519) which has become publicly available at least two Business Days
prior to the date fixed for redemption of the Securities following a Change of
Control (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the then
remaining Average Life to Stated Maturity of the Securities; provided, however,
that if the Average Life to Stated Maturity of the Securities is not equal to
the constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such
<PAGE> 36
28
yields are given, except that if the Average Life to Stated Maturity of the
Securities is less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant maturity of one year
shall be used.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President,
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial
Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
that at the time of determination shall be designated an Unrestricted Subsidiary
by the Board of Directors in the manner provided below and (ii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of,
or owns or holds any Lien on any property of, the Company or any other
Restricted Subsidiary of the Company that is not a Subsidiary of the Subsidiary
to be so designated; provided, however, that either (A) the Subsidiary to be so
designated has total Consolidated assets of $1,000 or less or (B) if such
Subsidiary has Consolidated assets greater than $1,000, then such designation
would be permitted under the Section 4.04. The Board of Directors may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however,
that immediately after giving effect to such designation (x) the Company could
Incur $1.00 of additional Indebtedness under paragraph (a) of Section 4.03 and
(y) no Default shall have occurred and be continuing. Any such designation by
the Board of Directors shall be evidenced to the Trustee by promptly filing with
the Trustee a copy of the resolution of the Board of Directors giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of
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29
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares and, to the
extent required by local ownership laws in foreign countries, shares owned by
foreign shareholders) is owned by the Company or another Wholly Owned Subsidiary
(including shares held of record by a nominee for the benefit of the Company or
another Wholly Owned Subsidiary).
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SECTION 1.02. Other Definitions.
Term Defined in
---- Section
-------
"Affiliate Transaction"........................................... 4.07
"Bankruptcy Law".................................................. 6.01
"covenant defeasance option"...................................... 8.01(b)
"Custodian"....................................................... 6.01
"Event of Default"................................................ 6.01
"IAI"............................................................. 2.01(b)
"IAI Global Note"................................................. 2.01(b)
"legal defeasance option"......................................... 8.01(b)
"Legal Holiday"................................................... 13.08
"Obligations"..................................................... 10.01
"Offer"........................................................... 4.06(b)
"Offer Amount".................................................... 4.06(c)
"Offer Period".................................................... 4.06(c)
"Offshore Securities Exchange Date"............................... 2.01(c)
"Paying Agent".................................................... 2.03
"Permanent Offshore Physical Securities".......................... 2.01(c)
"Purchase Date"................................................... 4.06(c)
"QIB Global Note"................................................. 2.01(b)
"QIBs"............................................................ 2.01(b)
"Registrar"....................................................... 2.03
"Restricted Payment".............................................. 4.04
"Rule 144A"....................................................... 2.01(b)
"Successor Company"............................................... 5.01
"Temporary Offshore Physical Securities".......................... 2.01(c)
"U.S. Global Security"............................................ 2.01(b)
"U.S. Physical Securities"........................................ 2.01(d)
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SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture Securityholder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate
or junior to Secured Indebtedness of the Company or a Guarantor
Subsidiary, as the case may be, merely by virtue of its nature as
unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a
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balance sheet of the issuer dated such date prepared in accordance with
GAAP and accretion of principal on such security shall be deemed to be
the Incurrence of Indebtedness; and
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. (a) The Initial Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture, and as otherwise provided in this Article II. Any Exchange Securities
and the Trustee's certificate of authentication shall be substantially in the
form of Exhibit B, which is incorporated in and expressly made a part of this
Indenture, and as otherwise provided in this Article II. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company or any Guarantor Subsidiary is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). Each Security shall be dated the date of its
authentication. The terms of the Securities set forth in Exhibit A and B are
part of the terms of this Indenture. The Securities shall be issuable only in
registered form without coupons and only in denominations of $1,000 and integral
multiples thereof.
(b) The Initial Securities are being offered and sold by the
Company pursuant to the Purchase Agreement. Initial Securities offered and sold
to "qualified institutional buyers" (as defined in Rule 144A under the
Securities Act) ("QIBs") and institutional "Accredited Investors" (within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) ("IAIs"),
in each case in accordance with Rule 144A under the Securities Act ("Rule 144A")
as provided in the Purchase Agreement, shall be issued on the Issue Date
initially in the form of two permanent global Securities (with separate CUSIP
numbers) substantially in the form set forth in Exhibit A (each a "U.S. Global
Security") deposited with the Trustee, as
<PAGE> 41
33
custodian for the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. One U.S. Global Security (which may be
represented by more than one certificate, if so required by the Depositary's
rules regarding the maximum principal amount to be represented by a single
certificate) will represent Initial Securities sold to QIBs (the "QIB Global
Note"), and the other will represent Initial Securities sold to IAIs (the "IAI
Global Note"). The aggregate principal amount of each U.S. Global Security may
from time to time be increased or decreased by adjustments made on the records
of the Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided. Transfers of Initial Securities from QIBs to IAIs, and from IAIs to
QIBs, will be represented by appropriate increases and decreases to the
respective amounts of the appropriate U.S. Global Securities, as more fully
provided in Section 2.13.
(c) Initial Securities offered and sold in reliance on Regulation
S, if any, shall be issued initially in the form of temporary certificated
Securities in registered form substantially in the form set forth in Exhibit A
(the "Temporary Offshore Physical Securities"). The Temporary Offshore Physical
Securities will be registered in the name of, and held by, a temporary
certificate holder designated by the Initial Purchaser until the later of the
completion of the distribution of the Initial Securities and the termination of
the "restricted period" (as defined in Regulation S) with respect to the offer
and sale of the Initial Securities (the "Offshore Securities Exchange Date").
The Company shall promptly notify the Trustee in writing of the occurrence of
the Offshore Securities Exchange Date and, at any time following the Offshore
Securities Exchange Date, upon receipt by the Trustee and the Company of a
certificate substantially in the form set forth in Exhibit E, the Company shall
execute, and the Trustee shall authenticate and deliver, one or more permanent
certificated Securities in registered form substantially in the form set forth
in Exhibit A (the "Permanent Offshore Physical Securities") in exchange for the
Temporary Offshore Physical Securities of like tenor and amount.
(d) Initial Securities offered and sold other than as described
in the preceding two paragraphs, if any, shall be issued in the form of
permanent certificated Securities in registered form in substantially the form
set forth in Exhibit A (the "U.S. Physical Securities").
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34
(e) The Temporary Offshore Physical Securities, Permanent
Offshore Physical Securities and U.S. Physical Securities are sometimes
collectively herein referred to as the "Physical Securities".
SECTION 2.02. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and deliver (1) Initial Securities
for original issue in an aggregate principal amount of $45,000,000 and (2)
Exchange Securities for issue only in a Registered Exchange Offer, pursuant to
the Exchange and Registration Rights Agreement, for Initial Securities for a
like principal amount of Initial Securities exchanged pursuant thereto, in each
case upon a written order of the Company signed by two Officers or by an Officer
and either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the amount of the Securities to be authenticated, the date
on which the original issue of Securities is to be authenticated and whether the
Securities are to be Initial Securities or Exchange Securities. The aggregate
principal amount of Securities outstanding at any time may not exceed
$45,000,000 except as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Any such appointment
shall be evidenced by an instrument signed by an authorized officer of the
Trustee, a copy of which shall be furnished to the Company. Unless limited by
the terms of such appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
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35
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities 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 shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the provi-
sions of this Indenture that relate to such agent. The Company shall notify the
Trustee 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 and shall
be entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
The Company initially appoints The Depository Trust Company to
act as Depositary with respect to the Global Securities.
The Company may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided that no
such removal shall become effective until (1) acceptance of an appointment by a
successor as evidenced by an appropriate agreement entered into by the Company
and such successor Registrar or Paying Agent, as the case may be, and delivered
to the Trustee or (2) notification to the Trustee that the Trustee shall serve
as Registrar or Paying Agent until the appointment of a successor in accordance
with clause (1) above. The Registrar or Paying Agent may resign at any time upon
written notice; provided, however, that the Trustee may resign as Paying Agent
or Registrar only if the Trustee also resigns as Trustee in accordance with
Section 7.08.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each
due date of the principal and interest on any Security, the Company shall
deposit with the Paying
<PAGE> 44
36
Agent (or if the Company or a Subsidiary is acting as Paying Agent, segregate
and hold in trust for the benefit of the Persons entitled thereto) a sum
sufficient to pay such principal and interest when so becoming due. The Company
shall require each Paying Agent (other than the Trustee) to agree in writing
that the Paying Agent shall hold in trust for the benefit of Securityholders or
the Trustee all money held by the Paying Agent for the payment of principal of
or interest on the Securities and shall notify the Trustee of any default by the
Company in making any such payment. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate the money held by it as Paying Agent and hold
it as a separate trust fund. The Company at any time may require a Paying Agent
to pay all money held by it to the Trustee and to account for any funds
disbursed by the Paying Agent. Upon complying with this Section, the Paying
Agent shall have no further liability for the money delivered to the Trustee.
Any money deposited with any Paying Agent, or then held by the
Company or a Subsidiary in trust for the payment of principal or interest on any
Security and remaining unclaimed for two years after such principal and interest
has become due and payable shall be paid to the Company at its request, or, if
then held by the Company or a Subsidiary, shall be discharged from such trust;
and the Securityholders shall thereafter, as unsecured general creditors, look
only to the Company for payment thereof, and all liability of the Paying Agent
with respect to such money, and all liability of the Company or such Subsidiary
as trustee thereof, shall thereupon cease.
SECTION 2.05. Securityholder 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 Securityholders. If the Trustee is not the
Registrar, the Company shall furnish, or cause the Registrar to furnish, to the
Trustee, in writing at least five Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401(l)
of the
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37
Uniform Commercial Code are met. When Securities are presented to the Registrar
or a co-registrar with a request to exchange them for an equal principal amount
of Securities of other denominations, the Registrar shall make the exchange as
requested if the same requirements are met. To permit registration of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's or co-registrar's request. The Company may require
payment of a sum sufficient to pay all taxes, assessments or other governmental
charges in connection with any transfer or exchange pursuant to this Section.
The Company shall not be required to make and the Registrar need not register
transfers or exchanges of Securities selected for redemption (except, in the
case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest, if any, on such Security and for all other
purposes whatsoever, whether or not such Security is overdue, and none of the
Company, the Trustee, the Paying Agent, the Registrar or any co registrar shall
be affected by notice to the contrary.
Any Holder of a U.S. Global Security shall, by acceptance of such
Global Note, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by the Holder of
such Global Security(or its agent), and that ownership of a beneficial interest
in such Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to
this Section 2.06 will evidence the same debt and will be entitled to the same
benefits under this Indenture as the Securities surrendered upon such transfer
or exchange.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies the Company or
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38
the Trustee within a reasonable time after he has notice of such loss,
destruction or wrongful taking and the Registrar does not register a transfer
prior to receiving such notification, (ii) makes such request to the Company or
the Trustee prior to the Security being acquired by a bona fide purchaser and
(iii) satisfies any other reasonable requirements of the Trustee. If required by
the Trustee or the Company, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Trustee to protect the Company, the Trustee,
the Paying Agent, the Registrar and any co-registrar from any loss that any of
them may suffer if a Security is replaced. The Company and the Trustee may
charge the Holder for their expenses in replacing a Security. In the event any
such mutilated, lost, destroyed or wrongfully taken Security has become or is
about to become due and payable, the Company in its discretion may pay such
Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the
Company.
The provisions of this Section 2.07 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.08. Outstanding Securities. Securities outstanding at
any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to
be outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and interest payable on that date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case may be,
and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
<PAGE> 47
39
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or any of its Affiliates shall be disregarded,
except that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities
which the Trustee knows or has reason to know are so owned shall be disregarded.
SECTION 2.09. Temporary Securities. Until Definitive Securities
and Global Securities are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate Definitive
Securities and deliver them in exchange for temporary Securities upon surrender
of such temporary Securities at the office or agency of the Company, without
charge to the Holder.
SECTION 2.10. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancellation unless the Company directs the Trustee to deliver canceled
Securities to the Company. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
The Trustee shall not authenticate Securities in place of canceled Securities
other than pursuant to the terms of this Indenture.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail or cause to be
mailed to each Securityholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
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The Company may make payment of any defaulted interest in any
other lawful manner not inconsistent with the requirements (if applicable) of
any securities exchange on which the Securities 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 paragraph, such
manner of payment shall be deemed practicable by the Trustee.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 2.13. Book-Entry Provisions for U.S. Global Security.
(a) Each U.S. Global Security initially shall (i) be registered
in the name of the Depositary for such U.S. Global Security or the nominee of
such Depositary and (ii) be delivered to the Trustee as custodian for such
Depositary.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any U.S. Global
Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under such U.S. Global Security, and the Depositary may be treated
by the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such U.S. Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or shall impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a Holder of any
Security.
(b) Transfers of a U.S. Global Security shall be limited to
transfers of such U.S. Global Security in whole, but not in part, to the
Depositary, its successors or their respective nominees. Interests of beneficial
owners in a
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41
U.S. Global Security may be transferred in accordance with the rules and
procedures of the Depositary and the provisions of Section 2.14. If required to
do so pursuant to any applicable law or regulation, beneficial owners may obtain
U.S. Physical Securities in exchange for their beneficial interests in a U.S.
Global Security upon written request in accordance with the Depositary's and the
Registrar's procedures. In addition, U.S. Physical Securities shall be
transferred to all beneficial owners in exchange for their beneficial interests
in a U.S. Global Security if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such U.S. Global Security or
the Depositary ceases to be a clearing agency registered under the Exchange Act,
at a time when the Depositary is required to be so registered in order to act as
Depositary, and in each case a successor depositary is not appointed by the
Company within 90 days of such notice or, (ii) the Company executes and delivers
to the Trustee and Security Registrar an Officers' Certificate stating that such
U.S. Global Security shall be so exchangeable or (iii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depositary.
(c) In connection with any transfer of a portion of the
beneficial interest in a U.S. Global Security pursuant to subsection (b) of this
Section to beneficial owners who are required to hold U.S. Physical Securities,
the Registrar shall reflect on its books and records the date and a decrease in
the principal amount of such U.S. Global Security in an amount equal to the
principal amount of the beneficial interest in the U.S. Global Security to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more U.S. Physical Securities of like tenor and amount.
(d) In connection with the transfer of an entire U.S. Global
Security to beneficial owners pursuant to subsection (b) of this Section, such
U.S. Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in such U.S. Global Security, an equal aggregate
principal amount of U.S. Physical Securities of authorized denominations.
(e) Any U.S. Physical Security delivered in exchange for an
interest in a U.S. Global Security pursuant to subsection (c) or subsection (d)
of this Section shall,
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except as otherwise provided by paragraph (f) of Section 2.14, bear the
applicable legend regarding transfer restrictions applicable to the U.S.
Physical Security set forth in Exhibit A.
(f) The registered holder of a U.S. Global Security may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Securities.
SECTION 2.14. Special Transfer Provisions.
Unless and until an Initial Security is transferred or exchanged
under an effective registration statement under the Securities Act, the
following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of an Initial Security to any IAI which is not a QIB
(excluding Non-U.S. Persons) that is consistent with the Private Placement
Legend:
(i) The Registrar shall register the transfer of any Initial
Security if (x) the requested transfer is at least two years after the
original issue date of the Initial Security or (y) the proposed
transferee has delivered to the Registrar a certificate substantially in
the form set forth in Exhibit C.
(ii) If the proposed transferee is an Agent Member, and the
Initial Security to be transferred consists of U.S. Physical Securities
or an interest in the QIB Global Security, upon receipt by the Registrar
of (x) the document, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depositary's and the
Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and an increase in the principal amount of
the IAI Global Security in an amount equal to (x) the principal amount
of the U.S. Physical Securities to be transferred, and the Trustee shall
cancel the U.S. Physical Security so transferred or (y) the amount of
the beneficial interest in the QIB Global Security to be so transferred
(in which case the Registrar shall reflect on its books and records the
date and an
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appropriate decrease in the principal amount of the QIB Global
Security).
(iii) If the proposed transferee is entitled to receive a U.S.
Physical Security as provided in Section 2.13 and the proposed
transferor is an Agent Member holding a beneficial interest in a U.S.
Global Security, upon receipt by the Registrar of (x) the documents, if
any, required by paragraph (i) and (y) instructions given in accordance
with the Depositary's and the Registrar's procedures therefor, the
Registrar shall reflect on its books and records the date and a decrease
in the principal amount of such U.S. Global Security in an amount equal
to the principal amount of the beneficial interest in such U.S. Global
Security to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more U.S. Physical
Securities of like tenor and amount.
(iv) If the Initial Security to be transferred consists of U.S.
Physical Securities and the proposed transferee is entitled to receive a
U.S. Physical Security as provided in Section 2.13, upon receipt by the
Registrar of the document, if any, required by paragraph (i), the
Registrar shall register such transfer and the Company shall execute,
and the Trustee shall authenticate and deliver, one or more U.S.
Physical Securities of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Security to a
QIB (excluding Non-U.S.
Persons):
(i) If the Security to be transferred consists of U.S. Physical
Securities, Temporary Offshore Physical Securities, Permanent Offshore
Physical Securities or an interest in the IAI Global Security, the
Registrar shall register the transfer if such transfer is being made by
a proposed transferor who has provided the Registrar with a certificate
substantially in the form set forth in Exhibit F hereto.
(ii) If the proposed transferee is an Agent Member, and the
Initial Security to be transferred consists of U.S. Physical Securities,
Temporary Offshore Physical Securities, Permanent Offshore Physical
Securities or an interest in the IAI Global Security, upon receipt by
the Registrar of (x) the
<PAGE> 52
44
document, if any, required by paragraph (i) and (y) instructions given
in accordance with the Depositary's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the QIB Global Security in an
amount equal to (x) the principal amount of the U.S. Physical
Securities, Temporary Offshore Physical Securities or Permanent Offshore
Physical Securities, as the case may be, to be transferred, and the
Trustee shall cancel the Physical Security so transferred or (y) the
amount of the beneficial interest in the IAI Global Security to be so
transferred (in which case the Registrar shall reflect on its books and
records the date and an appropriate decrease in the principal amount of
the IAI Global Security).
(iii) If the proposed transferee is entitled to receive a U.S.
Physical Security as provided in Section 2.13 and the proposed
transferor is an Agent Member holding a beneficial interest in a U.S.
Global Security, upon receipt by the Registrar of (x) the documents, if
any, required by paragraph (i) and (y) instructions given in accordance
with the Depositary's and the Registrar's procedures therefor, the
Registrar shall reflect on its books and records the date and a decrease
in the principal amount of such U.S. Global Security in an amount equal
to the principal amount of the beneficial interest in such U.S. Global
Security to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more U.S. Physical
Securities of like tenor and amount.
(iv) If the Initial Security to be transferred consists of U.S.
Physical Securities, Temporary Offshore Physical Securities or Permanent
Offshore Physical Securities and the proposed transferee is entitled to
receive a U.S. Physical Security as provided in Section 2.13, upon
receipt by the Registrar of the document, if any, required by paragraph
(i), the Registrar shall register such transfer and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
U.S. Physical Securities of like tenor and amount.
(c) Transfers by Non-U.S. Persons Prior to August 10, 1997. The
following provisions shall apply with
<PAGE> 53
45
respect to registration of any proposed transfer of an Initial Security by a
Non-U.S. Person prior to August 10, 1997:
(i) The Registrar shall register the transfer of any Initial
Security (x) if the proposed transferee is a Non-U.S. Person and the
proposed transferor has provided the Registrar with a certificate
substantially in the form set forth in Exhibit G hereto or (y) if the
proposed transferee is a QIB and the proposed transferor has provided
the Registrar with a certificate substantially in the form set forth in
Exhibit F hereto. Unless clause (ii) below is applicable, the Company
shall execute, and the Trustee shall authenticate and deliver, one or
more Temporary Offshore Physical Securities of like tenor and amount.
(ii) If the proposed transferee is an Agent Member in connection
with a proposed transfer of an Initial Security to a QIB, upon receipt
by the Registrar of (x) the document, if any, required by paragraph (i)
and (y) instructions given in accordance with the Depositary's and the
Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and an increase in the principal amount of
the QIB Global Security in an amount equal to the principal amount of
the Temporary Offshore Physical Security to be transferred, and the
Registrar shall cancel the Temporary Offshore Physical Securities so
transferred.
(d) Transfers by Non-U.S. Persons on or After August 10, 1997.
The following provisions shall apply with respect to any transfer of an Initial
Security by a Non-U.S. Person on or after August 10, 1997:
(i) (x) If the Initial Security to be transferred is a Permanent
Offshore Physical Note, the Registrar shall register such transfer, (y)
if the Initial Security to be transferred is a Temporary Offshore
Physical Note, upon receipt of a certificate substantially in the form
set forth in Exhibit E from the proposed transferor, the Registrar shall
register such transfer and (z) in the case of either clause (x) or (y),
unless clause (ii) below is applicable, the Company shall execute, and
the Trustee shall authenticate and deliver, one or more Permanent
Offshore Physical Securities of like tenor and amount.
(ii) If the proposed transferee is an Agent Member in connection
with a proposed transfer of an Initial
<PAGE> 54
46
Security to a QIB, upon receipt by the Registrar of instructions given
in accordance with the Depositary's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the QIB Global Security in an
amount equal to the principal amount of the Temporary Offshore Physical
Security or of the Permanent Offshore Physical Security to be
transferred, and the Trustee shall cancel the Physical Security so
transferred.
(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of an Initial Security to a
Non-U.S. Person:
(i) Prior to August 10, 1997, the Registrar shall register any
proposed transfer of an Initial Security to a Non-U.S. Person upon
receipt of a certificate substantially in the form set forth in Exhibit
G from the proposed transferor and the Company shall execute, and the
Trustee shall authenticate and make available for delivery, one or more
Temporary Offshore Physical Securities.
(ii) On and after August 10, 1997, the Registrar shall register
any proposed transfer to any Non-U.S. Person (w) if the Initial Security
to be transferred is a Permanent Offshore Physical Note, (x) if the
Initial Security to be transferred is a Temporary Offshore Physical
Note, upon receipt of a certificate substantially in the form set forth
in Exhibit E from the proposed transferor, (y) if the Initial Security
to be transferred is a U.S. Physical Security or an interest in a U.S.
Global Security, upon receipt of a certificate substantially in the form
set forth in Exhibit E from the proposed transferor and (z) in the case
of either clause (w), (x) or (y), the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Permanent Offshore
Physical Securities of like tenor and amount.
(iii) If the proposed transferor is an Agent Member holding a
beneficial interest in a U.S. Global Security, upon receipt by the
Registrar of (x) the document, if any, required by paragraph (i), and
(y) instructions in accordance with the Depositary's and the Registrar's
procedures therefor, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of such U.S.
Global Security in an amount equal to the principal amount of the
<PAGE> 55
47
beneficial interest in the U.S. Global Security to be transferred and
the Company shall execute, and the Trustee shall authenticate and
deliver, one or more Permanent Offshore Physical Securities of like
tenor and amount.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless either (i) the circumstances contemplated by
paragraph (c) of Section 2.01 (relating to Permanent Offshore Physical
Securities) or paragraph (a)(i)(x), (d)(i) or (e)(ii) of this Section 2.14 exist
or (ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(g) General. By its acceptance of any Security bearing the
Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.13 or this Section
2.14. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable written notice to the Registrar.
Interest payable on the Securities shall be computed on the basis
of a 360-day year comprised of 30-day months.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to Section 3.07, it
<PAGE> 56
48
shall notify the Trustee in writing of the redemption date and the principal
amount of Securities to be redeemed.
The Company shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein; provided, however, that an
Opinion of Counsel shall not be required in connection with a redemption
pursuant to Section 3.07. If fewer than all the Securities are to be redeemed,
the record date relating to such redemption shall be selected by the Company and
given to the Trustee, which record date shall be not less than 15 days after the
date of notice to the Trustee (unless a shorter period shall be acceptable to
the Trustee). Any such notice may be canceled by notice in writing to the
Trustee at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect.
SECTION 3.02. Selection of Securities to be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Securities, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed.
<PAGE> 57
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the certificate numbers and principal amounts of the
particular Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Securities
(or portion thereof) called for redemption ceases to accrue on and
after the redemption date;
(7) the CUSIP number, if any, printed on the Securities being
redeemed;
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities; and
(9) that if a Security is to be redeemed in part, only the
portion of the principal amount (equal to $1,000 or an integral
multiple thereof) of such Security to be redeemed and that a new
Security in the aggregate principal amount equal to the unredeemed
portion thereof will be issued without charge to the holder.
At the Company's request (which may be revoked at any time in
writing prior to the time at which the Trustee shall have given such notice to
the Holders), the Trustee shall give the notice of redemption in the Company's
name and at the Company's expense. In such event, the Company shall provide the
Trustee with the information required by this Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for
<PAGE> 58
50
redemption become due and payable on the redemption date and at the redemption
price stated in the notice. Upon surrender to the Paying Agent, such Securities
shall be paid at the redemption price stated in the notice, plus accrued
interest, if any, 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 Securityholder of the redeemed
Securities registered on the relevant record date. If mailed in the manner
provided herein, the notice shall be conclusively presumed to have been given
whether or not the Holder receives such notice. Failure to give notice or any
defect in the notice to any Holder shall not affect the validity of the notice
to any other Holder.
SECTION 3.05. Deposit of Redemption Price. At least one
Business Day prior to the redemption date, the Company shall deposit with the
Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the redemption price of and
accrued interest on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption which have been
delivered by the Company to the Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security
surrendered.
SECTION 3.07. Optional Redemption. (a) Except as set forth in
the next two paragraphs, the Securities may not be redeemed prior to May 1,
2002. On and after that date, the Company may redeem the Securities in whole or
in part, at any time at the following redemption prices (expressed in
percentages of principal amount), plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record
<PAGE> 59
51
date to receive interest due on the relevant interest payment date that is on or
prior to the date of redemption), if redeemed during the 12-month period
beginning on or after May 1 of the years set forth below:
<TABLE>
<CAPTION>
Redemption
Period Price
- ------ -----
<S> <C>
2002 ............................................. 105.5625%
2003 ............................................. 103.7083%
2004 ............................................. 101.8542%
2005 and thereafter............................... 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, at any time on or prior to
May 1, 2000, the Company may redeem in the aggregate up to 40% of the original
aggregate principal amount of Securities with the proceeds of one or more Public
Equity Offerings following which there is a Public Market, at a redemption price
(expressed as a percentage of principal amount thereof) of 111.125% plus accrued
and unpaid interest, if any, to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date that is on or prior to the date of redemption);
provided, however, that at least 60% of the original aggregate principal amount
of the Securities must remain outstanding after each such redemption.
(c) Notwithstanding paragraphs (a) and (b) above, the Company
shall not redeem the Original Securities unless, substantially concurrently with
such redemption, the Company redeems an aggregate principal amount of Securities
(rounded to the nearest integral multiple of $1000) equal to the product of: (1)
a fraction, the numerator of which is the aggregate principal amount of Original
Securities to be so redeemed and the denominator of which is the aggregate
principal amount of Original Securities outstanding immediately prior to such
proposed redemption, and (2) the aggregate principal amount of Securities
outstanding immediately prior to such proposed redemption. The Company shall not
redeem the Securities unless, substantially concurrently with such redemption,
the Company redeems an aggregate principal amount of Original Securities
(rounded to the nearest integral multiple of $1000) equal to the product of: (1)
a fraction, the numerator of which is the aggregate principal amount of
Securities to be so redeemed and the denominator of which is the aggregate
principal amount of Securities outstanding immediately prior to such
<PAGE> 60
52
proposed redemption, and (2) the aggregate principal amount of Original
Securities outstanding immediately prior to such proposed redemption.
(d) At any time prior to May 1, 2002, the Securities may be
redeemed, in whole or in part, at any time within 180 days after a Change of
Control, at a redemption price equal to the sum of (i) the principal amount
thereof plus (ii) accrued and unpaid interest, if any, to the redemption date
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption) plus (iii) the Applicable Premium.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal and interest then due and the Trustee or the Paying Agent, as the
case may be, is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company
may not be required to be or remain subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall file with the SEC
(after the date that either the Exchange Offer, Registration Statement or the
Shelf Registration Statement becomes effective), and provide (both prior to and
after such effective date) the Trustee and Securityholders and prospective
Securityholders (upon request) with the annual reports and the information,
documents and other reports which are specified in Section 13 or 15(d) of the
Exchange Act. The Company also shall comply with the other provisions of TIA
Section 314(a).
<PAGE> 61
53
SECTION 4.03. Limitation on Indebtedness. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, Incur any
Indebtedness (other than pursuant to the following paragraph (b)) unless on the
date of such Incurrence the Consolidated Coverage Ratio exceeds 2.00 to 1.
(b) Notwithstanding Section 4.03(a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness consisting of revolving credit, working capital
or letters of credit financing in an aggregate principal amount at any
time outstanding not in excess of the greater of $35,000,000 and the
Borrowing Base in effect from time to time (in each case less the
aggregate amount of all repayments of principal actually made
thereunder since the Original Issue Date with Net Available Cash from
Asset Dispositions pursuant to Section 4.06(a)(iii)(A));
(ii) Indebtedness of the Company owing to and held by any
Wholly Owned Subsidiary or Indebtedness of a Restricted Subsidiary
owing to and held by the Company or any Wholly Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any
Capital Stock or any other event which results in any such Wholly Owned
Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent
transfer of any such Indebtedness (except to the Company or a Wholly
Owned Subsidiary) will be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the issuer thereof;
(iii) Indebtedness of the Company represented by the
Securities and the Original Securities;
(iv) any Indebtedness of the Company and its Restricted
Subsidiaries (other than the Indebtedness described in clauses (i) or
(ii) above) outstanding on the Original Issue Date and Indebtedness
Incurred under Section 4.03(a) of the Original Indenture prior to the
Issue Date;
(v) Indebtedness of the Company and its Restricted Subsidiaries,
(A) in respect of judgment, appeal, surety, performance and other like bonds,
bankers' acceptances and letters of credit provided by the Company and its
Restricted Subsidiaries in the ordinary course of their business and which do
not secure other Indebtedness and (B) under
<PAGE> 62
54
Commodity Agreements, Currency Agreements and Interest Rate Agreements that are
designed to protect the Company and its Restricted Subsidiaries against
fluctuations in commodity prices (for raw materials used by them), interest
rates or currency exchange rates and not for the purposes of speculation;
(vi) Indebtedness represented by Guarantees by the Company of
Indebtedness of a Restricted Subsidiary, or in respect of letters of credit
provided by the Company to support such Indebtedness, or Guarantees by a
Restricted Subsidiary of Indebtedness of the Company or a Restricted Subsidiary,
or in respect of letters of credit provided by a Restricted Subsidiary to
support such Indebtedness; provided, however, that only Indebtedness that is
incurred in compliance with this covenant may be guaranteed pursuant to this
clause (vi);
(vii) Purchase Money Indebtedness, industrial revenue bonds or similar
Indebtedness and Capitalized Lease Obligations of the Company and its Restricted
Subsidiaries in an aggregate principal amount at any time outstanding not in
excess of 10% of Total Assets;
(viii) Indebtedness of the Company or any Restricted Subsidiary
consisting of guarantees, indemnities or obligations in respect of purchase
price adjustments, in connection with the acquisition or disposition of any
business, assets or Subsidiary of the Company permitted under this Indenture;
(ix) Indebtedness of the Company and its Restricted Subsidiaries, to
the extent the proceeds thereof are immediately used after the
Incurrence thereof to purchase Original Securities or Securities,
tendered in an offer to purchase made as a result of a Change of
Control;
(x) Indebtedness of the Company or a Restricted Subsidiary owed to
(including obligations in respect of letters of credit for the benefit
of) any Person in connection with liability insurance provided by such
Person to the Company or such Restricted Subsidiary, pursuant to
reimbursement or indemnification obligations to such Person, in each
case Incurred in the ordinary course of business;
(xi) Indebtedness of the Company consisting of guarantees of up
to an aggregate principal amount of $2,000,000 of borrowings by
Management Investors in
<PAGE> 63
55
connection with purchases of Voting Stock of Holdings on or after the
Original Issue Date and in accordance with Section 4.04;
(xii) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding not in excess of
$15,000,000 million which Indebtedness may be incurred pursuant to
clause (i) above; and
(xiii) any Refinancing Indebtedness Incurred in respect of any
Indebtedness Incurred pursuant to paragraph (a) or pursuant to clause (ii),
(iv), (vii), (ix) or (xiii) of this paragraph (b).
Notwithstanding the foregoing, the Company shall not Incur any
Indebtedness if such Indebtedness is subordinate or junior in ranking in any
respect to any Senior Indebtedness of the Company unless such Indebtedness is
Senior Subordinated Indebtedness or is expressly subordinated in right of
payment to Senior Subordinated Indebtedness of the Company. In addition, the
Company shall not Incur any Secured Indebtedness which is not Senior
Indebtedness of the Company unless contemporaneously therewith effective
provision is made to secure the Securities equally and ratably with (or on a
senior basis to, in the case of Indebtedness subordinated in right of payment to
the Securities) such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien. A Guarantor Subsidiary shall not incur any
Indebtedness if such Indebtedness is subordinate or junior in ranking in any
respect to any Senior Indebtedness of the Subsidiary Guarantor unless such
Indebtedness is Senior Subordinated Indebtedness of such Subsidiary Guarantor or
is expressly subordinated in right of payment to Senior Subordinated
Indebtedness of such Subsidiary Guarantor. In addition, a Guarantor Subsidiary
shall not incur any Secured Indebtedness which is not Senior Indebtedness of
such Guarantor Subsidiary unless contemporaneously therewith effective provision
is made to secure the Subsidiary Guaranty equally and ratably with (or on a
senior basis to, in the case of Indebtedness subordinated in right of payment to
such Subsidiary Guaranty) such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
(d) For purposes of determining the outstanding principal
amount of any particular Indebtedness Incurred pursuant to this section 4.03,
(i) Indebtedness permitted by this section need not be permitted solely by
reference to one provision permitting such Indebtedness but may be
<PAGE> 64
56
permitted in part by one such provision and in part by one or more other
provisions of this provision permitting such Indebtedness and (ii) in the event
that Indebtedness or any portion thereof meets the criteria of more than one of
the types of Indebtedness described in this section, the Company, in its sole
discretion, shall classify such Indebtedness and only be required to include the
amount of such Indebtedness in one of such clauses.
SECTION 4.04. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) except dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and except
dividends or distributions payable to the Company or another Restricted
Subsidiary (and, if such Restricted Subsidiary has shareholders other than the
Company or other Restricted Subsidiaries, to its other shareholders on a pro
rata basis or on a basis that results in the receipt by the Company or a
Restricted Subsidiary of dividends or distributions of equal or greater value);
(ii) purchase, redeem, retire or otherwise acquire for value any Capital Stock
of the Company or any Restricted Subsidiary held by Persons other than the
Company or another Restricted Subsidiary; (iii) purchase, repurchase, redeem,
defease or otherwise acquire or retire for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment any Subordinated
Obligations (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition); or (iv) make any Investment (other than a
Permitted Investment) in any Person (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement, Investment or
payment being herein referred to as a "Restricted Payment") if at the time the
Company or such Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Company could not Incur at least $1.00 of additional
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount
<PAGE> 65
57
so expended, if other than in cash, to be determined in good faith by
the Board of Directors, whose determination shall be conclusive and
evidenced by a resolution of the Board of Directors) declared or made
subsequent to the Original Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) from the
Original Issue Date to the end of the most recent fiscal
quarter ending at least 45 days prior to the date of such
Restricted Payment (or, in case such Consolidated Net Income
shall be a deficit, minus 100% of such deficit);
(B) 100% of the aggregate net proceeds received by
the Company (including the fair market value (as determined in
good faith by the Board of Directors, whose determination
shall be conclusive and evidenced by a resolution of the Board
of Directors) of property received by the Company; provided,
however, that such property is related, ancillary or
complementary to any business of the Company and the
Restricted Subsidiaries conducted on the Issue Date) as a
capital contribution or from the issue or sale of its Capital
Stock (other than Disqualified Stock) of the Company or
Holdings subsequent to the Original Issue Date (other than an
issuance or sale to a Subsidiary of the Company or an employee
stock ownership plan or other trust established by the Company
or any of its Subsidiaries to the extent the purchase by such
plan or trust is financed by Indebtedness of such plan or
trust and for which the Company or a Subsidiary is liable,
directly or indirectly, as a guarantor or otherwise (including
by the making of cash contributions to such plan or trust
which are used to pay interest or principal on such
Indebtedness));
(C) the amount by which Indebtedness of the Company
or its Restricted Subsidiaries is reduced on the Company's
balance sheet upon the conversion or exchange (other than by a
Subsidiary) of any Indebtedness of the Company or its
Restricted Subsidiaries issued subsequent to the Original
Issue Date and convertible or exchangeable for Capital Stock
(other than Disqualified Stock) of the Company (less the
amount of any cash or other
<PAGE> 66
58
property (other than such Capital Stock) distributed by the
Company or any Restricted Subsidiary upon such conversion or
exchange) (including any such exchange pursuant to the
exercise of a conversion right or privilege in connection with
which cash is paid in lieu of the issuance of fractional
shares or scrip);
(D) the aggregate Net Cash Proceeds received
subsequent to the Original Issue Date by the Company or
Holdings (other than from any Restricted Subsidiary) upon the
exercise of any options or warrants to purchase Capital Stock
(other than Disqualified Stock) of the Company or Holdings;
and
(E) the amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting from (i)
payments of dividends, repayments of the principal of loans,
return of capital or advances or other transfers of assets to
the Company or any Restricted Subsidiary from Unrestricted
Subsidiaries or (ii) the redesignation of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case
as provided in the definition of "Investment") or the receipt
of proceeds from the sale or other disposition of any portion
of any Investment in an Unrestricted Subsidiary not to exceed,
in the case of any Unrestricted Subsidiary, the amount of
Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was
included in the calculation of the amount of Restricted
Payments.
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) any purchase, redemption, retirement or other acquisition
of Capital Stock or Subordinated Obligations of the Company made by
exchange for, or out of the proceeds of the substantially concurrent
sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary or an
employee stock ownership plan or other trust established by the Company
or any of its Subsidiaries to the extent the purchase by such plan or
trust is financed by Indebtedness of such plan or trust and for which
the Company or a Subsidiary is liable, directly or indirectly, as a
guarantor or
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otherwise (including by the making of cash contributions to such plan
or trust which are used to pay interest or principal on such
Indebtedness)); provided, however, that (A) such purchase, redemption,
retirement or other acquisition shall be excluded in the calculation of
the amount of Restricted Payments and (B) the Net Cash Proceeds from
such sale to the extent so used shall be excluded from Section
4.04(a)(iv)(B);
(ii) any purchase, defeasance, retirement, redemption or other
acquisition of (A) Subordinated Obligations of the Company made by
exchange for, or out of the proceeds of the substantially concurrent
sale of, Indebtedness of the Company which is permitted to be Incurred
pursuant to Section 4.03(b) or (B) Subordinated Obligations of a
Restricted Subsidiary made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Indebtedness of any Restricted
Subsidiary or the Company which is permitted to be Incurred pursuant to
Section 4.03(b); provided, however, that such purchase, defeasance,
retirement, redemption or other acquisition shall be excluded in the
calculation of the amount of Restricted Payments;
(iii) any purchase, retirement, redemption or other
acquisition of Disqualified Stock made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Disqualified Stock;
provided, however, that such purchase, retirement, redemption or other
acquisition shall be excluded in the calculation of the amount of
Restricted Payments;
(iv) any purchase or redemption of Subordinated Obligations
from Net Available Cash to the extent permitted by Section 4.06;
provided, however, that such purchase or redemption shall be excluded
in the calculation of the amount of Restricted Payments;
(v) upon the occurrence of a Change of Control and within 60
days after the completion of the offer to repurchase the Securities
pursuant to Section 4.08 (including the purchase of all Securities
tendered), any purchase, defeasance, retirement, redemption or other
acquisition of Subordinated Obligations required pursuant to the terms
thereof as a result of such Change of Control; provided, however, that
such purchase, defeasance, retirement, redemption or other acquisition
shall be included in the calculation of the amount of Restricted
Payments;
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(vi) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this covenant; provided, however, that such dividend
shall be included in the calculation of the amount of Restricted
Payments;
(vii) the repurchase, for cash or notes, of shares of, or options or
warrants to purchase shares of, or payments to Holdings to enable
Holdings to repurchase shares of, or options or warrants to purchase
shares of, Capital Stock of Holdings, the Company or any of the
Subsidiaries of the Company from present or former Management Investors
in an amount not in excess of $2,000,000 in any one year and $5,000,000
in the aggregate; provided, however, that the amount of such repurchase
shall be included in the calculation of the amount of Restricted
Payments;
(viii) payments in lieu of fractional shares in amount not in excess
of $250,000 in the aggregate;
(ix) payments by the Company to Holdings to pay Federal, state
and local taxes to the extent such taxes are attributable to the
Company and its Restricted Subsidiaries; provided, however, that such
payments shall be excluded from the calculation of the amount of
Restricted Payments;
(x) loans, advances, dividends or distributions by the Company to
Holdings to pay dividends on the common stock of Holdings following a
Public Equity Offering of such stock; but only to the extent that such
loans, advances, dividends or distributions do not exceed 6% per annum
of the net proceeds received by the Company in such Public Equity
Offering; provided, however, that the amount of such loans, advances,
dividends or distributions shall be included in the amount of
Restricted Payments; or
(xi) in each case to the extent such payments by Holdings are
attributable to the Company and its Restricted Subsidiaries, payments
by the Company to Holdings not to exceed an amount necessary to permit
Holdings to (A) make payments in respect to its indemnification
obligations owing to directors, officers or other Persons under
Holding's charter or by-laws or pursuant to written agreements with any
such Person, (B) make payments in respect of its other operational
expenses (other than taxes) incurred in the
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ordinary course of business, or (C) make payments in respect of
indemnification obligations and costs and expenses incurred by Holdings
in connection with any offering of common stock of Holdings; provided,
however, that all such payments shall be included in the calculation of
the amount of Restricted Payments.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness owed to the Company, (ii) make any
loans or advances to the Company or (iii) transfer any of its property or assets
to the Company, except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Original Issue Date;
(2) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness entered into prior to the date on which such Restricted
Subsidiary was acquired or designated as a Restricted Subsidiary by the
Company (other than as consideration in, in contemplation of, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant
to which such Restricted Subsidiary became a Restricted Subsidiary or
was otherwise acquired by the Company);
(3) any encumbrance or restriction pursuant to (x) an
agreement constituting Refinancing Indebtedness of Indebtedness
Incurred pursuant to an agreement referred to in clause (1) or (2) of
this Section or contained in any amendment to an agreement referred to
in clause (1) or (2) of this Section 4.05 or this clause (3) or (y)
Indebtedness Incurred pursuant to clause (i) of paragraph (b) of
Section 4.03; provided, however, that the encumbrances and restrictions
contained in (A) any such refinancing agreement or amendment referred
to in clause (x) above are, collectively, no more restrictive in any
material respect, than the encumbrances and restrictions contained in
such agreements (as determined in good faith by the Company) and (B)
any instrument relating to any Indebtedness referred to in clause (y)
above,
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are, collectively, no more restrictive in any material respect than the
encumbrances and restrictions contained in the Senior Bank Facilities
as in effect on the Original Issue Date (as determined in good faith by
the Company);
(4) in the case of clause (iii) of this Section 4.05, any
encumbrance or restriction contained in security agreements or
mortgages securing Indebtedness of a Restricted Subsidiary which are
not prohibited by Section 4.12 to the extent such encumbrances or
restrictions restrict the transfer of the property or assets subject to
such security agreements or mortgages;
(5) any encumbrance or restriction existing under or by reason
of applicable law;
(6) customary non-assignment provisions of any licensing
agreement or of any lease;
(7) any encumbrance or restriction contained in contracts for
sales of assets otherwise permitted by this Indenture;
(8) with respect to a Restricted Subsidiary, any encumbrance
or restriction imposed pursuant to an agreement that has been entered
into for the sale of all or substantially all of the Capital Stock of
such Restricted Subsidiary; and
(9) Purchase Money Obligations for property acquired in the
ordinary course of business that impose restrictions of the type
referred to in clause (iii) of this Section 4.05.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, make any Asset Disposition unless (i) the Company or such Restricted
Subsidiary receives 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 Disposition at least equal to the fair
market value, as may be determined (and shall be determined, to the extent an
Asset Disposition (or a series of related Asset Dispositions) involves a fair
market value greater than $1,000,000) in good faith by the Board of Directors,
whose determination shall be conclusive and evidenced by a resolution of the
Board of Directors
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(including as to the value of all non-cash consideration), of the shares and
assets subject to such Asset Disposition, (ii) in the case of an Asset
Disposition (or a series of related Asset Dispositions) having a fair market
value of $1,000,000 or more at least 80% (or 100% in the case of lease payments)
of the consideration thereof received by the Company or such Restricted
Subsidiary is in the form of cash or cash equivalents and (iii) an amount equal
to 100% of the Net Available Cash from such Asset Disposition is applied by the
Company (or such Restricted Subsidiary, as the case may be) (A) first, to the
extent the Company or such Restricted Subsidiary elects (or is required by the
terms of any Senior Indebtedness), to prepay, repay or purchase Senior
Indebtedness of the Company or a Wholly Owned Subsidiary or, in the case of a
sale by a Restricted Subsidiary which is not a Wholly Owned Subsidiary, to
prepay, repay or purchase Senior Indebtedness of such Restricted Subsidiary (in
each case other than Indebtedness owed to the Company or an Affiliate of the
Company) within 365 days after the later of the date of such Asset Disposition
or the receipt of such Net Available Cash; (B) second, to the extent of the
balance of Net Available Cash after application in accordance with clause (A),
to the extent the Company or such Restricted Subsidiary elects, to reinvest (or
enter into a binding contract to do so) in Additional Assets (including by means
of an Investment in Additional Assets by a Restricted Subsidiary with Net
Available Cash received by the Company or another Restricted Subsidiary), within
365 days from the later of such Asset Disposition or the receipt of such Net
Available Cash; (C) third, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A) and (B), to make an Offer
(as defined below) to purchase Securities and Original Securities pursuant to
and subject to the conditions of Section 4.06(b) and (D) fourth, to the extent
of the balance of such Net Available Cash after application in accordance with
clauses (A), (B) and (C), to fund (to the extent consistent with any other
applicable provision of this Indenture) any corporate purpose; provided,
however, that in connection with any prepayment, repayment or purchase of
Indebtedness pursuant to clause (A) above, the Company or such Restricted
Subsidiary shall retire such Indebtedness and shall cause the related loan
commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased. Notwithstanding the foregoing
provisions of this covenant, the Company and its Restricted Subsidiaries shall
not be required to apply any Net Available Cash in accordance with this covenant
except to the extent that the aggregate Net Available Cash from all Asset
Dispositions in any year which are not applied in
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accordance with this covenant exceed $5,000,000 in such year.
For the purposes of Section 4.06(a)(ii), the following are deemed to be
cash: (w) the assumption of Indebtedness of the Company (other than Disqualified
Stock of the Company) or any Restricted Subsidiary and the release of the
Company or such Restricted Subsidiary from all liability on such Indebtedness in
connection with such Asset Disposition, (x) securities received by the Company
or any Restricted Subsidiary from the transferee that are promptly converted by
the Company or such Restricted Subsidiary into cash, (y) Indebtedness of any
Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of
such Asset Disposition, to the extent that the Company and each other Restricted
Subsidiary is released from any Guarantee of such Indebtedness in connection
with such Asset Disposition, and (z) consideration consisting of Indebtedness of
the Company or any Restricted Subsidiary.
(b) In the event of an Asset Disposition that requires the
purchase of Securities pursuant to Section 4.06(a)(iii)(C), the Company shall be
required to purchase Securities and Original Securities, tendered pursuant to an
offer, commenced within 30 days following the expiration of the 365 day period
referred to in Section 4.06(a)(iii)(B) (or, if the Company so elects, at any
time within such 365 day period), by the Company for the Securities and Original
Securities (the "Offer") at a purchase price of 100% of their principal amount
plus accrued and unpaid interest, if any, to the date of purchase in accordance
with the procedures (including prorationing in the event of oversubscription)
set forth in Section 4.06(c) below, in the case of the Securities and Section
4.06 of the Original Indenture, in the case of the Original Securities. If the
aggregate purchase price of Securities and Original Securities tendered pursuant
to the Offer is less than the Net Available Cash allotted to the purchase of the
Securities and Original Securities, the Company shall apply the remaining Net
Available Cash in accordance with Section 4.06(a)(iii)(D) and upon completion of
the purchase of the Securities and Original Securities tendered pursuant to the
Offer, the remaining amount of Net Available Cash, if any, will be reset at
zero. The Company shall not be required to make an Offer for Securities and
Original Securities pursuant to this Section if the Net Available Cash available
therefor (after application of the proceeds as provided in clauses (A) and (B)
of Section 4.06(a)(iii)) is less than $5,000,000 (which lesser amount shall be
carried forward for purposes of determining whether an Offer is required with
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respect to the Net Available Cash from any subsequent Asset Disposition).
(c)(1) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall deliver to the
Trustee and send, by first-class mail to each Holder, a written notice stating
that the Holder may elect to have his Securities purchased by the Company either
in whole or in part (subject to prorationing as hereinafter described in the
event the Offer is oversubscribed) in integral multiples of $1,000 of principal
amount, at the applicable purchase price. The notice shall specify a purchase
date not less than 30 days nor more than 60 days after the date of such notice
(the "Purchase Date") and shall contain such information concerning the business
of the Company which the Company in good faith believes will enable such Holders
to make an informed decision (which at a minimum will include (i) the most
recently filed Annual Report on Form 10-K (including audited consolidated
financial statements) of the Company, the most recent subsequently filed
Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the Company
filed subsequent to such Quarterly Report, other than Current Reports describing
Asset Dispositions otherwise described in the offering materials (or
corresponding successor reports), (ii) a description of material developments in
the Company's business subsequent to the date of the latest of such Reports, and
(iii) if material, appropriate pro forma financial information) and all
instructions and materials necessary to tender Securities pursuant to the Offer,
together with the information contained in clause (3).
(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the Company shall deliver
to the Trustee an Officers' Certificate as to (i) the amount of the Offer (the
"Offer Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, segregate and hold in
trust) in Temporary Cash Investments an amount equal to the Offer Amount to be
held for payment in accordance with the provisions of this Section. Upon the
expiration of the period for which the Offer remains open (the "Offer Period"),
the Company shall deliver to the Trustee for cancellation the Securities or
portions thereof which have been properly tendered to and are to be accepted by
the Company. The Trustee (or paying
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agent) shall, on the Purchase Date, mail or deliver payment to each tendering
Holder in the amount of the purchase price. In the event that the aggregate
purchase price of the Securities delivered by the Company to the Trustee is less
than the Offer Amount, the Trustee (or paying agent) shall deliver the excess to
the Company (or if the Company is acting as paying agent, the Company may
release such amount from trust) promptly after the expiration of the Offer
Period for application in accordance with this Section.
(3) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders will be entitled to withdraw their election
if the Trustee or the Company receives not later than 5:00 PM Eastern Standard
Time one Business Day prior to the Purchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security which was delivered for purchase by the Holder and a
statement that such Holder is withdrawing his election to have such Security
purchased. If at the expiration of the Offer Period the aggregate principal
amount of Securities surrendered by Holders exceeds the Offer Amount, the
Company shall select the Securities to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by the Company so that only
Securities in denominations of $1,000, or integral multiples thereof, shall be
purchased). Holders whose Securities are purchased only in part will be issued
new Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate and an Opinion of Counsel stating that such Securities are
to be accepted by the Company pursuant to and in accordance with the terms of
this Section. A Security shall be deemed to have been accepted for purchase at
the time the Trustee, directly or through an agent, mails or delivers payment
therefor to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of
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this Section, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section by virtue thereof.
SECTION 4.07. Limitation on Transactions with Affiliates. (a)
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, enter into or conduct any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company (an "Affiliate Transaction") on terms
(i) that are less favorable to the Company or such Restricted Subsidiary, as the
case may be, than those that could be obtained at the time of such transaction
in arm's-length dealings with a Person who is not such an Affiliate and (ii)
that, in the event such Affiliate Transaction involves an aggregate amount in
excess of $1,000,000, are not in writing and have not been approved by a
majority of the members of the Board of Directors having no material direct or
indirect financial interest in or with respect to such Affiliate Transaction. In
addition, if such Affiliate Transaction involves an amount in excess of
$5,000,000, a fairness opinion must be obtained from a nationally recognized
appraisal or investment banking firm.
(b) The provisions of Section 4.07(a) shall not prohibit (i)
any Restricted Payment or Permitted Investment permitted to be made pursuant to
Section 4.04, (ii) fees, compensation or employee benefit arrangements paid to,
and any indemnity provided for the benefit of directors, officers or employees
of the Company, Holdings or any Subsidiary of the Company in the ordinary course
of business or any Indebtedness permitted to be Incurred pursuant to Section
4.03(b)(xii), or any payments in respect thereof, (iii) any issuance of
securities, or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment arrangements, stock options and stock
ownership plans approved by the Board of Directors, (iv) transactions pursuant
to agreements entered into or in effect on the Original Issue Date, including
amendments thereto entered into after the Original Issue Date, provided that the
terms of any such amendment are not, in the aggregate, less favorable to the
Company or such Restricted Subsidiary than the terms of such agreement prior to
such amendment and provided further that such agreements are set forth on
Schedule 4.07 hereto, (v) loans or advances to employees that are Affiliates of
the Company in the ordinary course of business, but in any event not to exceed
$2,000,000 in the aggregate outstanding at any one time,
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(vi) any transaction between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries (so long as the other stockholders of any participating
Restricted Subsidiaries which are not Wholly Owned Subsidiaries are not
themselves Affiliates of the Company) or (vii) payments with respect to
Indebtedness Incurred pursuant to Section 4.03(b)(viii).
SECTION 4.08. Change of Control. (a) Upon a Change of Control,
each Holder shall have the right to require that the Company repurchase all or
any part of such Holder's Securities at a purchase price in cash equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date, in
accordance with the terms contemplated in Section 4.08(b); provided, however,
that notwithstanding the occurrence of a Change of Control, the Company shall
not be obligated to purchase the Securities pursuant to this Section 4.08 in the
event that it has mailed notice of its election to redeem all the Securities
under Section 3.07.
(b) Subject to the proviso to Section 4.08(a), within 30 days
following any Change of Control, the Company shall mail a notice to each Holder
with a copy to the Trustee stating, among other things:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase all or any portion in
integral multiples of $1,000 of such Holder's Securities at a purchase
price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (subject
to the right of Holders of record on a record date to receive interest
due on the relevant interest payment date that is on or prior to the
date of purchase);
(2) the circumstances and relevant facts and financial
information regarding such Change of Control;
(3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent
with this Section, that a Holder must follow in order to have its
Securities or any portion thereof purchased.
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(c) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than 5:00 PM Eastern Standard
Time one Business Day prior to the purchase date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security which was delivered for purchase by the Holder and a
statement that such Holder is withdrawing his election to have such Security
purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered to the Trustee for cancellation,
and the Company shall pay the purchase price plus accrued and unpaid interest to
the purchase date, if any, to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.09. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year and
within 60 days of the end of the first three fiscal quarters of the Company an
Officers' Certificate complying with Section 314(a)(4) of the TIA and stating
that in the course of the performance by the signers of their duties as Officers
of the Company they would normally have knowledge of any Default or Event of
Default and, if such signer does know of such a Default or Event of Default, the
certificate shall describe such Default or Event of Default with particularity
and describe what actions, if any, the Company proposes to take with respect to
such Default or Event of Default.
SECTION 4.10. Further Instruments and Acts. Upon request of
the Trustee, the Company shall execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
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SECTION 4.11. Limitation on the Sale or Issuance of Capital
Stock of Restricted Subsidiaries. The Company shall not sell any shares of
Capital Stock of a Restricted Subsidiary, and shall not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell any shares of its Capital
Stock, except (i) to the Company or a Wholly Owned Subsidiary, (ii) if,
immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary, (iii) directors'
qualifying shares or (iv) in a Public Equity Offering as a result of or after
which a Public Market exists. The proceeds of any sale of such Capital Stock
permitted by clause (ii) shall be treated as Net Available Cash from an Asset
Disposition and must be applied in accordance with the terms of Section 4.06.
SECTION 4.12. Limitation on Liens. (a) The Company shall not,
and shall not permit any Guarantor Subsidiary to, directly or indirectly, create
or permit to exist any Lien (the "Initial Lien") on any of its property or
assets (including Capital Stock), whether owned on the Original Issue Date or
thereafter acquired, securing any Indebtedness other than Senior Indebtedness of
the Company in the case of the Company, or Senior Indebtedness of a Guarantor
Subsidiary, in the case of a Guarantor Subsidiary, unless contemporaneously
therewith effective provision is made to secure the Securities and, in respect
of Liens on any Guarantor Subsidiary's property or assets, the Subsidiary
Guaranty of such Guarantor Subsidiary equally and ratably with (or on a senior
basis to, in the case of Indebtedness subordinated in right of payment to the
Securities and such Subsidiary Guaranty) such obligation for so long as such
obligation is so secured. The preceding sentence shall not require the Company
or any Restricted Subsidiary to equally ratably secure the Securities if the
Initial Lien consists of Permitted Liens.
(b) Any Lien created for the benefit of the Holders of the
Securities pursuant to the foregoing paragraph (a) shall provide by its terms
that such Lien shall be automatically and unconditionally released and
discharged upon the release and discharge of the Initial Lien.
SECTION 4.13. Limitation on Sale/Leaseback Transactions. The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
any Sale/Leaseback Transaction with respect to any property unless (i) the
Company or such Restricted Subsidiary would be entitled to Incur Indebtedness in
an amount equal to the Attributable
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Debt with respect to such Sale/Leaseback Transaction pursuant to Section 4.03
and (ii) the net cash proceeds received by the Company or any Restricted
Subsidiary in connection with such Sale/Leaseback Transaction are at least equal
to the fair market value (in the case of Sale/Leaseback Transactions involving
amounts in excess of $1,000,000, as determined by the Board of Directors, whose
determination shall be conclusive and evidenced by a resolution of the Board of
Directors) of such property and (iii) the transfer of such property is permitted
by, and the Company applies the proceeds of such transaction in compliance with,
Section 4.06.
SECTION 4.14. Limitation on Lines of Business. The Company
shall not, and shall not permit any Restricted Subsidiary to, engage in any
business other than (i) a Related Business and (ii) the making of Permitted
Investments and the operations of any business that is part of a Permitted
Investment. Holdings will not engage in any business other than managing its
investment in the Company.
SECTION 4.15. Future Guarantor Subsidiaries. The Company shall
cause (a) each Restricted Subsidiary that is a Domestic Subsidiary which Incurs
Indebtedness and (b) each Restricted Subsidiary that is not a Domestic
Subsidiary and that after the Original Issue Date enters into a Guarantee of any
of the obligations of the Company, Holdings or any of the Company's Subsidiaries
pursuant to the Senior Bank Facilities to execute and deliver to the Trustee a
supplemental indenture in the form of Exhibit D hereto pursuant to which such
Subsidiary shall Guarantee payment of the Securities as provided in Section
10.06; provided, however, that such Subsidiary shall not be required to execute
and deliver a supplemental indenture pursuant to this Section in the event that
such Subsidiary is a party to this Indenture at the time of such Incurrence of
Indebtedness.
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all its assets to any Person unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation
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organized and existing under the laws of the United States of America,
any State thereof or the District of Columbia and the Successor Company
(if not the Company) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(iii) except in the case of a merger the sole purpose of which
is to change the Company's jurisdiction of incorporation, immediately
after giving effect to such transaction, the Successor Company would be
able to Incur an additional $1.00 of Indebtedness under Section
4.03(a);
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount which
is not less than the Consolidated Net Worth of the Company immediately
prior to such transaction; and
(v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.
Notwithstanding the foregoing clauses (ii), (iii) and (iv),
any Restricted Subsidiary may consolidate with, merge into or transfer all or
part of its properties and assets to the Company.
The Successor Company shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture, but the predecessor Company in the case of a conveyance, transfer or
lease of all or substantially all its assets shall not be released from the
obligation to pay the principal of and interest on the Securities.
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ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default"
occurs if:
(1) a default occurs in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article X, and such default continues
for a period of 30 days;
(2) a default occurs in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity,
upon optional redemption, upon required repurchase, upon declaration or
otherwise, whether or not such payment shall be prohibited by Article
X;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.11, 4.12, 4.13, 4.14 or 4.15 (other than a
failure to purchase Securities when required under Section 4.06 or
4.08) and such failure continues for 30 days after the notice specified
in the penultimate paragraph of this Section 6.01;
(5) the Company or any Guarantor Subsidiary fails to comply
with any of its agreements in the Securities or this Indenture (other
than those referred to in (1), (2), (3) or (4) above) and such failure
continues for 60 days after the notice specified in the penultimate
paragraph of this Section 6.01;
(6) Indebtedness of the Company or any Significant Subsidiary
is not paid within any applicable grace period after final maturity or
the acceleration of any such Indebtedness by the holders of such
Indebtedness because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds $5,000,000 or its foreign
currency equivalent at the time;
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(7) the Company or any Restricted Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property;
(D) makes a general assignment for the benefit of
its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Restricted Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Restricted Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Restricted Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(9) the rendering of any judgment or decree for the payment of
money in excess of $5,000,000 or its foreign currency equivalent (net
of amounts paid within 30 days of such judgment or decree under any
insurance, indemnity, bond, surety or similar instrument) against
the Company or any Restricted Subsidiary and is not discharged, waived
or stayed and either (A) an enforcement proceeding is commenced with
respect to such judgment or decree or (B) such judgment or decree
remains outstanding the later of (i) the day which is the sixtieth day
after the judgment is rendered and (ii) the day on which any right to
appeal expires; or
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(10) any Subsidiary Guaranty ceases to be in full force and
effect (except as contemplated by the terms thereof) or any Guarantor
Subsidiary shall deny or disaffirm its obligations under this Indenture
or any Subsidiary Guaranty and such Default continues for 10 days.
The foregoing shall constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected 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.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4) or (5) is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
outstanding Securities notify the Company of the Default and the Company does
not cure such Default within the time specified in clauses (4) or (5) hereof
after receipt of such notice. Such notice must specify the Default, demand that
it be remedied and state that such notice is a "Notice of Default."
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (3), (6), (7) or (10) and any event which
with the giving of notice or the lapse of time would become an Event of Default
under clause (4), (5), (8) or (9), its status and what action the Company is
taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(7) or 6.01(8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the outstanding Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.01(7) or 6.01(8) with respect to
the Company occurs and is continuing, the principal of and
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interest on all the Securities shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Securityholders. The Holders of a majority in principal amount of the
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in principal amount of the outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 7.01, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed
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proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Security holder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or 6.01(2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
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SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents and take such other
actions, including participating as a member, voting or otherwise, of any
committee of creditors appointed in the matter, as may be necessary or advisable
in order to have the claims of the Trustee and the Securityholders allowed in
any judicial proceedings relative to the Company, any Subsidiary, their
respective creditors or their property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make 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, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
Nothing herein shall be deemed to empower the Trustee to
authorize or consent to, or accept or adopt on behalf of any Securityholder, any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Securityholder, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money
or property from the Company pursuant to this Article VI, it shall pay out the
money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Trustee shall mail to each Securityholder and the Company
a notice that
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states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Company, a suit by the Trustee, a suit by a Holder pursuant to
Section 6.07 or a suit by Holders of more than 10% in principal amount of the
Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
SECTION 6.13. Restoration of Rights and Remedies. If the
Trustee or any Securityholder 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 Securityholder, then, and in every such case, subject to any determination
in such proceeding, the Company, the Trustee and the Securityholders shall be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Company, Trustee and Securityholders
shall continue as though no such proceeding had been instituted.
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ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against 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 wilful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section and Section 7.02(e);
(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 written
direction received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
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(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. Subject to Section 7.01: (a)
The Trustee may conclusively rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through 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; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it here under
in good faith and in accordance with the advice or opinion of such counsel.
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(f) The Trustee shall be under no obligation to exercise any
of the rights or powers created in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction.
(g) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, it will not be responsible for the use
or application of any monies received by a Paying Agent other than the Trustee,
and it shall not be responsible for any statement of the Company in this
Indenture or in any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee's certificate of
authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to a Trust Officer of the Trustee, the Trustee
shall mail to each Securityholder notice of the Default within the earlier of 90
days after it occurs or 30 days after it is known to a Trust Officer or written
notice of it is received by the Trustee. Except in the case of a Default in
payment of principal of, premium (if any) or interest on any Security (including
payments pursuant to the mandatory redemption provisions of such Security, if
any), the Trustee may withhold the notice if and so long as a committee of its
Trust Officers in good faith determines that withholding the notice is in the
interests of Securityholders.
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SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with May 15, 1998, and in any event
prior to July 15 in each year, the Trustee shall mail to each Securityholder a
brief report dated as of May 15 that complies with TIA Section 313(a) (but if no
event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report shall be transmitted). The Trustee will
also comply with TIA Section 313(b) and TIA Section 313(c).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee, Paying Agent and Registrar 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 shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and other professionals. Any costs and expenses associated
with the Exchange Securities shall be paid by the Company. The Company shall
indemnify the Trustee, Paying Agent, Registrar, and each of their officers,
directors and employees (each in their respective capacities), for and hold each
of them harmless against any and all loss, liability or expense (including
attorneys' fees) incurred by them without negligence or bad faith on their part
in connection with the administration of this trust and the performance of their
duties hereunder, including the costs and expenses of defending itself against
any claim or liability in connection with the acceptance, exercise or
performance of any of its powers or duties hereunder. The Trustee, Paying Agent
and Registrar shall notify the Company of any claim for which they may seek
indemnity promptly upon obtaining actual knowledge thereof; provided that any
failure so to notify the Company shall not relieve the Company of its indemnity
obligations hereunder except to the extent the Company shall have been adversely
affected thereby. The Company shall defend the claim and the indemnified party
shall provide reasonable cooperation at the Company's expense in the defense.
Such indemnified
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parties may have separate counsel and the Company shall pay the fees and
expenses of such counsel; provided that the Company shall not be required to pay
such fees and expenses if it assumes such indemnified parties' defense and, in
such indemnified parties' reasonable judgment, there is no conflict of interest
between the Company and such parties in connection with such defense. The
Company need not pay for any settlement made without its written consent. The
Company need not reimburse any expense or indemnify against any loss, liability
or expense incurred by an indemnified party through such party's own wilful
misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee, Paying Agent or
Registrar incurs expenses after the occurrence of a Default specified in Section
6.01(7) or 6.01(8) with respect to the Company, the expenses are intended to
constitute expenses of administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company in writing. The Holders of a majority in
principal amount of the Securities may remove the Trustee by so notifying the
Company and the Trustee and may appoint a successor Trustee with the consent of
the Company, which shall not be unreasonably withheld. The Company shall remove
the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the
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office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon 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. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is
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anywhere in the Securities or in this Indenture provided that the certificate of
the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are out standing if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
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
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancelation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article III hereof and the Company irrevocably deposits with the
Trustee funds or U.S. Government Obligations on which payment of principal and
interest when due will be sufficient to pay at maturity or upon redemption all
outstanding Securities, including interest thereon to maturity or such
redemption date (other than Securities replaced pursuant to Section 2.07), and
if in either case the Company pays all other sums payable hereunder by the
Company including, but not limited to fees and expenses of the Trustee and its
counsel, then this Indenture shall, subject to Section 8.01(c), cease to be of
further effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
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(b) Subject to Sections 8.01(c), 8.02 and 8.06, the Company at
any time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12, 4.13, 4.14, 4.15,
5.01(iii) and 5.01(iv) and the operation of Sections 6.01(4), 6.01(6), 6.01(7)
(with respect to Restricted Subsidiaries only), 6.01(8) (with respect to
Restricted Subsidiaries only), 6.01(9) and 6.01(10) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Sections 6.01(4),
6.01(6), 6.01(7) (with respect to Restricted Subsidiaries only), 6.01(8) (with
respect to Restricted Subsidiaries only), 6.01(9) and 6.01(10) or because of the
failure of the Company to comply with Sections 5.01(iii) and 5.01(iv).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06 shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal,
premium (if any) and interest on the Securities to maturity or
redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without
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reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and
in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(7) or 6.01(8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for federal income tax purposes as a result of
such 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 defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders 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; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance
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and discharge of the Securities as contemplated by this Article VIII
have been complied with.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to this Section 8.02 or the principal, premium,
if any, and interest received in respect thereof other than any such tax, fee or
other charge which by law is for the account of the Holders of the outstanding
Securities.
Anything in this Section 8.02 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request, in writing, by the Company any cash in dollars or U.S. Government
Obligations held by it as provided in paragraph (d) above which, in the opinion
of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect an
equivalent legal defeasance or covenant defeasance.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the
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Trustee against any tax, fee or other charge imposed on or assessed against
deposited U.S. Government Obligations or the principal and interest received on
such U.S. Government Obligations other than any tax, fee or other charge which
by law is for the account of the Securityholders.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
SECTION 8.07. Concurrent Defeasance Of Securities And Original
Securities. The Company shall not exercise either of the defeasance options
described in this Article with respect to the Securities unless it defeases the
Original Securities equivalently and substantially simultaneously. Similarly,
the Company shall not defease the Original Securities unless it defeases the
Securities equivalently and substantially simultaneously.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company, the
Guarantor Subsidiaries and the Trustee may amend this Indenture or the
Securities without notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Section 4.15 or Article V;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities;
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provided, however, that the uncertificated Securities are issued in
registered form for purposes of Section 163(f) of the Code or in a
manner such that the uncertificated Securities are described in Section
163(f)(2)(B) of the Code;
(4) to make any change in Article X or Article XII that would
limit or terminate the benefits available to any holder of Senior
Indebtedness (or Representative therefor) under Article X or Article
XII;
(5) to add further Guarantees with respect to the Securities
or to release Guarantor Subsidiaries when permitted by the terms
hereof, or to secure the Securities;
(6) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA;
(8) to make any change that does not adversely affect the
rights of any Securityholder; or
(9) to provide for the issuance and authorization of the
Exchange Securities.
An amendment under this Section may not make any change that
adversely affects the rights under Article X or Article XII of any holder of
Senior Indebtedness of the Company or any Guarantor Subsidiary then outstanding
unless the holders of such Senior Indebtedness (or any group or representative
thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.02. With Consent of Holders. The Company, the
Guarantor Subsidiaries and the Trustee may amend this Indenture or the
Securities without notice to any Securityholder but with the written consent of
the Holders
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of at least a majority in principal amount of the Securities. The Holders of at
least a majority in principal amount of the Securities may waive compliance by
the Company or any Guarantor Subsidiary with any provision or covenant of this
Indenture or the Securities. However, without the consent of each Securityholder
affected, an amendment or waiver may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment or waiver;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article III;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any change in Article X or Article XII that adversely
affects the rights of any Securityholder under Article X or Article
XII;
(7) impair the right of any Holder to receive payment of
principal of and interest on such Holder's Securities on or after the
due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Holder's Securities.
(8) modify the Subsidiary Guarantees (except as contemplated
by the terms thereof or of this Indenture) in any manner adverse to the
Holders; or
(9) make any change in Section 6.04, Section 6.07 or the third
sentence of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article X or Article XII of any holder of
Senior Indebtedness of the Company or a Guarantor Subsidiary then outstanding
unless
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the holders of such Senior Indebtedness (or any group or representative
thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment or waiver becomes effective. After
an amendment or waiver becomes effective, it shall bind every Security holder.
An amendment or waiver becomes effective once the consents from the Holders of
the requisite percentage in principal amount of outstanding Securities are
received by the Company or the Trustee.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
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notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article IX if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture and
complies with the provisions hereof (including Section 9.03).
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Subordination of the Securities
SECTION 10.01. Agreement To Subordinate. The Company agrees,
and each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article X, to the prior payment in full of
all Senior Indebtedness of the Company and that the subordination is for the
benefit of and enforceable by the holders of Senior Indebtedness of the Company.
The Securities shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of the Company, including, without limitation, the
Original Securities, and only Indebtedness of the Company that is Senior
Indebtedness of the Company shall rank senior to the Securities in accordance
with the provisions set forth
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herein. For purposes of these subordination provisions, the Indebtedness
evidenced by the Securities is deemed to include the liquidated damages payable
pursuant to the provisions set forth in the Securities and the Exchange and
Registration Rights Agreement. All provisions of this Article X shall be
subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company and its properties:
(1) holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full of such Senior Indebtedness before
Securityholders shall be entitled to receive any payment of principal
of or interest on the Securities; and
(2) until the Senior Indebtedness of the Company is paid in
full, any payment or distribution to which Securityholders would be
entitled but for this Article X shall be made to holders of such Senior
Indebtedness as their respective interests may appear.
SECTION 10.03. Default on Senior Indebtedness of the Company.
The Company may not pay the principal of, premium (if any) or interest on the
Securities or make any deposit pursuant to Section 8.01 and may not otherwise
purchase, redeem or otherwise retire any Securities (collectively, "pay the
Securities") if (i) any Senior Indebtedness of the Company is not paid when due
or (ii) any other default on Senior Indebtedness of the Company occurs and the
maturity of such Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Senior Indebtedness has been paid in
full; provided, however, that the Company may pay the Securities without regard
to the foregoing if the Company and the Trustee receive written notice approving
such payment from the Representative of the holders of such Senior Indebtedness
with respect to which either of the events in clause (i) or (ii) of this
sentence has occurred and is continuing. During the continuance of any default
(other than a default described in clause (i) or (ii) of the preceding sentence)
with respect to any Designated Senior Indebtedness of the Company pursuant to
which the maturity thereof may be accelerated immediately without further
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notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods, the Company may not pay the
Securities for a period (a "Payment Blockage Period") commencing upon the
receipt by the Trustee (with a copy to the Company) of written notice (a
"Blockage Notice") of such default from the Representative of the holders of
the Designated Senior Indebtedness of the Company specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter (or earlier if
such Payment Blockage Period is terminated (i) by written notice to the Trustee
(with a copy to the Company) from the Person or Persons who gave such Blockage
Notice, (ii) because such Designated Senior Indebtedness has been repaid in full
or (iii) because the default giving rise to such Blockage Notice is no longer
continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in the first
sentence of this Section), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume payments
on the Securities after such Payment Blockage Period, including any missed
payments. Not more than one Blockage Notice may be given in any consecutive
360-day period, irrespective of the number of defaults with respect to
Designated Senior Indebtedness of the Company during such period; provided,
however, that if any Blockage Notice within such 360-day period is given by or
on behalf of any holders of Designated Senior Indebtedness of the Company (other
than the Bank Indebtedness), the Representative of the Bank Indebtedness may
give another Blockage Notice within such period; provided further, however, that
in no event may the total number of days during which any Payment Blockage
Period or Periods is in effect exceed 179 days in the aggregate during any 360
consecutive day period.
SECTION 10.04. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness of the Company (or the Representative of such holders) of
the acceleration. If any Designated Senior Indebtedness of the Company is
outstanding, the Company may not pay the Securities until five Business Days
after such holders or the Representative of the holders of the Designated Senior
Indebtedness of the Company receive notice of such acceleration and, thereafter,
may pay the Securities only if this Article X otherwise permits payment at that
time.
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SECTION 10.05. When Distribution Must Be Paid Over. If a
payment or distribution is made to Securityholders that because of this Article
X should not have been made to them, the Securityholders who receive the payment
or distribution shall hold such payment or distribution in trust for holders of
the Senior Indebtedness of the Company and pay it over to them as their
respective interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of
the Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness of the Company to receive distributions applicable to Senior
Indebtedness of the Company. A distribution made under this Article X to holders
of Senior Indebtedness of the Company which otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a payment by
the Company on Senior Indebtedness of the Company.
SECTION 10.07. Relative Rights. This Article X defines the
relative rights of Securityholders and holders of Senior Indebtedness of the
Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default, subject to the rights of
holders of Senior Indebtedness of the Company to receive distributions
otherwise payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of
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such payment, a Trust Officer of the Trustee receives written notice
satisfactory to it that payments may not be made under this Article X. The
Company, the Registrar or co-registrar, the Paying Agent, a Representative or a
holder of Senior Indebtedness of the Company may give the notice; provided,
however, that, if an issue of Senior Indebtedness of the Company has a
Representative, only the Representative may give the notice. The Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of any Senior Indebtedness of the
Company (or a Representative of such holder) to establish that such notice has
been given by a holder of such Senior Indebtedness or Representative thereof.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of the Company with the same rights it would have if it were
not Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article X with respect to any Senior Indebtedness of the Company which may
at any time be held by it, to the same extent as any other holder of Senior
Indebtedness of the Company; and nothing in Article VII shall deprive the
Trustee of any of its rights as such holder. Nothing in this Article X shall
apply to claims of, or payments to, the Trustee under or pursuant to Section
7.07.
SECTION 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of the Company, the distribution may be made and the notice given
to their Representative (if any).
SECTION 10.11. Article X Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article X shall not be construed
as preventing the occurrence of a Default. Nothing in this Article X shall have
any effect on the right of the Securityholders or the Trustee to accelerate the
maturity of the Securities.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of
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any Senior Indebtedness of the Company or subject to the restrictions set forth
in this Article X, and none of the Securityholders shall be obligated to pay
over any such amount to the Company or any holder of Senior Indebtedness of the
Company or any other creditor of the Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
10.02 are pending, (ii) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Security holders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness of the Company and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article X. In the event that
the Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness of the Company to
participate in any payment or distribution pursuant to this Article X, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of the
Company held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article X, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 7.01 and 7.02 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article X.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of the Company as provided in this Article X and appoints
the Trustee as attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Company. The Trustee shall
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not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of
the Company and shall not be liable to any such holders if it shall mistakenly
pay over or distribute to Securityholders or the Company or any other Person,
money or assets to which any holders of Senior Indebtedness of the Company shall
be entitled by virtue of this Article X or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness of
the Company on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Senior Indebtedness of the Company, whether such Senior Indebtedness was
created or acquired before or after the issuance of the Securities, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of such Senior Indebtedness of the Company shall be deemed conclusively
to have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Senior Indebtedness.
SECTION 10.17. Trustee's Compensation Not Prejudiced. Nothing
in this Article shall apply to amounts due to the Trustee pursuant to other
sections of this Indenture.
ARTICLE XI
Subsidiary Guarantees
SECTION 11.01. Subsidiary Guarantees. Each Guarantor
Subsidiary hereby jointly and severally unconditionally and irrevocably
guarantees, as a primary obligor and not merely as a surety, to each Holder and
to the Trustee and its successors and assigns (a) the full and punctual payment
of principal of and interest on the Securities when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary obligations of
the Company under this Indenture (including obligations to the Trustee) and the
Securities and (b) the full and punctual performance within applicable grace
periods of all other obligations of the Company whether for expenses,
indemnification or otherwise under this Indenture and the Securities (all the
foregoing being hereinafter collectively called the "Obligations"). Each
Guarantor Subsidiary further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice or further assent from each such
Guarantor Subsidiary, and that
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each such Guarantor Subsidiary shall remain bound under this Article XI
notwithstanding any extension or renewal of any Obligation.
Each Guarantor Subsidiary waives presentation to, demand of,
payment from and protest to the Company of any of the Obligations and also
waives notice of protest for nonpayment. Each Guarantor Subsidiary waives notice
of any default under the Securities or the Obligations. The obligations of each
Guarantor Subsidiary hereunder shall not be affected by (a) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Company or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (b) any extension or renewal of
any thereof; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities or any other agreement;
(d) the release of any security held by any Holder or the Trustee for the
Obligations or any of them; (e) the failure of any Holder or Trustee to exercise
any right or remedy against any other guarantor of the Obligations; or (f) any
change in the ownership of such Guarantor Subsidiary, except as provided in
Section 11.02(b).
Each Guarantor Subsidiary further agrees that its Subsidiary
Guaranty herein constitutes a guarantee of payment, performance and compliance
when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Obligations.
The obligations of each Guarantor Subsidiary hereunder shall
not be subject to any reduction, limitation, impairment or termination for any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense of setoff, counterclaim,
recoupment or termination whatsoever or by reason of the invalidity, illegality
or unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor Subsidiary herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under this Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of any
<PAGE> 110
102
Guarantor Subsidiary or would otherwise operate as a discharge of any Guarantor
Subsidiary as a matter of law or equity.
Each Guarantor Subsidiary further agrees that its Subsidiary
Guaranty herein shall continue to be effective or be reinstated, as the case may
be, if at any time payment, or any part thereof, of principal of or interest on
any Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Guarantor Subsidiary by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Obligation, each Guarantor Subsidiary hereby
promises to and shall, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (i) the unpaid principal amount of such Obligations, (ii) accrued
and unpaid interest on such Obligations (but only to the extent not prohibited
by law) and (iii) all other monetary Obligations of the Company to the Holders
and the Trustee.
Each Guarantor Subsidiary agrees that it shall 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. Each
Guarantor Subsidiary further agrees that, as between it, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in Article VI for
the purposes of any Subsidiary Guaranty herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such Obligations as provided in Article VI, such Obligations
(whether or not due and payable) shall forthwith become due and payable by such
Guarantor Subsidiary for the purposes of this Section.
Each Guarantor Subsidiary also agrees to pay any and all costs
and expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section.
<PAGE> 111
103
SECTION 11.02. Limitation on Liability. (a) Any term or
provision of this Indenture to the contrary notwithstanding, the maximum,
aggregate amount of the obligations guaranteed hereunder by any Guarantor
Subsidiary shall not exceed the maximum amount that can be hereby guaranteed
without rendering this Indenture, as it relates to any Guarantor Subsidiary,
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer or similar laws affecting the rights of creditors generally.
(b) This Subsidiary Guaranty as to any Guarantor Subsidiary
shall terminate and be of no further force or effect upon the sale or other
transfer (i) by such Guarantor Subsidiary of all or substantially all of its
assets or (ii) by the Company of all of its stock or other equity interests in
such Guarantor Subsidiary, to a Person that is not an Affiliate of the Company;
provided, however, that such sale or transfer shall be deemed to constitute an
Asset Disposition and the Company shall comply with its obligations under
Section 4.06.
SECTION 11.03. Successors and Assigns. This Article XI shall
be binding upon each Guarantor Subsidiary and its successors and assigns and
shall enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 11.04. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article XI shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article XI
at law, in equity, by statute or otherwise.
SECTION 11.05. Modification. No modification, amendment or
waiver of any provision of this Article XI, nor the consent to any departure by
any Guarantor Subsidiary therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific
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instance and for the purpose for which given. No notice to or demand on any
Guarantor Subsidiary in any case shall entitle such Guarantor Subsidiary to any
other or further notice or demand in the same, similar or other circumstances.
SECTION 11.06. Initial Guarantors; Execution of Supplemental
Indenture for Future Guarantor Subsidiaries. (a) Upon their execution and
delivery of this Indenture, the Initial Guarantors will each become Guarantor
Subsidiaries.
(b) Each Subsidiary which is required to become a Guarantor
Subsidiary pursuant to Section 4.15 shall promptly execute and deliver to the
Trustee a supplemental indenture in the form of Exhibit D hereto pursuant to
which such Subsidiary shall become a Guarantor Subsidiary under this Article XI
and shall guarantee the Obligations. Concurrently with the execution and
delivery of such supplemental indenture, the Company shall deliver to the
Trustee an Opinion of Counsel and an Officers' Certificate to the effect that
such supplemental indenture has been duly authorized, executed and delivered by
such Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating to
creditors' rights generally and to the principles of equity, whether considered
in a proceeding at law or in equity, the Subsidiary Guaranty of such Guarantor
Subsidiary is a legal, valid and binding obligation of such Guarantor
Subsidiary, enforceable against such Guarantor Subsidiary in accordance with its
terms.
ARTICLE XII
Subordination of the Subsidiary Guaranties
SECTION 12.01. Agreement To Subordinate. Each Guarantor
Subsidiary agrees, and each Securityholder by accepting a Security agrees, that
the Obligations of a Guarantor Subsidiary are subordinated in right of payment,
to the extent and in the manner provided in this Article XII, to the prior
payment in full of all Senior Indebtedness of such Guarantor Subsidiary and that
the subordination is for the benefit of and enforceable by the holders of Senior
Indebtedness of such Guarantor Subsidiary. The Obligations with respect to a
Guarantor Subsidiary shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of such Guarantor Subsidiary, and only Indebtedness of
such Guarantor Subsidiary that is Senior Indebtedness of such Guarantor
Subsidiary shall rank
<PAGE> 113
105
senior to the Obligations of such Guarantor Subsidiary in accordance with the
provisions set forth herein.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of a Guarantor Subsidiary to creditors
upon a total or partial liquidation or a total or partial dissolution of such
Guarantor Subsidiary or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Guarantor Subsidiary and its
properties:
(1) holders of Senior Indebtedness of such Guarantor
Subsidiary shall be entitled to receive payment in full of such Senior
Indebtedness before Securityholders shall be entitled to receive any
payment of any Obligations from such Guarantor Subsidiary; and
(2) until the Senior Indebtedness of such Guarantor Subsidiary
is paid in full, any payment or distribution to which Securityholders
would be entitled but for this Article XII shall be made to holders of
such Senior Indebtedness as their respective interests may appear.
SECTION 12.03. Default on Senior Indebtedness of a Guarantor
Subsidiary. A Guarantor Subsidiary may not make any payment pursuant to any of
the Obligations or repurchase, redeem or otherwise retire any Securities
(collectively, "pay its Guaranty") if (i) any Senior Indebtedness of such
Guarantor Subsidiary is not paid when due or (ii) any other default on Senior
Indebtedness of such Guarantor Subsidiary occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the default has been cured or waived and any such acceleration has been
rescinded or (y) such Senior Indebtedness has been paid in full; provided,
however, that such Guarantor Subsidiary may pay its Guaranty without regard to
the foregoing if such Guarantor Subsidiary and the Trustee receive written
notice approving such payment from the Representative of the holders of such
Senior Indebtedness with respect to which either of the events in clause (i) or
(ii) of this sentence has occurred and is continuing. During the continuance of
any default (other than a default described in clause (i) or (ii) of the
preceding sentence) with respect to any Designated Senior Indebtedness of a
Guarantor Subsidiary pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the
<PAGE> 114
106
expiration of any applicable grace periods, such Subsidiary Guarantor may not
pay its Guaranty for a period (a "Guarantor Subsidiary Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to such Guarantor
Subsidiary and the Company) of written notice (a "Guarantor Subsidiary Blockage
Notice") of such default from the Representative of the holders of the
Designated Senior Indebtedness of such Guarantor Subsidiary specifying an
election to effect a Guarantor Subsidiary Payment Blockage Period and ending 179
days thereafter (or earlier if such Guarantor Subsidiary Payment Blockage Period
is terminated (i) by written notice to the Trustee (with a copy to such
Guarantor Subsidiary and the Company) from the Person or Persons who gave such
Guarantor Subsidiary Blockage Notice, (ii) because such Designated Senior
Indebtedness has been repaid in full or (iii) because the default giving rise to
such Guarantor Subsidiary Blockage Notice is no longer continuing).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the first sentence of this Section),
unless the holders of such Designated Senior Indebtedness or the Representative
of such holders shall have accelerated the maturity of such Designated Senior
Indebtedness, such Guarantor Subsidiary may resume to pay its Guaranty after
such Guarantor Subsidiary Payment Blockage Period, including any missed
payments. Not more than one Guarantor Subsidiary Blockage Notice may be given
with respect to a Guarantor Subsidiary in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness of such Guarantor Subsidiary during such period; provided, however,
that if any Guarantor Subsidiary Blockage Notice within such 360-day period is
given by or on behalf of any holders of Designated Senior Indebtedness of such
Guarantor Subsidiary (other than the Bank Indebtedness), the Representative of
the Bank Indebtedness may give another Guarantor Subsidiary Blockage Notice
within such period; provided further, however, that in no event may the total
number of days during which any Guarantor Subsidiary Payment Blockage Period or
Periods is in effect exceed 179 days in the aggregate during any 360 consecutive
day period.
SECTION 12.04. Demand for Payment. If payment of the
Securities is accelerated because of an Event of Default and a demand for
payment is made on a Guarantor Subsidiary pursuant to Article XI the Trustee
shall promptly notify the holders of the Designated Senior Indebtedness of such
Guarantor Subsidiary (or the Representative of such holders) of such demand. If
any Designated Senior Indebtedness of such Guarantor Subsidiary is outstanding,
such Guarantor
<PAGE> 115
107
Subsidiary may not pay its Guaranty until five Business Days after such holders
or the Representative of the holders of the Designated Senior Indebtedness of
such Guarantor Subsidiary receive notice of such demand and, thereafter, may pay
its Guaranty only if this Article XII otherwise permits payment at that time.
SECTION 12.05. When Distribution Must Be Paid Over. If a
payment or distribution is made to Securityholders that because of this Article
XII should not have been made to them, the Securityholders who receive the
payment or distribution shall hold such payment or distribution in trust for
holders of the Senior Indebtedness of the relevant Guarantor Subsidiary and pay
it over to them as their respective interests may appear.
SECTION 12.06. Subrogation. After all Senior Indebtedness of a
Guarantor Subsidiary is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness of such Guarantor Subsidiary to receive distributions applicable to
Senior Indebtedness of such Guarantor Subsidiary. A distribution made under this
Article XII to holders of Senior Indebtedness of such Guarantor Subsidiary which
otherwise would have been made to Securityholders is not, as between such
Guarantor Subsidiary and Securityholders, a payment by such Guarantor Subsidiary
on Senior Indebtedness of such Guarantor Subsidiary.
SECTION 12.07. Relative Rights. This Article XII defines the
relative rights of Securityholders and holders of Senior Indebtedness of a
Guarantor Subsidiary. Nothing in this Indenture shall:
(1) impair, as between a Guarantor Subsidiary and
Securityholders, the obligation of a Guarantor Subsidiary which is
absolute and unconditional, to pay its Obligations to the extent set
forth in Article XI; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a default by a Guarantor Subsidiary under
its Obligations, subject to the rights of holders of Senior
Indebtedness of such Guarantor Subsidiary to receive distributions
otherwise payable to Securityholders.
SECTION 12.08. Subordination May Not Be Impaired by a
Guarantor Subsidiary. No right of any holder of Senior Indebtedness of a
Guarantor Subsidiary to enforce the
<PAGE> 116
108
subordination of the Obligations of such Guarantor Subsidiary shall be impaired
by any act or failure to act by such Guarantor Subsidiary or by its failure to
comply with this Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 12.03, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article XII. A Guarantor Subsidiary, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness of a Guarantor Subsidiary may give the notice; provided, however,
that, if an issue of Senior Indebtedness of a Guarantor Subsidiary has a
Representative, only the Representative may give the notice. The Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of any Senior Indebtedness of a
Guarantor Subsidiary (or a Representative of such holder) to establish that such
notice has been given by a holder of such Senior Indebtedness or Representative
thereof.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of a Guarantor Subsidiary with the same rights it would have
if it were not Trustee. The Registrar and co-registrar and the Paying Agent may
do the same with like rights. The Trustee shall be entitled to all the rights
set forth in this Article XII with respect to any Senior Indebtedness of a
Guarantor Subsidiary which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness of such Guarantor Subsidiary; and
nothing in Article VII shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article XII shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.07.
SECTION 12.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of a Guarantor Subsidiary, the distribution may be made and the
notice given to their Representative (if any).
SECTION 12.11. Article XII Not To Prevent Events of Default or
Limit Right To Accelerate. The failure of a Guarantor Subsidiary to make a
payment on any of its Obligations by reason of any provision in this Article XII
<PAGE> 117
109
shall not be construed as preventing the occurrence of a default by such
Guarantor Subsidiary under its Obligations. Nothing in this Article XII shall
have any effect on the right of the Securityholders or the Trustee to make a
demand for payment on a Guarantor Subsidiary pursuant to Article XI.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article XII, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Security holders or (iii) upon the Representatives for the holders of Senior
Indebtedness of a Guarantor Subsidiary for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
the Senior Indebtedness of a Guarantor Subsidiary and other Indebtedness of a
Guarantor Subsidiary, 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. In the event that the Trustee determines, in good faith, that
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness of a Guarantor Subsidiary to participate in any payment or
distribution pursuant to this Article XII, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness of such Guarantor Subsidiary held by such Person,
the extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article XII, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article XII.
SECTION 12.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of each of the Guarantor Subsidiaries as provided in this
Article XII and appoints the Trustee as attorney-in-fact for any and all such
purposes.
<PAGE> 118
110
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of a Guarantor Subsidiary. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness of a Guarantor
Subsidiary and shall not be liable to any such holders if it shall mistakenly
pay over or distribute to Securityholders or the relevant Guarantor Subsidiary
or any other Person, money or assets to which any holders of Senior Indebtedness
of such Guarantor Subsidiary shall be entitled by virtue of this Article XII or
otherwise.
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a
Guarantor Subsidiary on Subordination Provisions. Each Securityholder by
accepting a Security acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement and a consideration to
each holder of any Senior Indebtedness of a Guarantor Subsidiary, whether such
Senior Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively
to have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Senior Indebtedness.
ARTICLE XIII
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which
is required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail or by national
overnight courier service addressed as follows:
if to the Company or any Guarantor Subsidiary:
2121 Brooks Avenue
Neenah, WI 54957
Attention of:
Chief Financial Officer
<PAGE> 119
111
if to the Trustee:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036
Attention: Corporate Trust Division
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Security holder shall
be mailed to the Securityholder at the Securityholder's address as it appears
on the registration books of the Registrar and shall be sufficiently given if so
mailed by first class mail within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it, except that
any such notice to the Trustee must be received by a Trust Officer to be duly
given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice.
SECTION 13.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee and complying with Section 11.05 stating
that, in the opinion of the signers, all conditions precedent, if any,
provided for
<PAGE> 120
112
in this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee and complying with Section 11.05 stating
that, in the opinion of such counsel, all such conditions precedent
have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual 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
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the fore going, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action
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113
by or a meeting of Securityholders. The Registrar and the Paying Agent may make
reasonable rules for their functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which commercial banking institutions (including,
without limitation, the Federal Reserve System) are authorized or required by
law to close in New York City. If a payment date is a Legal Holiday, payment
shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If a regular record date is a
Legal Holiday, the record date shall not be affected.
SECTION 13.09. Governing Law. THIS INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 13.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company of any Guarantor
Subsidiary shall not have any liability for any obligations of the Company or
any Guarantor Subsidiary under the Securities or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 13.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 13.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 13.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
<PAGE> 122
114
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
NEENAH CORPORATION,
by
-------------------------------------
Name:
Title:
NEENAH TRANSPORT, INC.,
by
-------------------------------------
Name:
Title:
HARTLEY CONTROLS CORPORATION
by
-------------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK,
by
-------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.8
EXECUTION COPY
NEENAH CORPORATION
$45,000,000
11-1/8 % SERIES C SENIOR SUBORDINATED NOTES DUE 2007
PURCHASE AGREEMENT
June 26, 1997
CHASE SECURITIES INC.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Neenah Corporation, a Wisconsin corporation (the "Company"),
proposes to issue and sell $45,000,000 aggregate principal amount of its 11-1/8%
Series C Senior Subordinated Notes due 2007 (the "Notes"). The Notes will be
issued pursuant to an Indenture to be dated as of July 1, 1997 (the "Indenture")
between the Company and United States Trust Company of New York, as trustee (the
"Trustee") and will be guaranteed on an unsecured senior subordinated basis (the
"Guarantees", and together with the Notes, the "Securities") by the principal
operating subsidiaries of the Company (collectively, the "Guarantors"). The
Company confirms its agreement with Chase Securities Inc., (the "Initial
Purchaser") concerning the purchase of the Securities from the Company by the
Initial Purchaser.
The Securities will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon an exemption therefrom. The Company has
prepared an offering memorandum dated the date hereof (the "Offering
Memorandum") setting forth information concerning the Company, the Guarantors
and the Securities. Copies of the Offering Memorandum will be delivered by the
Company to the Initial Purchaser pursuant to the terms of this Agreement. Any
references herein to the Offering Memorandum shall be deemed to include all
amendments and supplements thereto, unless otherwise noted. The Company hereby
confirms that it has authorized the use of the Offering Memorandum in connection
with the offering and resale of the Securities by the Initial Purchaser in
accordance with Section 2.
Holders of the Securities (including the Initial Purchaser and
its direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A (the "Registration Rights Agreement"), pursuant to which the
Company and the Guarantors
<PAGE> 2
2
will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of senior
subordinated notes of the Company (the "Exchange Securities") which are
identical in all material respects to the Securities (except that the Exchange
Securities will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement").
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with, the Initial Purchaser
on and as of the date hereof and the Closing Date (as defined in Section 3)
that:
(a) The Offering Memorandum, as of the date hereof does not,
and on the Closing Date will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that the Company makes no representation or warranty as to
information contained in or omitted from the Offering Memorandum in
reliance upon and in conformity with written information relating to
the Initial Purchaser furnished to the Company by or on behalf of the
Initial Purchaser specifically for use therein (the "Initial
Purchaser's Information").
(b) The Offering Memorandum, as of the date hereof, contains
all of the information that, if requested by a prospective purchaser of
the Securities, would be required to be provided to such prospective
purchaser pursuant to Rule 144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and
warranties of the Initial Purchaser contained in Section 2 and its
compliance with the agreements set forth therein, it is not necessary,
in connection with the issuance and sale of the Securities to the
Initial Purchaser and the offer, resale and delivery of the Securities
by the Initial Purchaser in the manner contemplated by this Agreement
and the Offering Memorandum, to register the Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act").
(d) NFC Castings, Inc., a Delaware corporation ("Holdings")
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware and the Company
and each of the Company's subsidiaries have been duly incorporated and
are validly existing as corporations under the laws of the State of
Wisconsin; and each of the Company, Holdings, and each of the Company's
subsidiaries are duly qualified to do business and are in good standing
as foreign corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective
<PAGE> 3
3
businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged and to take the
actions necessary to consummate each of the transactions contemplated
by this Agreement and the Offering Memorandum (the "Transactions"),
except where the failure to so qualify or have such power or authority
would not, singularly or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), results of
operations, business or prospects of the Company and its subsidiaries
taken as a whole (a "Material Adverse Effect").
(e) The Company has a capitalization as set forth in the
Offering Memorandum under the heading "Capitalization"; all of the
outstanding shares of capital stock of Holdings, the Company, and each
of the Company's Subsidiaries have been duly and validly authorized and
issued and are fully paid and non-assessable, except as set forth in
Section 180.0622(2)(b) of the Wisconsin statutes, as judicially
interpreted; and conform in all material respects to the description
thereof contained in the Offering Memorandum. All of the outstanding
shares of capital stock of the Company and its subsidiaries will be
owned directly or indirectly by Holdings, free and clear of any lien,
charge, encumbrance, security interest, restriction upon voting or
transfer or any other claim of any third party, other than liens
arising under the Senior Bank Facilities.
(f) Each of the Company and the Guarantors have full right,
power and authority to execute and deliver any of this Agreement, the
Indenture, the Registration Rights Agreement and the Securities
(collectively, the "Transaction Documents") to which it is or will be a
party and to perform its respective obligations hereunder and
thereunder; and all corporate action required to be taken for the due
and proper authorization, execution and delivery of each of the
Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly taken.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors and constitutes a
valid and legally binding agreement of the Company and each of the
Guarantors.
(h) The Registration Rights Agreement has been or will be duly
authorized by the Company and each of the Guarantors and, when duly
executed and delivered in accordance with its terms by the Company, the
Guarantors and the Initial Purchaser, will constitute a valid and
legally binding agreement of the Company and each of the Guarantors,
enforceable against the Company and each of the Guarantors in
accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law).
<PAGE> 4
4
(i) The Indenture has been duly authorized by the Company and
each of the Guarantors and, when duly executed and delivered in
accordance with its terms by the Company and the Trustee, will
constitute a valid and legally binding agreement of the Company and
each of the Guarantors enforceable against the Company and each of the
Guarantors in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law). On
the Closing Date, the Indenture will conform in all material respects
to the requirements of the Trust Indenture Act and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder.
(j) The Securities have been duly authorized by the Company
and each of the Guarantors and, when duly executed, authenticated,
issued and delivered as provided in the Indenture and paid for as
provided herein, will be duly and validly issued and outstanding and
will constitute valid and legally binding obligations of the Company,
as primary obligor, and of each of the Guarantors, as note guarantors
entitled to the benefits of the Indenture and enforceable against the
Company and each of the Guarantors, in accordance with their terms,
except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(k) Each Transaction Document conforms in all material
respects to the description thereof contained in the Offering
Memorandum.
(l) The execution, delivery and performance by the Company,
and each of the Guarantors of each of the Transaction Documents to
which it is or will be a party, the issuance, authentication, sale and
delivery of the Securities and compliance by the Company, and each of
the Guarantors with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents (i) will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Company's subsidiaries pursuant to,
any material indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which any of them is a party
or by which any of them is bound or to which any of their respective
properties or assets are subject, except where such conflict, breach,
violation or default would not (A) result in a Material Adverse Effect
on the Company or any of the Company's subsidiaries, or (B) have a
material adverse effect on the Company's ability to perform its
obligations under any of the Transaction Documents to which it is a
party, and (ii) such actions will not result in any violation of (A)
the provisions of the charter or by-laws of the Company or any of the
Company's subsidiaries or (B) to the Company's best knowledge, any
statute or any judgment, order, decree, rule or regulation of any court
or arbitrator or governmental agency or body
<PAGE> 5
5
having jurisdiction over the Company or any of the Company's
subsidiaries or any of their properties or assets; and no consent,
approval, authorization or order of, or filing or registration with,
any such court or arbitrator or governmental agency or body under any
such statute, judgment, order, decree, rule or regulation is required
for the execution, delivery and performance by the Company and each of
the Guarantors of each of the Transaction Documents to which it is or
will be a party, the issuance, authentication, sale and delivery of the
Securities and compliance by the Company and each of the Guarantors (as
applicable) with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents, except for such
consents, approvals, authorizations, filings, registrations or
qualifications (i) which shall have been obtained or made prior to the
Closing Date and (ii) as may be required to be obtained or made under
the Securities Act and applicable state securities laws as provided in
the Registration Rights Agreement.
(m) Ernst & Young LLP are independent certified public
accountants with respect to the Company and its subsidiaries within the
meaning of Rule 101 of the Code of Professional Conduct of the American
Institute of Certified Public Accountants ("AICPA") and its
interpretations and rulings thereunder. The historical financial
statements (including the related notes) contained in the Offering
Memorandum comply in all material respects with the requirements
applicable to a registration statement on Form S-1 under the Securities
Act (except that certain consolidated financial statement schedules and
net income per common share data are omitted); such financial
statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
covered thereby and fairly present the financial position of the
entities purported to be covered thereby at the respective dates
indicated and the results of their operations and their cash flows for
the respective periods indicated; and the financial information
contained in the Offering Memorandum under the headings
"Summary--Summary Consolidated Financial and Other Data",
"Capitalization", "Selected Consolidated Financial and Other Data",
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Management--Compensation of Executive
Officers" are derived from the accounting records of the Company and
its subsidiaries and fairly present the information purported to be
shown thereby. The pro forma financial information contained in the
Offering Memorandum has been prepared on a basis consistent with the
historical financial statements contained in the Offering Memorandum
(except for the pro forma adjustments specified therein), includes all
material adjustments to the historical financial information required
by Rule 11-02 of Regulation S-X under the Securities Act and the
Exchange Act to reflect the transactions described in the Offering
Memorandum, gives effect to assumptions made on a reasonable basis and
fairly presents the historical and proposed transactions contemplated
by the Offering Memorandum and the Transaction Documents. The other
historical financial and statistical information and data included in
the Offering Memorandum are, in all material respects, fairly
presented.
<PAGE> 6
6
(n) There are no legal or governmental proceedings pending to
which the Company or any of the Company's subsidiaries is a party or of
which any of their respective property or assets is the subject which,
singularly or in the aggregate, if determined adversely to the Company
or any of the Company's subsidiaries, could reasonably be expected to
have a Material Adverse Effect; and to the best knowledge of the
Company, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(o) To the best knowledge of the Company, no action has been
taken and no statute, rule, regulation or order has been enacted,
adopted or issued by any governmental agency or body which prevents the
issuance of the Securities or suspends the sale of the Securities in
any jurisdiction; to the best knowledge of the Company, no injunction,
restraining order or order of any nature by any federal or state court
of competent jurisdiction has been issued with respect to the Company
or any of the Company's subsidiaries which would prevent or suspend the
issuance or sale of the Securities or the use of the Offering
Memorandum in any jurisdiction; no action, suit or proceeding is
pending against or, to the best knowledge of the Company, threatened
against or affecting the Company or any of the Company's subsidiaries
before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to
interfere with or adversely affect the issuance of the Securities or in
any manner draw into question the validity or enforceability of any of
the Transaction Documents or any action taken or to be taken pursuant
thereto; and the Company has complied with any and all requests by any
securities authority in any jurisdiction for additional information to
be included in the Offering Memorandum.
(p) None of the Company, Holdings or any of the Company's
subsidiaries is (i) in violation of its charter or by-laws, (ii) in
default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets are subject or (iii)
in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its
properties or assets may be subject, except for any violation or
default under clauses (ii) or (iii) that would not have a Material
Adverse Effect.
(q) The Company and each of its subsidiaries possess all
material licenses, certificates, authorizations and permits issued by,
and have made all declarations and filings with, the appropriate
federal, state or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of their respective properties
or the conduct of their respective businesses as described in the
Offering Memorandum, except where the failure to possess or make the
same would not, singularly or in the aggregate, have a Material Adverse
Effect, and none of the Company or any of its subsidiaries has received
notification of any revocation or modification of any such license,
certificate, authorization or
<PAGE> 7
7
permit or has any reason to believe that any such license, certificate,
authorization or permit will not be renewed in the ordinary course.
(r) The Company and each of its subsidiaries have filed all
federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof and have paid all taxes
due thereon, and no tax deficiency has been determined adversely to the
Company or any of its subsidiaries which has had (nor does the Company
have any knowledge of any tax deficiency which, if determined adversely
to the Company or any of its subsidiaries, could reasonably be expected
to have) a Material Adverse Effect.
(s) None of the Company, or 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"), and the rules and regulations of the
Commission thereunder 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.
(t) The Company and each of its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(u) The Company and each of its subsidiaries have insurance
covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such
losses and risks as are adequate to protect the Company and its
subsidiaries and their respective businesses. Neither the Company nor
any of its subsidiaries has received notice from any insurer or agent
of such insurer that capital improvements or other expenditures are
required or necessary to be made in order to continue such insurance.
(y) The Company and each of its subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures)
necessary for the conduct of their respective businesses; and the
Company has no reason to believe that the conduct of their respective
businesses will conflict in any material respect with, and the Company
and its subsidiaries have not received any notice of any claim of
conflict with, any such rights of others.
<PAGE> 8
8
(v) The Company and each of its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are
material to the business of the Company and its subsidiaries, in each
case free and clear of all liens (other than liens arising under the
Senior Bank Facilities), encumbrances, claims and defects and
imperfections of title except such as (i) do not materially interfere
with the use made and proposed to be made of such property by the
Company and its subsidiaries or (ii) could not reasonably be expected
to have a Material Adverse Effect.
(aa) No material labor disturbance by or dispute with the
employees of the Company or any of its subsidiaries exists or, to the
best knowledge of the Company, is contemplated or threatened.
(bb) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code")) or "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or any of the events
set forth in Section 4043(b) of ERISA (other than events with respect
to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of
the Company or any of its subsidiaries which could reasonably be
expected to have a Material Adverse Effect; each such employee benefit
plan is in compliance in all material respects with applicable law,
including ERISA and the Code; the Company and each of its subsidiaries
have not incurred and do not expect to incur liability under Title IV
of ERISA with respect to the termination of, or withdrawal from, any
pension plan for which the Company or any of its subsidiaries would
have any liability; and each such pension plan that is intended to be
qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which could reasonably be expected to cause the loss of
such qualification.
(cc) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of
any kind of toxic or other wastes or other hazardous substances by, due
to or caused by the Company or any of its subsidiaries (or, to the best
knowledge of the Company, any other entity (including any predecessor)
for whose acts or omissions the Company or any of the Company's
subsidiaries is or could reasonably be expected to be liable) upon any
of the property now or previously owned or leased by the Company or any
of its subsidiaries, or upon any other property, in violation of any
statute or any ordinance, rule, regulation, order, judgment, decree or
permit or which would, under any statute or any ordinance, rule
(including rule of common law), regulation, order, judgment, decree or
permit, give rise to any liability, except for any violation or
liability could not reasonably be expected to have, singularly or in
the aggregate with all such violations and liabilities, a Material
Adverse Effect; and there has been no disposal, discharge, emission or
other release of any kind onto such property or
<PAGE> 9
9
into the environment surrounding such property of any toxic or other
wastes or other hazardous substances with respect to which the Company
has knowledge, except for any such disposal, discharge, emission or
other release of any kind which could not reasonably be expected to
have, singularly or in the aggregate with all such discharges and other
releases, a Material Adverse Effect.
(dd) Neither the Company nor, to the best knowledge of the
Company, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of its
subsidiaries has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment
to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(ee) On and immediately after the Closing Date, the Company
(on a consolidated basis, after giving effect to the issuance of the
Securities and to the other Transactions as described in the Offering
Memorandum) will be Solvent. As used in this paragraph, the term
"Solvent" means, with respect to a particular date, that on such date
(i) the present fair market value (or present fair saleable value) of
the assets of the Company is not less than the total amount required to
pay the probable liabilities of the Company on its total existing debts
and liabilities (including contingent liabilities) as they become
absolute and matured, (ii) the Company is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations
and commitments as they mature and become due in the normal course of
business, (iii) assuming the sale of the Securities as contemplated by
this Agreement and the Offering Memorandum, the Company is not
incurring debts or liabilities beyond its ability to pay as such debts
and liabilities mature and (iv) the Company is not engaged in any
business or transaction, and is not about to engage in any business or
transaction, for which its property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in
the industry in which the Company is engaged. In computing the amount
of such contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in the light of all
the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
(ff) Except as described in the Offering Memorandum, there are
no outstanding subscriptions, rights, warrants, calls or options to
acquire, or instruments convertible into or exchangeable for, or
agreements or understandings with respect to the sale or issuance of,
any shares of capital stock of or other equity or other ownership
interest in Holdings, the Company, or any of the Company's
subsidiaries.
(gg) Neither the Company nor any of its subsidiaries owns any
"margin securities" as that term is defined in Regulations G and U of
the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), and
<PAGE> 10
10
none of the proceeds of the sale of the Securities will be used,
directly or indirectly, for the purpose of purchasing or carrying any
margin security, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the
Securities to be considered a "purpose credit" within the meanings of
Regulation G, T, U or X of the Federal Reserve Board.
(hh) None of the Company or any of the Company's subsidiaries
is a party to any contract, agreement or understanding with any person
that would give rise to a valid claim against the Company or the
Initial Purchaser for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Securities.
(ii) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(jj) None of the Company any of its affiliates or any person
acting on behalf of any of them has engaged or will engage in any
directed selling efforts (as such term is defined in Regulation S under
the Securities Act ("Regulation S")), and all such persons have
complied and will comply with the offering restrictions requirement of
Regulation S to the extent applicable.
(kk) None of the Company or any of its affiliates has,
directly or through any agent, sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any security (as such
term is defined in the Securities Act), which is or will be integrated
with the sale of the Securities in a manner that would require
registration of the Securities under the Securities Act.
(ll) None of the Company or any of its affiliates or any other
person acting on behalf of any of them has engaged, in connection with
the offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the
Securities Act.
(mm) There are no securities of the Company registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or listed on a national securities exchange or quoted in a U.S.
automated inter-dealer quotation system.
(nn) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange
Act in connection with the offering of the Securities.
(oo) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Offering Memorandum has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good
faith.
<PAGE> 11
11
(pp) None of the Company or any of its subsidiaries does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Florida Statutes Section 517.075.
(qq) Since the date as of which information is given in the
Offering Memorandum, except as contemplated by the Transactions, (i)
there has been no material adverse change or any development involving
a prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, management or business
prospects of the Company or any of its subsidiaries, whether or not
arising in the ordinary course of business, (ii) neither the Company
nor any of the subsidiaries have incurred any material liability or
obligation, direct or contingent, other than in the ordinary course of
business, (iii) neither the Company nor any of its subsidiaries have
entered into any material transaction other than in the ordinary course
of business and (iv) there has not been any change in the capital stock
or long-term debt of the Company or any of its subsidiaries, or any
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
2. Purchase and Resale of the Securities. (a) On the basis of
the representations, warranties and agreements contained herein, and subject to
the terms and conditions set forth herein, the Company agrees to issue and sell
to the Initial Purchaser, and the Initial Purchaser agrees to purchase from the
Company, $45,000,000 principal amount of Securities at a purchase price equal to
103.75% of the principal amount thereof. The Company shall not be obligated to
deliver any of the Securities except upon payment for all of the Securities to
be purchased as provided herein.
(b) The Initial Purchaser has advised the Company that it
proposes to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. The Initial
Purchaser, represents and warrants to, and agrees with, the Company that (i) it
is purchasing the Securities pursuant to a private sale exempt from registration
under the Securities Act, (ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer or sell, the Securities by means
of any form of general solicitation or general advertising within the meaning of
Rule 502(c) of Regulation D under the Securities Act ("Regulation D") or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, as part of its initial offering, only to persons whom it
reasonably believes to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the Securities Act, or if
any such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
it that each such account is a Qualified Institutional Buyer to whom notice has
been given that such sale or delivery is being made in reliance on Rule 144A and
in each case, in transactions in accordance with Rule 144A. In addition to the
foregoing, the Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchaser pursuant
to Sections 5(d) and (e), counsel for the Company and for the Initial
<PAGE> 12
12
Purchaser, respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchaser and their compliance with their agreements
contained in this Section 2, and Initial Purchaser hereby consents to such
reliance.
(c) The Company acknowledges and agrees that the Initial
Purchaser may sell Securities to any affiliate of the Initial Purchaser and that
any such affiliate may sell Securities purchased by it to the Initial Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery of
and payment for the Securities shall be made at the offices of Cravath, Swaine &
Moore ("CSM"), New York, New York, or at such other place as shall be agreed
upon by the Initial Purchaser and the Company, at 10:00 A.M., New York City
time, on July 1 1997, or at such other time or date, not later than seven full
business days thereafter, as shall be agreed upon by the Initial Purchaser and
the Company (such date and time of payment and delivery being referred to herein
as the "Closing Date").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior to
the Closing Date or by such other means as the parties hereto shall agree prior
to the Closing Date against delivery to the Initial Purchaser of the
certificates evidencing the Notes. Time shall be of the essence, and delivery at
the time and place specified pursuant to this Agreement is a further condition
of the obligations of the Initial Purchaser hereunder. Upon delivery, the Notes
shall be in global form, registered in such names and in such denominations as
the Initial Purchaser shall have requested in writing not less than two full
business days prior to the Closing Date. The Company agrees to make one or more
global certificates evidencing the Notes available for inspection by the Initial
Purchaser in New York, New York at least 24 hours prior to the Closing Date.
4. Further Agreements of the Company. The Company agrees with
the Initial Purchaser:
(a) to advise the Initial Purchaser promptly and, if
requested, confirm such advice in writing, of the happening of any
event which makes any statement of a material fact made in the Offering
Memorandum untrue or which requires the making of any additions to or
changes in the Offering Memorandum (as amended or supplemented from
time to time) in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; to advise
the Initial Purchaser promptly of any order preventing or suspending
the use of the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any
jurisdiction and of the initiation or threatening of any proceeding for
any such purpose; and to use its best efforts to prevent the issuance
of any such order preventing or suspending the use of the Offering
Memorandum or suspending any such qualification and, if any such
suspension is issued, to obtain the lifting thereof at the earliest
possible time;
<PAGE> 13
13
(b) to furnish promptly to the Initial Purchaser and counsel
for the Initial Purchaser, without charge, as many copies of the
Offering Memorandum (and any amendments or supplements thereto) as may
be reasonably requested;
(c) prior to making any amendment or supplement to the
Offering Memorandum, to furnish a copy thereof to the Initial Purchaser
and counsel for the Initial Purchaser and not to effect any such
amendment or supplement to which the Initial Purchaser shall reasonably
object by notice to the Company after a reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchaser, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel
for the Initial Purchaser or counsel for the Company, to amend or
supplement the Offering Memorandum in order that the Offering
Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is
delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Offering Memorandum to comply with applicable
law, to promptly prepare such amendment or supplement as may be
necessary to correct such untrue statement or omission or so that the
Offering Memorandum, as so amended or supplemented, will comply with
applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act and are not saleable pursuant to Rule 144(k) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request
of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to and in compliance
with Section 13 or 15(d) of the Exchange Act (the foregoing agreement
being for the benefit of the holders from time to time of the
Securities and prospective purchasers of the Securities designated by
such holders);
(f) for so long as the Securities are outstanding, to furnish
to the Initial Purchaser copies of any annual reports, quarterly
reports and current reports filed by the Company with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the Trustee or to
the holders of the Securities pursuant to the Indenture or the Exchange
Act or any rule or regulation of the Commission thereunder;
(g) to promptly take from time to time such actions as the
Initial Purchaser may reasonably request to qualify the Securities for
offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchaser may designate and to continue
such qualifications in effect for so long as required for the resale of
the Securities; and to arrange for the determination of the eligibility
for investment of the Securities under the laws of such
<PAGE> 14
14
jurisdictions as the Initial Purchaser may reasonably request; provided
that the Company and the Company's subsidiaries shall not be obligated
to qualify as foreign corporations in any jurisdiction in which they
are not so qualified or to file a general consent to service of process
in any jurisdiction;
(h) to assist the Initial Purchaser in arranging for the
Securities to be designated Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market securities in accordance
with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL
Market and for the Securities to be eligible for clearance and
settlement through the Depository Trust Company ("DTC");
(i) not to, and to cause their affiliates not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as such term is defined in the Securities Act) which
could be integrated with the sale of the Securities in a manner which
would require registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause their affiliates not to, and not to
authorize or knowingly permit any person acting on their behalf to,
solicit any offer to buy or offer to sell the Securities by means of
any form of general solicitation or general advertising within the
meaning of Regulation D or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act; and not to
offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale,
contract or disposition would cause the exemption afforded by Section
4(2) of the Securities Act to cease to be applicable to the offering
and sale of the Securities as contemplated by this Agreement and the
Offering Memorandum;
(k) for a period of 180 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement
for, or announce any offer, sale, contract for sale of or other
disposition of any debt securities issued or guaranteed by the Company
or any of its subsidiaries (other than the Securities or the Exchange
Securities) without the prior written consent of the Initial Purchaser;
(l) during the period from the Closing Date until two years
after the Closing Date, without the prior written consent of the
Initial Purchaser, not to, and not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been reacquired by them, except for Securities
purchased by the Company or any of its affiliates and resold in a
transaction registered under the Securities Act;
(m) not to, for so long as the Securities are outstanding, be
or become, or be or become owned by, an open-end investment company,
unit investment
<PAGE> 15
15
trust or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act, and to not be
or become, or be or become owned by, a closed-end investment company
required to be registered, but not registered thereunder;
(n) in connection with the offering of the Securities, until
the Initial Purchaser has notified the Company of the completion of the
resale of the Securities, not to, and to use its reasonable best
efforts to cause its affiliated purchasers (as defined in Rule 100 of
Regulation M under the Exchange Act) not to, directly or indirectly,
either alone or with one or more other persons, bid for, purchase, or
attempt to induce any person to bid for or purchase, a covered security
during the applicable restricted period;
(o) in connection with the offering of the Securities, to make
the officers, employees, independent accountants and legal counsel of
the Company, Holdings and the Company's subsidiaries reasonably
available upon request by the Initial Purchaser;
(p) to furnish to the Initial Purchaser on the date hereof a
copy of the independent accountants' report included in the Offering
Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and
performed by it under this Agreement that are within its control prior
to or after the Closing Date, and to use its best efforts to satisfy
all conditions precedent to the delivery of the Securities;
(r) to not take, and to use best efforts to cause Holdings,
the Company and each of the Company's subsidiaries to not take, any
action prior to the execution and delivery of the Indenture which, if
taken after such execution and delivery, would have violated any of the
covenants contained in the Indenture;
(s) to not take, and to use best efforts to cause Holdings,
the Company and each of the Company's subsidiaries to not take, any
action prior to the Closing Date which would require the Offering
Memorandum to be amended or supplemented pursuant to Section 4(d);
(t) prior to the Closing Date, not to issue, and to use best
efforts to cause Holdings, the Company and each of the Company's
subsidiaries not to issue, any press release or other communication
directly or indirectly or hold any press conference with respect to the
Company or the Company's subsidiaries, their respective conditions,
financial or otherwise, or earnings, business affairs or business
prospects (except for routine oral marketing communications in the
ordinary course of business and consistent with the past practices of
the Company and of which the Initial Purchaser is notified), without
the prior written consent of the Initial Purchaser, unless in the
judgment of the Company and its counsel, and after notification to the
Initial Purchaser, such press release or communication is required by
law; and
<PAGE> 16
16
(u) to apply the net proceeds from the sale of the Securities
as set forth in the Offering Memorandum under the heading "Use of
Proceeds".
5. Conditions of Initial Purchaser's Obligation. The
obligation of the Initial Purchaser hereunder is subject to (i) the accuracy, on
and as of the date hereof and the Closing Date, of the representations and
warranties of the Company contained herein, (ii) the accuracy of the statements
of the Company and the Guarantors and their respective officers made in any
certificates delivered pursuant hereto, (iii) the performance by the Company and
each of the Guarantors of their respective obligations hereunder, and to each of
the following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchaser as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchaser and the Company may agree; and no stop order suspending the
sale of the Securities in any jurisdiction shall have been issued and
no proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(b) The Initial Purchaser shall not have discovered and
disclosed to the Company on or prior to the Closing Date that the
Offering Memorandum or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of counsel for the
Initial Purchaser, is material or omits to state any fact which, in the
opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of each of the Transaction
Documents and the Offering Memorandum, and all other legal matters
relating to the Transaction Documents and the transactions contemplated
thereby, shall be satisfactory in all material respects to the Initial
Purchaser, and the Company, Holdings and the Guarantors shall have
furnished to the Initial Purchaser all documents and information that
they or their counsel may reasonably request to enable them to pass
upon such matters.
(d) Kirkland & Ellis ("K&E"), as counsel to the Company, and
Foley & Lardner, as counsel for the Company and the Guarantors, shall
have furnished to the Initial Purchaser their written opinions,
addressed to the Initial Purchaser and dated the Closing Date, each in
form and substance reasonably satisfactory to the Initial Purchaser.
(e) The Initial Purchaser shall have received from CSM, such
opinion or opinions, dated the Closing Date, with respect to such
matters as the Initial Purchaser may reasonably require, and the
Company, Holdings and the Guarantors shall have furnished to such
counsel such documents and information as CSM requests for the purpose
of enabling them to pass upon such matters.
<PAGE> 17
17
(f) The Company shall have furnished to the Initial Purchaser
a letter (the "Initial Letter") of Ernst & Young LLP, addressed to the
Initial Purchaser and dated June 26, 1997, in form and substance
satisfactory to the Initial Purchaser, substantially to the effect set
forth in Annex B hereto.
(g) The Company shall have furnished to the Initial Purchaser
a letter (the "Bring-Down Letter") of Ernst & Young LLP, addressed to
the Initial Purchaser and dated the Closing Date (i) confirming that
they are independent public accountants with respect to the Company and
its subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the AICPA and its interpretations and rulings
thereunder, (ii) stating, as of the date of the Bring-Down Letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Offering Memorandum, as of a date not more than three business
days prior to the date of the Bring-Down Letter), that the conclusions
and findings of such accountants with respect to the financial
information and other matters covered by the Initial Letter are
accurate and (iii) confirming in all material respects the conclusions
and findings set forth in the Initial Letter. In addition, The Company
shall have received letters from such accountants consenting to the
use, in connection with the offering of the Securities, of the audited
consolidated financial statements of The Company prepared by such
accountants and included in the Offering Memorandum.
(h) Each of the Company and the Guarantors shall have
furnished to the Initial Purchaser a certificate, dated the Closing
Date, of its chief executive officer or president and its chief
financial officer stating that (A) such officers have carefully
examined the Offering Memorandum, (B) in their opinion, the Offering
Memorandum, as of its date, did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and since the date of the Offering Memorandum, no event has
occurred which should have been set forth in a supplement or amendment
to the Offering Memorandum so that the Offering Memorandum (as so
amended or supplemented) would not include any untrue statement of a
material fact and would not omit to state a material fact required to
be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading and (C) as of the Closing Date, the representations and
warranties of the Company and each of the Guarantors in this Agreement
are true and correct in all material respects, the Company and each of
the Guarantors have complied with all agreements and satisfied all
conditions on their part to be performed or satisfied hereunder on or
prior to the Closing Date, and subsequent to the date of the most
recent financial statements contained in the Offering Memorandum, there
has been no material adverse change in the financial position or
results of operation of The Company or any of its subsidiaries, or any
change, or any development including a prospective change, in or
affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company and its subsidiaries
taken as a whole.
<PAGE> 18
18
(i) The Indenture shall have been duly executed and delivered
by the Company and each of the Guarantors and the Trustee, and the
Notes shall have been duly executed and delivered by the Company and
duly authenticated by the Trustee.
(j) The Securities shall have been approved by the NASD for
trading in the PORTAL Market.
(k) If any event shall have occurred that requires the Company
under Section 4(d) to prepare an amendment or supplement to the
Offering Memorandum, such amendment or supplement shall have been
prepared, the Initial Purchaser shall have been given a reasonable
opportunity to comment thereon, and copies thereof shall have been
delivered to the Initial Purchaser reasonably in advance of the Closing
Date.
(l) There shall not have occurred any invalidation of Rule
144A under the Securities Act by any court or any withdrawal or
proposed withdrawal of any rule or regulation under the Securities Act
or the Exchange Act by the Commission or any amendment or proposed
amendment thereof by the Commission which in the judgment of the
Initial Purchaser would materially impair the ability of the Initial
Purchaser to purchase, hold or effect resales of the Securities as
contemplated hereby.
(m) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the
Offering Memorandum (exclusive of any amendment or supplement thereto),
there shall not have been any change in the capital stock or long-term
debt or any change, or any development involving a prospective change,
in or affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company and its subsidiaries
taken as a whole, the effect of which, in any such case described
above, is, in the judgment of the Initial Purchaser, so material and
adverse as to make it impracticable or inadvisable to proceed with the
sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement and the Offering Memorandum (exclusive
of any amendment or supplement thereto).
(n) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Securities; and no injunction,
restraining order or order of any other nature by any federal or state
court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance or sale of the
Securities.
(o) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Securities or the Company's 11-1/8% Senior Subordinated Notes due 2007
(the "Old Notes") by any "nationally recognized statistical rating
organization", as such term is defined by the Commission for purposes
of Rule 436(g)(2) of the rules and
<PAGE> 19
19
regulations of the Commission under the Securities Act and (ii) no such
organization shall have publicly announced that it has under
surveillance or review (other than an announcement with positive
implications of a possible upgrading), its rating of the Securities or
the Old Notes.
(p) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange, the NASDAQ market or the over-the-counter market shall have
been suspended or limited, or minimum prices shall have been
established on any such exchange or market by the Commission, by any
such exchange or by any other regulatory body or governmental authority
having jurisdiction, or (ii) any moratorium on commercial banking
activities shall have been declared by federal or New York state
authorities or (iii) an outbreak or escalation of hostilities or a
declaration by the United States of a national emergency or war or (iv)
a material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) the effect of which, in the
case of this clause (iv), is, in the judgment of the Initial Purchaser,
so material and adverse as to make it impracticable or inadvisable to
proceed with the sale or the delivery of the Securities on the terms
and in the manner contemplated by this Agreement and in the Offering
Memorandum (exclusive of any amendment or supplement thereto).
(q) Substantially simultaneously with the sale of the
Securities hereunder (i) the bank waiver allowing the issuance of the
Notes contemplated by the Offering Memorandum shall have been obtained;
and (ii) the Initial Purchaser shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and
delivered by a duly authorized officer of the Company and each of the
Guarantors.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchaser.
6. Termination. The obligations of the Initial Purchaser
hereunder may be terminated by the Initial Purchaser, in its absolute
discretion, by notice given to and received by the Company prior to delivery of
and payment for the Securities if, prior to that time, any of the events
described in Section 5(l), (m), (n), (o) or (p) shall have occurred and be
continuing.
7. Reimbursement of Initial Purchaser's Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6, (b) the Company
shall fail to tender the Securities for delivery to the Initial Purchaser for
any reason permitted under this Agreement or (c) the Initial Purchaser shall
decline to purchase the Securities for any reason permitted under this
Agreement, the Company shall reimburse the Initial Purchaser for such
out-of-pocket expenses (including reasonable fees and disbursements
<PAGE> 20
20
of counsel) as shall have been reasonably incurred by the Initial Purchaser in
connection with this Agreement and the proposed purchase and resale of the
Securities.
8. Indemnification. (a) The Company shall indemnify and hold
harmless the Initial Purchaser, its affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls the Initial Purchaser within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 8(a) and
Section 9 as the Initial Purchaser), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of the Securities), to which the Initial Purchaser may
become subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in the Offering Memorandum or in any
amendment or supplement thereto or in the Initial Purchaser's information
provided by the Company pursuant to Section 4(e) or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and shall reimburse
the Initial Purchaser promptly upon demand for any legal or other expenses
reasonably incurred by the Initial Purchaser in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with the Initial Purchaser's Information; and
provided, further, that with respect to any such untrue statement in or omission
from the Preliminary Offering Memorandum, the indemnity agreement contained in
this Section 8(a) shall not inure to the benefit of the Initial Purchaser to the
extent that the sale to the person asserting any such loss, claim, damage,
liability or action was an initial resale by the Initial Purchaser and any such
loss, claim, damage, liability or action of or with respect to the Initial
Purchaser results from the fact that to the extent required by applicable law, a
copy of the Offering Memorandum was not sent or given to such person at or prior
to the written confirmation of the sale of such Securities to such person unless
such failure to deliver the Offering Memorandum was a result of non-compliance
by the Company with Section 4(b).
(b) The Initial Purchaser shall indemnify and hold harmless
the Company, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 8(b) and Section 9 as the Company),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
<PAGE> 21
21
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Offering Memorandum or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with the Initial Purchaser's Information, and shall
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 8(a) or 8(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 8 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 8. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
<PAGE> 22
22
fees, disbursements and other charges of more than one separate firm of
attorneys (in addition to any local counsel) at any one time for all such
indemnified party or parties. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 8(a) and 8(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), 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.
The obligations of the Company and the Initial Purchaser in
this Section 8 and in Section 9 are in addition to any other liability that the
Company or the Initial Purchaser, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
9. Contribution. If the indemnification provided for in
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Initial Purchaser on the other from the offering of the Securities 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 Company on
the one hand and the Initial Purchaser on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Initial Purchaser on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities purchased under this Agreement (before deducting expenses)
received by or on behalf of the Company, on the one hand, and the total
discounts and commissions received by the Initial Purchaser with respect to the
Securities purchased under this Agreement, on the other, bear to the total gross
proceeds from the sale of the Securities under this Agreement. The relative
fault 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 the Company or information supplied
by the Company on the one hand or to the Initial Purchaser's Information on the
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Initial Purchaser agree that it would not be just
and equitable if
<PAGE> 23
23
contributions pursuant to this Section 9 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 9 shall be deemed
to include, for purposes of this Section 9, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim. Notwithstanding
the provisions of this Section 9, the Initial Purchaser shall not be required to
contribute any amount in excess of the amount by which the total discounts and
commissions received by the Initial Purchaser with respect to the Securities
purchased by it under this Agreement exceeds the amount of any damages which the
Initial Purchaser has otherwise paid or become liable to pay by reason of any
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.
10. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchaser, the
Company and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 8 and 9 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Company and
the Initial Purchaser and in Section 4(e) with respect to holders and
prospective purchasers of the Securities. Nothing in this Agreement is intended
or shall be construed to give any person, other than the persons referred to in
this Section 10, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
11. Expenses. The Company agrees with the Initial Purchaser to
pay (a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the Offering
Memorandum and any amendments or supplements thereto; (c) the costs of
reproducing and distributing each of the Transaction Documents; (d) the costs
incident to the preparation, printing and delivery of the certificates
evidencing the Securities, including stamp duties and transfer taxes, if any,
payable upon issuance of the Securities; (e) the fees and expenses of the
Company's counsel and independent accountants; (f) the fees and expenses of
qualifying the Securities under the securities laws of the several jurisdictions
as provided in Section 4(h) and of preparing, printing and distributing Blue Sky
Memoranda (including related fees and expenses of counsel for the Initial
Purchaser); (g) any fees charged by rating agencies for rating the Securities;
(h) the fees and expenses of the Trustee and any paying agent (including related
fees and expenses of any counsel to such parties); (i) all expenses and
application fees incurred in connection with the application for the inclusion
of the Securities on the PORTAL Market and the approval of the Securities for
book-entry transfer by DTC; and (j) all other costs and expenses incident to the
performance of the obligations of the Company under this Agreement which are not
otherwise specifically provided for in this Section 11; provided, however, that
except as
<PAGE> 24
24
provided in this Section 11 and Section 7, the Initial Purchaser shall pay its
own costs and expenses.
12. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company and the
Initial Purchaser contained in this Agreement or made by or on behalf of the
Company or the Initial Purchaser pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the
Securities and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by or on
behalf of any of them or any of their respective affiliates, officers,
directors, employees, representatives, agents or controlling persons.
13. Notices, etc.. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent by
mail or telecopy transmission to Chase Securities Inc., 270 Park
Avenue, New York, New York 10017, Attention: Gerard J. Murray
(telecopier no.: (212) 270-0994); or
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the
Offering Memorandum, Attention: James K. Hildebrand (telecopier no.:
614-889-8308);
provided that any notice to the Initial Purchaser pursuant to Section 8(c) shall
also be delivered or sent by mail to the Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
14. Definition of Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange, Inc.
is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
15. Initial Purchaser's Information. The parties hereto
acknowledge and agree that the Initial Purchaser's Information consists solely
of the following information in the Offering Memorandum: (i) the last paragraph
on the front cover page concerning the terms of the offering by the Initial
Purchaser; (ii) the first paragraph on the inside front cover page concerning
over-allotment and trading activities by the Initial Purchaser; and (iii) the
statements concerning the Initial Purchaser contained in the third, fourth,
sixth and seventh paragraphs under the heading "Plan of Distribution".
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 25
25
17. Counterparts. This Agreement may be executed in one or
more counterparts (which may include counterparts delivered by telecopier) and,
if executed in more than one counterpart, the executed counterparts shall each
be deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
18. Amendments. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto.
19. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
<PAGE> 26
26
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company, the Guarantors
and the Initial Purchaser in accordance with its terms.
Very truly yours,
NEENAH CORPORATION
By______________________________________
Name:
Title:
NEENAH FOUNDRY COMPANY
By______________________________________
Name:
Title:
HARTLEY CONTROLS CORPORATION
By______________________________________
Name:
Title:
NEENAH TRANSPORT, INC.
By______________________________________
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By____________________________
<PAGE> 27
27
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
<PAGE> 28
ANNEX A
[Form of Exchange and Registration Rights Agreement]
<PAGE> 29
29
ANNEX B-1
[Form of Opinion of Counsel for the Company]
Kirkland & Ellis shall have furnished to the Initial Purchasers
their written opinion, as counsel to the Company, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth
below:
(i) Holdings has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its businesses requires such qualification, and
has all power and authority necessary to own or hold its properties and to
conduct the businesses in which it is engaged (except where the failure to
so qualify or have such power or authority would not, singularly or in the
aggregate, have a Material Adverse Effect);
(ii) all of the outstanding shares of capital stock of Holdings have
been, and upon the consummation of the Merger all of the outstanding
shares of capital stock of Holdings will be, duly and validly authorized
and issued and fully paid and non-assessable;
(iii) the statements in the Offering Memorandum under the heading
"Certain United States Federal Income Tax Considerations", to the extent
that they constitute summaries of matters of law or regulation or legal
conclusions, have been reviewed by such counsel and fairly summarize the
matters described therein in all material respects; and such counsel does
not have actual knowledge of any current or pending legal or governmental
actions, suits or proceedings which would be required to be described in
the Offering Memorandum if the Offering Memorandum were a prospectus
included in a registration statement on Form S-1 which are not described
as so required;
(iv) the Indenture conforms in all material respects with the
requirements of the Trust Indenture Act and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder;
(v) Holdings has full right, power and authority to execute and
deliver each of the Transaction Documents to which is a party and to
perform its obligations thereunder; and all corporate action required to
be taken for the due and proper authorization, execution and delivery of
each of the Transaction Documents to which Holdings is a party and the
consummation of the transactions contemplated thereby have been duly and
validly taken;
<PAGE> 30
30
(vi) assuming the due authorization, execution and delivery of the
Purchase Agreement by the Company, the Purchase Agreement constitutes a
valid and legally binding agreement of the Company (and, upon the due
authorization, execution, and delivery of the Neenah Letter Agreement by
the parties thereto, of Neenah and the Guarantors) enforceable against the
Company (and Neenah and each of the Guarantors) in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law) and except to the extent that the indemnification
provisions thereof may be limited by applicable law;
(vii) upon the due authorization, execution and delivery of the
Registration Rights Agreement by Neenah and the Guarantors, the
Registration Rights Agreement will constitute a valid and legally binding
agreement of the Neenah and each of the Guarantors, enforceable against
each of them in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law) and except to the
extent that the indemnification provisions thereof may be limited by
applicable law;
(viii) assuming the due authorization, execution and delivery of the
Indenture by the Company and the Trustee, the Indenture constitutes a
valid and legally binding agreement of the Company (and, upon the due
authorization, execution and delivery of the Supplemental Indenture by the
parties thereto, of Neenah and the Guarantors) enforceable against the
Company (and Neenah as primary obligor and each of the Guarantors as note
guarantors) in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law);
(ix) assuming the due authorization and execution of the Securities
by the Company and, assuming due authentication thereof by the Trustee and
upon payment and delivery in accordance with the Purchase Agreement, the
Securities constitute valid and legally binding obligations of the Company
(and, upon the due authorization, execution and delivery of the
Supplemental Indenture by the parties thereto, of Neenah and the
Guarantors) entitled to the benefits of the Indenture and enforceable
against the Company (and Neenah as primary obligor and each of the
Guarantors as note guarantors) in accordance with their terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity
or at law);
<PAGE> 31
31
(x) the Merger Agreement has been duly authorized, executed and
delivered by Holdings;
(xi) each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum;
(xii) the execution, delivery and performance by Holdings of each of
the Transaction Documents to which it is a party, the compliance by
Holdings with the terms of each of the Transaction Documents to which it
is a party and the consummation of the Transactions will not conflict with
or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of Holdings
pursuant to, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which Holdings is a party or by which it
is bound or to which its property or assets is subject, nor will such
actions result in any violation of the provisions of the charter or
by-laws of Holdings or any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body
having jurisdiction over Holdings or any of its properties or assets; and
no consent, approval, authorization or order of, or filing or registration
with, any such court or arbitrator or governmental agency or body under
any such statute, judgment, order, decree, rule or regulation is required
for the execution, delivery and performance by Holdings of each of the
Transaction Documents to which it is a party, the compliance by Holdings
with the terms of each of the Transaction Documents to which it is a party
and the consummation of the Transactions, except for such consents,
approvals, authorizations, filings, registrations or qualifications (i)
which have been obtained or made prior to the Closing Date and (ii) as may
be required to be obtained or made under the Securities Act and applicable
state securities laws as provided in the Registration Rights Agreement;
(xiii) to the best knowledge of such counsel, there are no pending
actions or suits or judicial, arbitral, rule-making, administrative or
other proceedings to which Holdings is a party or of which any property or
assets of Holdings is the subject which (A) singularly or in the
aggregate, if determined adversely to Holdings, could reasonably be
expected to have a Material Adverse Effect or (B) questions the validity
or enforceability of any of the Transaction Documents or any action taken
or to be taken pursuant thereto; and to the best knowledge of such
counsel, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(xiv) Holdings is not (A) in violation of its charter or by-laws,
(B) in default in any material respect, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which it is a party
or by which it is bound or to which any of its property or assets is
subject or (C) in violation in any material respect of any
<PAGE> 32
32
law, ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject;
(xv) neither the consummation of the transactions contemplated by
the Purchase Agreement nor the sale, issuance, execution or delivery of
the Securities will violate Regulation G, T, U or X of the Federal Reserve
Board; and
(xvi) assuming the accuracy of the representations, warranties and
agreements of the Company (and, upon the due authorization, execution and
delivery of the Neenah Letter Agreement, of Neenah and the Guarantors) and
of the Initial Purchasers contained in the Purchase Agreement, the
issuance and sale of the Securities and the offer, resale and delivery of
the Securities in the manner contemplated by the Purchase Agreement and
the Offering Memorandum, are exempt from the registration requirements of
the Securities Act, and it is not necessary to qualify the Indenture under
the Trust Indenture Act.
Such counsel shall also state that they have participated in conferences
with representatives of the Company and Neenah and with representatives of
Neenah's independent accountants and counsel at which conferences the contents
of the Offering Memorandum and any amendment and supplement thereto and related
matters were discussed and, although such counsel assume no responsibility for
the accuracy, completeness or fairness of the Offering Memorandum, any amendment
or supplement thereto (except as expressly provided above), nothing has come to
the attention of such counsel to cause such counsel to believe that the Offering
Memorandum or any amendment or supplement thereto (other than the financial
statements and other financial and statistical information contained therein, as
to which such counsel need express no belief) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
Neenah and public officials which are furnished to the Initial Purchasers.
<PAGE> 33
33
ANNEX B-2
[Form of Opinion of Counsel for the Company and Neenah]
Foley & Lardner shall have furnished to the Initial Purchasers their
written opinion, as counsel to the Company and to Neenah, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth
below:
(i) The Company has been, and upon consummation of the Merger each
of Neenah and each of the Guarantors will be, duly incorporated and
validly existing as corporations under the laws of the State of Wisconsin;
(ii) all of the outstanding shares of capital stock of the Company
have been, and upon the consummation of the Merger all of the outstanding
shares of capital stock of Neenah will be, duly and validly authorized and
issued and fully paid and non-assessable, except as set forth in Section
180.0622(2)(b) of the Wisconsin Statutes, as judicially interpreted; and
upon the consummation of the Merger and the other Transactions the capital
stock of Neenah will conform in all material respects to the description
thereof contained in the Offering Memorandum;
(iii) each of the Company, Neenah and each of the Guarantors has
full right, power and authority to execute and deliver each of the
Transaction Documents to which is a party and to perform its obligations
thereunder; and all corporate action required to be taken for the due and
proper authorization, execution and delivery of each of the Transaction
Documents to which any of the Company, Neenah or any of the Guarantors is
a party and the consummation of the transactions contemplated thereby have
been duly and validly taken;
(iv) the Purchase Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company (and, upon the due authorization, execution, and
delivery of the Neenah Letter Agreement by the parties thereto, of Neenah
and the Guarantors) enforceable against the Company (and Neenah and each
of the Guarantors) in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law) and except to the
extent that the indemnification provisions thereof may be limited by
applicable law;
(v) the Indenture has been duly authorized, executed and delivered
by the Company and, assuming due authorization, execution and delivery
thereof by the Trustee, constitutes a valid and legally binding agreement
of the Company (and, upon the due authorization, execution and delivery of
the Supplemental
<PAGE> 34
34
Indenture by the parties thereto, of Neenah and the Guarantors)
enforceable against the Company (and Neenah as primary obligor and each of
the Guarantors as note guarantors) in accordance with its terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity
or at law);
(vi) the Securities have been duly authorized and issued by the
Company and, assuming due authentication thereof by the Trustee and upon
payment and delivery in accordance with the Purchase Agreement, will
constitute valid and legally binding obligations of the Company (and, upon
the due authorization, execution and delivery of the Supplemental
Indenture by the parties thereto, of Neenah and the Guarantors) entitled
to the benefits of the Indenture and enforce able against the Company (and
Neenah as primary obligor and each of the Guarantors as note guarantors)
in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law);
(vii) the Merger Agreement has been duly authorized, executed and
delivered by the Company, and assuming due authorization, execution and
delivery by Neenah and Holdings, will constitute a valid and legally
binding agreement of Neenah, the Company and Holdings enforceable against
Neenah, the Company and Holdings in accordance with its terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity
or at law);
(viii) the execution, delivery and performance by each of the
Company, Neenah and each of the Guarantors of each of the Transaction
Documents, the issuance, authentication, sale and delivery of the
Securities by the Company, the compliance by each of the Company, Neenah
and each of the Guarantors with the terms of each of the Transaction
Documents to which each is a party and the consummation of the
Transactions will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company, Neenah or any of the
Guarantors pursuant to any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company, Neenah or
any of the Guarantors is a party or by which any of them are bound or to
which the property or assets of any of them is subject, nor will such
actions result in any violation of the provisions of the charter or
by-laws of any of the Company, Neenah or any of the Guarantors or any
statute or any judgment, order, decree, rule or regulation of any court or
arbitrator or governmental agency or body having jurisdiction over any of
the Company, Neenah or any of the Guarantors or any of their properties or
assets;
<PAGE> 35
35
and no consent, approval, authorization or order of, or filing or
registration with, any such court or arbitrator or governmental agency or
body under any such statute, judgment, order, decree, rule or regulation
is required for the execution, delivery and performance by each of the
Company, Neenah and each of the Guarantors of each of the Transaction
Documents to which each is a party, the issuance, authentication, sale and
delivery of the Securities by the Company, the compliance by each of the
Company, Neenah and each of the Guarantors with the terms of each of the
Transaction Documents to which each is a party and the consummation of the
Transactions, except for such consents, approvals, authorizations,
filings, registrations or qualifications (i) which have been obtained or
made prior to the Closing Date and (ii) as may be required to be obtained
or made under the Securities Act and applicable state securities laws as
provided in the Registration Rights Agreement;
(ix) to the best knowledge of such counsel, there are no pending
actions or suits or judicial, arbitral, rule-making, administrative or
other proceedings to which the Company is a party or of which any property
or assets of the Company is the subject which (A) singularly or in the
aggregate, if determined adversely to the Company, could reasonably be
expected to have a Material Adverse Effect or (B) questions the validity
or enforceability of any of the Transaction Documents or any action taken
or to be taken pursuant thereto; and to the best knowledge of such
counsel, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(x) the Company is not (A) in violation of its charter or by-laws,
(B) in default in any material respect, and no event has occurred which,
with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which it is a party
or by which it is bound or to which any of its property or assets is
subject or (C) in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property
or assets may be subject;
(xi) neither the Company, Neenah nor any of Neenah's subsidiaries is
(A) an "investment company" or a company "controlled by" an investment
company within the meaning of the Investment Company Act and the rules and
regulations of the Commission thereunder, without taking account of any
exemption under the Investment Company Act arising out of the number of
holders of securities of the Company, Neenah or Neenah's subsidiaries or
(B) 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;
(xii) each of the Letter Agreement, the Supplemental Indenture and
the Registration Rights Agreement has been duly authorized, executed and
delivered by Neenah and each of the Guarantors, and each of the Letter
Agreement, the Supplemental Indenture and the Registration Rights
<PAGE> 36
36
Agreement is enforceable against Neenah and each of the Guarantors in
accordance with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law);
(xii) neither the consummation of the transactions contemplated by the
Purchase Agreement nor the assumption of the Notes by Neenah or the guarantee of
the Notes by the Guarantors will violate Regulation G, T, U or X of the Federal
Reserve Board.
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
the Company, Neenah and public officials which are furnished to the Initial
Purchasers.
<PAGE> 37
37
ANNEX B-3
[Form of Opinion of Counsel for Neenah]
Quarles & Brady shall have furnished to the Initial Purchasers their
written opinion, as counsel to Neenah and the Guarantors, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set forth
below:
(i) Neenah and each of the Guarantors has been duly incorporated and
is validly existing as a corporation under the laws of Wisconsin, is duly
qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which its ownership or lease of property or the
conduct of its businesses requires such qualification, and has all power
and authority necessary to own or hold its properties and to conduct the
businesses in which it is engaged (except where the failure to so qualify
or have such power or authority would not, singularly or in the aggregate,
have a Material Adverse Effect),
(ii) all of the outstanding shares of capital stock of Neenah and
each of the Guarantors have been duly and validly authorized and issued
and are fully paid and non-assessable, except as set forth in Section
180.0622(2)(b) of the Wisconsin Statutes, as judicially interpretated.
Upon consummation of and by virtue of the Merger, each outstanding share
of the Company's common stock, without par value, will be converted into
one share of the Class A Common Stock of Neenah, and each outstanding
share of the Common Stock of Neenah will be converted into cash as
provided in the Merger Agreement;
(iii) to the best knowledge of such counsel, there are not any
current or pending legal or governmental actions, suits or proceedings
which would be required to be described in the Offering Memorandum if the
Offering Memorandum were a prospectus included in a registration statement
on Form S-1 which are not described as so required;
(iv) the Merger Agreement has been duly authorized, executed and
delivered by Neenah, and assuming due authorization, execution and
delivery by the Company and Holdings, will constitute a valid and legally
binding agreement of Neenah enforceable against Neenah in accordance with
its terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law);
(v) the execution, delivery and performance by Neenah of the Merger
Agreement and compliance by Neenah with the terms thereof will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or
<PAGE> 38
38
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of Neenah or any
of its subsidiaries pursuant to, any material indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument to which
Neenah or any of its subsidiaries is a party or by which Neenah or any of
its subsidiaries is bound or to which any of the property or assets of
Neenah or any of its subsidiaries is subject, nor will such actions result
in any violation of the provisions of the charter or by-laws of Neenah or
any of its subsidiaries or any statute or any judgment, order, decree,
rule or regulation of any court or arbitrator or governmental agency or
body having jurisdiction over Neenah or any of its subsidiaries or any of
their properties or assets; and no consent, approval, authorization or
order of, or filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by Neenah of the Merger Agreement, and compliance by Neenah
with the terms thereof and the consummation of the Merger, except for such
consents, approvals, authorizations, filings, registrations or
qualifications which have been obtained or made prior to the Closing Date;
(vi) to the best knowledge of such counsel, there are no pending
actions or suits or judicial, arbitral, rule-making, administrative or
other proceedings to which Neenah or any of its subsidiaries is a party or
of which any property or assets of Neenah or any of its subsidiaries is
the subject which (A) singularly or in the aggregate, if determined
adversely to Neenah or any of its subsidiaries, could reasonably be
expected to have a Material Adverse Effect or (B) questions the validity
or enforceability of any of the Transaction Documents or any action taken
or to be taken pursuant thereto; and to the best knowledge of such
counsel, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(vii) neither Neenah nor any of its subsidiaries is (A) in violation
of its charter or by-laws, (B) in default in any material respect, and no
event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any material indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument to
which it is a party or by which it is bound or to which any of its
property or assets is subject or (C) in violation in any material respect
of any law, ordinance, governmental rule, regulation or court decree to
which it or its property or assets may be subject;
[Such counsel shall also state that they have participated in conferences
with representatives of Neenah and with representatives of Neenah's independent
accountants and counsel at which conferences the contents of the Offering
Memorandum and any amendment and supplement thereto and related matters were
discussed and, although such counsel assume no responsibility for the accuracy,
completeness or fairness of the Offering Memorandum, any amendment or supplement
thereto (except as expressly provided above), nothing has come to the attention
of such counsel to cause such counsel to believe that the Offering Memorandum or
any
<PAGE> 39
39
amendment or supplement thereto (other than the financial statements and other
financial and statistical information contained therein, as to which such
counsel need express no belief) contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.]
In rendering such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
Neenah and public officials which are furnished to the Initial Purchasers.
<PAGE> 40
40
ANNEX C
[Form of Initial Comfort Letter]
Neenah shall have furnished to the Initial Purchasers a letter of
Ernst & Young LLP, addressed to the Initial Purchasers and dated the date of the
Purchase Agreement, in form and substance satisfactory to the Initial
Purchasers, substantially to the effect set forth below:
(i) they are independent certified public accountants with respect
to the Company within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings;
(ii) in their opinion, the audited financial statements and pro
forma financial information included in the Offering Memorandum and
reported on by them comply in form in all material respects with the
accounting requirements of the Exchange Act and the related published
rules and regulations of the Commission thereunder that would apply to the
Offering Memorandum if the Offering Memorandum were a prospectus included
in a registration statement on Form S-1 under the Securities Act (except
that certain supporting schedules are omitted);
(iii) based upon a reading of the latest unaudited financial
statements made available by Neenah, the procedures of the AICPA for a
review of interim financial information as described in Statement of
Auditing Standards No. 71, reading of minutes and inquiries of certain
officials of Neenah who have responsibility for financial and accounting
matters and certain other limited procedures requested by the Initial
Purchasers and described in detail in such letter, nothing has come to
their attention that causes them to believe that (A) any unaudited
consolidated financial statements included in the Offering Memorandum do
not comply as to form in all material respects with applicable accounting
requirements, (B) any material modifications should be made to the
unaudited consolidated financial statements included in the Offering
Memorandum for them to be in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited consolidated financial statements included in the Offering
Memorandum or (C) the information included under the headings
["Summary--Summary Consolidated Financial and Other Data",
"Capitalization", "Selected Consolidated Financial and Other Data",
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" and "Management-Compensation of Executive Officers"]
is not in conformity with the disclosure requirements of Regulation S-K
that would apply to the Offering Memorandum if the Offering Memorandum
were a prospectus included in a registration statement on Form S-1 under
the Securities Act;
<PAGE> 41
41
(iv) based upon the procedures detailed in such letter with respect
to the period subsequent to the date of the last available balance sheet,
including reading of minutes and inquiries of certain officials of Neenah
who have responsibility for financial and accounting matters, nothing has
come to their attention that causes them to believe that (A) at a
specified date not more than three business days prior to the date of such
letter, there was any change in capital stock, increase in long-term debt
or decrease in net current assets as compared with the amounts shown in
the December 31, 1996 unaudited balance sheet included in the Offering
Memorandum or (B) for the period from December 31, 1996 to a specified
date not more than three business days prior to the date of such letter,
there were any decreases, as compared with the corresponding period in the
preceding year, in net sales, income from operations, EBITDA or net
income, except in all instances for changes, increases or decreases that
the Offering Memorandum discloses have occurred or which are set forth in
such letter, in which case the letter shall be accompanied by an
explanation by Neenah as to the significance thereof unless said
explanation is not deemed necessary by the Initial Purchasers;
(v) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company) set forth in the Offering Memorandum agrees with the
accounting records of Neenah, excluding any questions of legal
interpretation; and
(vi) on the basis of a reading of the unaudited pro forma financial
information included in the Offering Memorandum, carrying out certain
specified procedures, reading of minutes and inquiries of certain
officials of Neenah who have responsibility for financial and accounting
matters and proving the arithmetic accuracy of the application of the pro
forma adjustments to the historical amounts in the pro forma financial
information, nothing came to their attention which caused them to believe
that the pro forma financial information does not comply in form in all
material respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of such
information.
<PAGE> 42
42
EXHIBIT D
April__, 1997
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
c/o CHASE SECURITIES INC.
270 Park Avenue
New York, NY 10017
Dear Sirs:
Reference is hereby made to the Purchase Agreement dated April__, 1997
(the "Purchase Agreement"), between NC Merger Company, a Wisconsin corporation
(the "Company"), and you pursuant to which the Company has agreed to issue and
sell and you have agreed to purchase the Securities described therein on the
terms set forth therein. Capitalized terms used herein but not otherwise defined
herein have meanings assigned thereto in the Purchase Agreement (including by
reference therein to the Offering Memorandum). This is the letter agreement
referred to in Section 5(q) of the Purchase Agreement.
The parties hereto agree that this Letter Agreement is being executed and
delivered in connection with the issue and sale of the Securities pursuant to
the Purchase Agreement and to induce the Initial Purchasers to purchase the
Securities thereunder.
Neenah (as the Company's successor after the Merger) and each of the
Guarantors hereby confirm their agreement with you as follows:
SECTION 1. In accordance with Section 5(q) of the Purchase Agreement,
Neenah and each of the Guarantors by their respective signatures below each
becomes a party to the Purchase Agreement on the same terms and with the same
ongoing obligations and rights as the Company thereunder with the same force and
effect as if originally named therein as a party and Neenah and each of the
Guarantors jointly and severally agrees to all the terms and provisions of the
Purchase Agreement applicable to the Company thereunder including, but not
limited to, under Sections 8, 9, 10 and 12 thereof.
SECTION 2. Neenah and each of the Guarantors hereby represents and
warrants to, and agrees with, each of you as of the date hereof that:
(a) each of them has full right, power and authority to execute and
deliver this Letter Agreement and perform its obligations hereunder and
all
<PAGE> 43
43
corporate action required to be taken by each of them for the due and
proper authorization, execution, delivery and performance of this Letter
Agreement and the consummation of the transactions contemplated hereby has
been duly and validly taken and this Letter Agreement has been duly
authorized and validly executed and delivered by each of them and is the
valid and legally binding agreement of each of them enforceable against
each of them in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
and similar laws affecting creditors' rights and remedies generally and to
general principles of equity (regardless of whether enforcement is sought
in a proceeding at law or in equity), and except as rights to indemnity
and contribution may be limited under applicable law;
(b) each of them has full right, power and authority to execute and
deliver the Supplemental Indenture and perform its obligations thereunder
and all corporate action required to be taken by each of them for the due
and proper authorization, execution, delivery and performance of the
Supplemental Indenture and the consummation of the transactions
contemplated thereby have been duly and validly taken; the Supplemental
Indenture has been duly authorized by each of them, and, when duly
executed and delivered in accordance with its terms by each party thereto,
the Supplemental Indenture will constitute the valid and legally binding
agreement of Neenah as primary obligor, and of each of the Guarantors, as
note guarantors, and will be enforceable against Neenah and each of the
Guarantors in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity); and
(c) the representations, warranties and agreements set forth in
Section 1 of the Purchase Agreement are true and accurate on the date
hereof as if made on such date by Neenah and each of the Guarantors, and
each reference therein to the knowledge of the Company shall be deemed to
be a reference to the knowledge of Neenah and each of the Guarantors.
SECTION 3. THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 4. This Letter Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
SECTION 5. The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Letter Agreement.
<PAGE> 44
44
If the foregoing is in accordance with your understanding of the agreement
among the parties hereto, kindly indicate your acceptance in the space provided
for that purpose below.
Very truly yours,
NEENAH CORPORATION,
By ______________________
Name:
Title:
NEENAH FOUNDRY COMPANY,
By ______________________
Name:
Title:
HARTLEY CONTROLS
CORPORATION,
By ______________________
Name:
Title:
NEENAH TRANSPORT, INC.,
By ______________________
Name:
Title:
CHASE SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
By CHASE SECURITIES INC.,
By _________________
Name:
Title:
<PAGE> 1
Exhibit 4.9
EXECUTION COPY
NEENAH CORPORATION
$45,000,000
11-1/8 % SERIES C SENIOR SUBORDINATED NOTES DUE 2007
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
July 1, 1997
CHASE SECURITIES INC.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Neenah Corporation, a Wisconsin corporation (the "Company"),
proposes to issue and sell to you (the "Initial Purchaser"), upon the terms and
subject to the conditions set forth in a purchase agreement dated June 26, 1997
(the "Purchase Agreement"), $45,000,000 aggregate principal amount of its 11-1/8
% Series C Senior Subordinated Notes due 2007 (the "Notes"). The Notes will be
issued pursuant to an Indenture to be dated as of July 1, 1997 (the "Indenture")
between the Company and United States Trust Company of New York, as Trustee (the
"Trustee") and will be fully guaranteed (the "Guarantees", and collectively with
the Notes, the "Securities") on an unsecured senior subordinated basis as to
payment, premium, if any, and interest by the Company's principal operating
subsidiaries (collectively, the "Guarantors"). Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Purchase
Agreement.
Pursuant to the Purchase Agreement, substantially simultaneously
with the sale of the Notes to the Initial Purchaser, the Company and the
Guarantors are required to enter into an exchange and registration rights
agreement in the form hereof. Accordingly, the Company and the Guarantors hereby
agree with you, for the benefit of the holders of the Securities (including the
Initial Purchaser) (the "Holders"), as follows:
1. Registered Exchange Offer. The Company and the Guarantors shall
(i) prepare and, not later than 45 days following the date of original issuance
of the Securities (the "Issue Date"), file with the Commission a registration
statement (the "Exchange Offer Registration Statement") on an appropriate form
under the Securities Act
<PAGE> 2
2
with respect to a proposed offer to the Holders (the "Registered Exchange
Offer") to issue and deliver to such Holders, in exchange for the Securities, a
like aggregate principal amount of debt securities of the Company (the "Exchange
Securities") identical in all material respects to the Securities, except for
the transfer restrictions relating to the Securities, (ii) use their reasonable
best efforts to cause the Exchange Offer Registration Statement to become
effective under the Securities Act no later than 105 days after the Issue Date
and the Registered Exchange Offer to be consummated no later than 135 days after
the Issue Date, and (iii) keep the Exchange Offer Registration Statement
effective for not less than 30 days (or longer, if required by applicable law)
after the date that notice of the Registered Exchange Offer is mailed to the
Holders (such period being called the "Exchange Offer Registration Period"). The
Exchange Securities will be issued under the Indenture or an indenture (the
"Exchange Securities Indenture") between the Company, the Guarantors and the
Trustee or such other bank or trust company reasonably satisfactory to you, as
trustee (the "Exchange Securities Trustee"), such indenture to be identical in
all material respects to the Indenture except for the transfer restrictions
relating to the Securities (as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company and the Guarantors shall promptly commence the Registered Exchange
Offer, it being the objective of such Registered Exchange Offer to enable each
Holder to elect to exchange Securities for Exchange Securities (assuming that
such Holder (a) is not an affiliate of the Company, a Guarantor or an Exchanging
Dealer (as defined below) not complying with the requirements of the next
sentence, (b) acquires the Exchange Securities in the ordinary course of such
Holder's business and (c) has no arrangements or understandings with any person
to participate in the distribution of the Exchange Securities) and to trade such
Exchange Securities from and after their receipt without any limitations or
restrictions under the Securities Act and without material restrictions under
the securities laws of the several states of the United States. The Company, the
Guarantors, the Initial Purchaser and each Exchanging Dealer acknowledge that,
pursuant to current interpretations by the Commission's staff of Section 5 of
the Securities Act, (i) each Holder which is a broker-dealer electing to
exchange Securities, acquired for its own account as a result of market making
activities or other trading activities, for Exchange Securities (an "Exchanging
Dealer"), is required to deliver a prospectus containing the information set
forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in Annex
C hereto in the "Plan of Distribution" section of such prospectus in connection
with a sale of any such Exchange Securities received by such Exchanging Dealer
pursuant to the Registered Exchange Offer and (ii) if the Initial Purchaser
elects to sell Exchange Securities acquired in exchange for Securities
constituting any unsold portion of the original offering, it is required to
deliver a prospectus containing the
<PAGE> 3
3
information required by Items 507 or 508 of Regulation S-K under the Securities
Act and the Exchange Act ("Regulation S-K"), as applicable, in connection with
such a sale.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 20
business days after the date that notice of the Registered Exchange Offer
is mailed to the Holders (or longer if required by applicable law);
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
and
(d) otherwise comply in all respects with all laws applicable to the
Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(a) accept for exchange all Securities validly tendered and not
validly withdrawn pursuant to the Registered Exchange Offer;
(b) deliver to the Trustee for cancelation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder of
Securities, Exchange Securities equal in principal amount to the
Securities of such Holder so accepted for exchange.
The Company shall make available, for a period of 180 days after the
consummation of the Registered Exchange Offer, a copy of the prospectus forming
part of the Exchange Offer Registration Statement to any broker-dealer for use
in connection with any resale of any Exchange Securities.
Interest on each Exchange Security issued pursuant to the Registered
Exchange Offer will accrue from the last interest payment date on which interest
was paid
<PAGE> 4
4
on the Securities surrendered in exchange therefor or, if no interest has been
paid on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act and (iii) such Holder is not an affiliate of the Company or
any of the Guarantors, or, if it is such an affiliate, it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
Notwithstanding any other provisions hereof, the Company and the
Guarantors will ensure that (i) any Exchange Offer Registration Statement and
any amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Exchange Offer
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Exchange
Offer Registration Statement, and any supplement to such prospectus, does not
include, as of the consummation of the Registered Exchange Offer, an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
2. Shelf Registration. If (i) because of any change in law or
applicable interpretations of the Commission's staff the Company is not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (ii) for any other reason the Registered Exchange Offer is not
consummated within 135 days after the Issue Date, or (iii) the Initial Purchaser
so requests with respect to Securities not eligible to be exchanged for Exchange
Securities in the Registered Exchange Offer and held by the Initial Purchaser
following the consummation of the Registered Exchange Offer, or (iv) any
applicable law or interpretations do not permit any Holder to participate in the
Registered Exchange Offer, or (v) any Holder that participates in the Registered
Exchange Offer does not receive freely transferable Exchange Securities in
exchange for tendered Securities, or (vi) the Company so elects, then the
following provisions shall apply:
(a) The Company and the Guarantors shall use their reasonable best
efforts to file as promptly as practicable with the Commission, and thereafter
shall use their reasonable best efforts to cause to be declared effective, a
shelf registration statement on
<PAGE> 5
5
an appropriate form under the Securities Act relating to the offer and sale of
the Transfer Restricted Securities (as defined below) by the Holders from time
to time in accordance with the methods of distribution set forth in such
registration statement (hereafter, a "Shelf Registration Statement" and,
together with any Exchange Offer Registration Statement, a "Registration
Statement").
(b) The Company and the Guarantors shall use their reasonable best
efforts to keep the Shelf Registration Statement continuously effective in order
to permit the prospectus forming part thereof to be used by Holders for a period
of two years from the Issue Date or such shorter period that will terminate when
all the Securities and Exchange Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement (in any
such case, such period being called the "Shelf Registration Period"). The
Company and the Guarantors shall be deemed not to have used their reasonable
best efforts to keep the Shelf Registration Statement effective during the
requisite period if any one of them voluntarily takes any action that would
result in Holders of Securities or Exchange Securities covered thereby not being
able to offer and sell such Securities or Exchange Securities during that
period, unless such action is required by applicable law
(c) Notwithstanding any other provisions hereof, the Company and the
Guarantors will ensure that (i) any Shelf Registration Statement and any
amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Shelf Registration
Statement and any amendment thereto (in either case, other than with respect to
information included therein in reliance upon or in conformity with written
information furnished to the Company by or on behalf of any Holder specifically
for use therein (the "Holders' Information")) does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Shelf
Registration Statement, and any supplement to such prospectus (in either case,
other than with respect to Holders' Information), does not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the Holders
of Securities will suffer damages if the Company and the Guarantors fail to
fulfill their obligations under Section 1 or Section 2, as applicable, and that
it would not be feasible to ascertain the extent of such damages. Accordingly,
if (i) the applicable Registration Statement is not filed with the Commission on
or prior to 45 days after the Issue Date, (ii) the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case
<PAGE> 6
6
may be, is not declared effective within 105 days after the Issue Date (or in
the case of a Shelf Registration Statement required to be filed in response to a
change in law or the applicable interpretations of Commission's staff, if later,
within 45 days after publication of the change in law or interpretation), (iii)
the Registered Exchange Offer is not consummated on or prior to 135 days after
the Issue Date, or (iv) the Shelf Registration Statement is filed and declared
effective within 105 days after the Issue Date (or in the case of a Shelf
Registration Statement required to be filed in response to a change in law or
the applicable interpretations of Commission's staff, if later, within 45 days
after publication of the change in law or interpretation) but shall thereafter
cease to be effective (at any time that the Company is obligated to maintain the
effectiveness thereof) without being succeeded within 30 days by an additional
Registration Statement filed and declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company and the
Guarantors will be obligated to pay liquidated damages to each holder of
Transfer Restricted Securities, during the period of one or more such
Registration Defaults, in an amount equal to $ 0.192 per week per $1,000
principal amount of the Securities constituting Transfer Restricted Securities
held by such Holder until (i) the applicable Registration Statement is filed,
(ii) the Exchange Offer Registration Statement is declared effective and the
Registered Exchange Offer is consummated, (iii) the Shelf Registration Statement
is declared effective or (iv) the Shelf Registration Statement again becomes
effective, as the case may be. Following the cure of all Registration Defaults,
the accrual of liquidated damages will cease. As used herein, the term "Transfer
Restricted Securities" means each Security or Exchange Security until (i) the
date on which such Security or Exchange Security has been exchanged for a freely
transferable Exchange Security in the Registered Exchange Offer, (ii) the date
on which such Security or Exchange Security has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) the date on which such Security or Exchange
Security is distributed to the public pursuant to Rule 144 under the Securities
Act or is saleable pursuant to Rule 144(k) under the Securities Act.
Notwithstanding anything to the contrary in this Section 3(a), the Company and
the Guarantors shall not be required to pay liquidated damages to the holder of
Transfer Restricted Securities if such holder failed to comply with its
obligations to make the representations set forth in the second to last
paragraph of Section 1 or failed to provide the information required to be
provided by it, if any, pursuant to Section 4(n).
(b) The Company shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every Registration
Default. The Company and the Guarantors shall pay the liquidated damages due on
the Transfer Restricted Securities by depositing with the Paying Agent (which
may not be the Company for these purposes), in trust, for the benefit of the
holders thereof, prior to 10:00 a.m., New York City time, on the next interest
payment date specified by the Indenture and the Securities, sums sufficient to
pay the liquidated damages then due. The liquidated damages
<PAGE> 7
7
due shall be payable on each interest payment date specified by the Indenture
and the Securities to the record holder entitled to receive the interest payment
to be made on such date. Each obligation to pay liquidated damages shall be
deemed to accrue from and including the date of the applicable Registration
Default.
(c) The parties hereto agree that the liquidated damages provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to remain effective or (iii) the Exchange Offer
Registration Statement to be declared effective and the Registered Exchange
Offer to be consummated, in each case to the extent required by this Agreement.
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to you, prior to the filing
thereof with the Commission, a copy of the Registration Statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and, in the event that the Initial Purchaser (with respect to any
portion unsold from the original offering) is participating in the Registered
Exchange Offer or the Shelf Registration, shall use its reasonable best efforts
to reflect in each such document, when so filed with the Commission, such
comments as you reasonably (as determined by the Company) may propose; (ii) if
applicable, include the information set forth in Annex A hereto on the cover, in
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution"
section of the prospectus forming a part of the Exchange Offer Registration
Statement, and include the information set forth in Annex D hereto in the Letter
of Transmittal delivered pursuant to the Registered Exchange Offer; and (iii) if
requested by the Initial Purchaser, include the information required by Items
507 or 508 of Regulation S-K, as applicable, in the prospectus forming a part of
the Exchange Offer Registration Statement.
(b) The Company shall advise you and the Holders (if applicable)
and, if requested by you or any such Holder, confirm such advice in writing
(which advice pursuant to clauses (ii)-(v) hereof shall be accompanied by an
instruction to suspend the use of the prospectus until the requisite changes
have been made):
(i) when any Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or any
post-effective amendment thereto has become effective;
<PAGE> 8
8
(ii) of any request by the Commission for amendments or supplements
to any Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of any Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Securities or the Exchange
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of any
changes in any Registration Statement or the prospectus included therein
so that, as of such date, the statements therein are not misleading and do
not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(c) The Company and the Guarantors will make every reasonable effort
to obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement at the earliest possible time.
(d) The Company will furnish to each holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
and, if the Holder so requests in writing, all exhibits (including those
incorporated by reference).
(e) The Company will, during the Shelf Registration Period, promptly
deliver to each holder of Transfer Restricted Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company consents to the use of such prospectus
or any amendment or supplement thereto by each of the selling holders of
Transfer Restricted Securities in connection with the offer and sale of the
Transfer Restricted Securities covered by such prospectus or any amendment or
supplement thereto.
(f) The Company will furnish to each Exchanging Dealer and to the
Initial Purchaser, as applicable, which so requests, without charge, at least
one copy of the
<PAGE> 9
9
Exchange Offer Registration Statement and any post-effective amendment thereto,
including financial statements and schedules and, if the Exchanging Dealer or
the Initial Purchaser, as applicable, so requests in writing, all exhibits
(including those incorporated by reference).
(g) The Company will, during the Exchange Offer Registration Period
or the Shelf Registration Period, as applicable, promptly deliver to each
Exchanging Dealer and to the Initial Purchaser, as applicable, without charge,
as many copies of the prospectus included within the coverage of the Exchange
Offer Registration Statement or the Shelf Registration Statement and any
amendment or supplement thereto as such Exchanging Dealer or the Initial
Purchaser, as applicable, may reasonably request for delivery by (i) such
Exchanging Dealer in connection with a sale of Exchange Securities received by
it pursuant to the Registered Exchange Offer or (ii) the Initial Purchaser in
connection with a sale of Exchange Securities received by it in exchange for
Securities constituting any unsold portion of the original offering; and the
Company consents to the use of such prospectus or any amendment or supplement
thereto by any such Exchanging Dealer or by the Initial Purchaser, as
applicable, as aforesaid.
(h) Prior to any public offering of Securities or Exchange
Securities pursuant to any Registration Statement, the Company and the
Guarantors will use their reasonable best efforts to register or qualify, or
cooperate with the Holders of Securities included therein and their respective
counsel in connection with the registration or qualification of, such Securities
or Exchange Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as any such Holder reasonably requests in writing and do
any and all other acts or things necessary or advisable to enable the offer and
sale in such jurisdictions of the Securities or Exchange Securities covered by
such Registration Statement; provided that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so subject.
(i) The Company and the Guarantors will cooperate with the Holders
of Securities or Exchange Securities to facilitate the timely preparation and
delivery of certificates representing Securities or Exchange Securities to be
sold pursuant to any Registration Statement free of any restrictive legends and
in such denominations and registered in such names as Holders may request in
writing prior to sales of Securities or Exchange Securities pursuant to such
Registration Statement.
(j) If any event contemplated by paragraphs (b)(ii) through (v)
above occurs during the period for which the Company is required to maintain an
effective Registration Statement, the Company and the Guarantors will promptly
prepare a
<PAGE> 10
10
post-effective amendment to the Registration Statement or a supplement to the
related prospectus or file any other required document so that, as thereafter
delivered to purchasers of the Securities or purchasers of Exchange Securities
from a Holder, the prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities or
Exchange Securities, as the case may be, and provide the applicable trustee with
printed certificates for the Securities or Exchange Securities, as the case may
be, in a form eligible for deposit with The Depository Trust Company.
(l) The Company and the Guarantors will comply with all applicable
rules and regulations of the Commission and will make generally available to its
security holders as soon as practicable after the effective date of the
applicable Registration Statement an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act; provided that in no event
shall such earnings statement be delivered later than 45 days after the end of a
12-month period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter commencing after the effective
date of the applicable Registration Statement, which statement shall cover such
12-month period.
(m) The Company and the Guarantors will cause the Indenture or the
Exchange Securities Indenture, as the case may be, to be qualified under the
Trust Indenture Act as required by applicable law in a timely manner.
(n) The Company may require each holder of Transfer Restricted
Securities to be sold pursuant to any Shelf Registration Statement to furnish to
the Company such information concerning the Holder and the distribution of such
Transfer Restricted Securities as the Company may from time to time reasonably
require for inclusion in such Registration Statement, and the Company may
exclude from such registration the Transfer Restricted Securities of any Holder
that fails to furnish such information within a reasonable time after receiving
such request.
(o) In the case of a Shelf Registration Statement, each holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice of the Company pursuant to Section 4(b)(ii) through (v) hereof, such
holder will discontinue disposition of such Transfer Restricted Securities until
such holder's receipt of copies of the supplemental or amended prospectus
contemplated by Section 4(j) hereof or until advised in writing (the
<PAGE> 11
11
"Advice") by the Company that the use of the applicable prospectus may be
resumed. If the Company shall give any notice under Section 4(b)(ii) through (v)
during the period that the Company is required to maintain an effective
Registration Statement (the "Effectiveness Period"), such Effectiveness 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 Transfer Restricted Securities covered by such Registration Statement shall
have received (x) the copies of the supplemental or amended prospectus
contemplated by Section 4(j) (if an amended or supplemental prospectus is
required) or (y) the Advice (if no amended or supplemental prospectus is
required).
(p) In the case of a Shelf Registration Statement, the Company and
the Guarantors shall enter into such customary agreements (including, if
requested, an underwriting agreement in customary form) and take all such other
action, if any, as Holders of a majority in aggregate principal amount of the
Securities or Exchange Securities being sold or the managing underwriters (if
any) shall reasonably request in order to facilitate any disposition of
Securities pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, each of the
Company and the Guarantors shall (i) make reasonably available for inspection by
a representative of, and Special Counsel (as defined in Section 5 below) acting
for, Holders of a majority in aggregate principal amount of the Securities or
Exchange Securities being sold and any underwriter participating in any
disposition of Securities or Exchange Securities pursuant to such Shelf
Registration Statement, all relevant financial and other records, pertinent
corporate documents and properties of the Company and and the Guarantors and
(ii) use its reasonable best efforts to have its officers, directors, employees,
accountants and counsel supply all relevant information reasonably requested by
such representative, Special Counsel or any such underwriter (an "Inspector") in
connection with such Shelf Registration Statement.
(r) In the case of a Shelf Registration Statement, the Company and
the Guarantors shall, if requested by Holders of a majority in aggregate
principal amount of the Securities or Exchange Securities being sold, their
Special Counsel or the managing underwriters (if any) in connection with such
Shelf Registration Statement, use their reasonable best efforts to cause (i)
their counsel to deliver an opinion relating to the Shelf Registration Statement
and the Securities or Exchange Securities, as applicable, in customary form,
(ii) their officers to execute and deliver all customary documents and
certificates requested by Holders of a majority in aggregate principal amount of
the Securities or Exchange Securities being sold, their Special Counsel or the
managing underwriters (if any) and (iii) their independent public accountants to
provide a comfort
<PAGE> 12
12
letter in customary form, subject to receipt of appropriate documentation as
contemplated, and only if permitted, by Statement of Auditing Standards No. 72.
5. Registration Expenses. The Company and the Guarantors will bear
all expenses incurred in connection with the performance of their obligations
under Sections 1, 2, 3 and 4 and the Company and the Guarantors will reimburse
the Initial Purchaser and the Holders for the reasonable fees and disbursements
of one firm of attorneys (in addition to any local counsel) chosen by the
Holders of a majority in aggregate principal amount of the Securities and the
Exchange Securities to be sold pursuant to each Registration Statement (the
"Special Counsel") acting for the Initial Purchaser or Holders in connection
therewith.
6. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Exchanging Dealer or the Initial Purchaser,
as applicable, the Company and the Guarantors shall jointly and severally
indemnify and hold harmless each Holder, its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls such Holder within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 6 and
Section 7 as a Holder) from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of Securities or Exchange Securities), to which that Holder may become
subject, whether commenced or threatened, under the Securities Act, the Exchange
Act, any other federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any such Registration Statement or any prospectus
forming part thereof or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and shall
reimburse each Holder promptly upon demand for any legal or other expenses
reasonably incurred by that Holder in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss,
<PAGE> 13
13
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company and the Guarantors shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with any Holders' Information; and provided, further, that with
respect to any such untrue statement in or omission from any related preliminary
prospectus, the indemnity agreement contained in this Section 6(a) shall not
inure to the benefit of any Holder from whom the person asserting any such loss,
claim, damage, liability or action received Securities or Exchange Securities to
the extent that such loss, claim, damage, liability or action of or with respect
to such Holder results from the fact that both (A) to the extent required by
applicable law, a copy of the final prospectus was not sent or given to such
person at or prior to the written confirmation of the sale of such Securities or
Exchange Securities to such person and (B) the untrue statement in or omission
from the related preliminary prospectus was corrected in the final prospectus
unless, in either case, such failure to deliver the final prospectus was a
result of non-compliance by the Company with Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder
shall indemnify and hold harmless the Company, the Guarantors, their affiliates,
their respective officers, directors, employees, representatives and agents, and
each person, if any, who controls the Company or the Guarantors within the
meaning of the Securities Act or the Exchange Act (collectively referred to for
purposes of this Section 6(b) and Section 7 as the Company), from and against
any loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Company may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
any such Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with any Holders' Information
furnished to the Company by such Holder, and shall reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that no such Holder
shall be liable for any indemnity claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Securities or Exchange
Securities pursuant to such Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 6 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses)
<PAGE> 14
14
by such failure; and provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 6. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 6(a) and 6(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party(which
consent shall not be unreasonably withheld), 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
<PAGE> 15
15
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
7. Contribution. If the indemnification provided for in Section 6 is
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, in such proportion as shall be appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party on the
other with respect to the actions, statements or omissions that resulted in such
loss, claim, damage or liability, or action in respect thereof, 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 any action in question, including any untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact, has been taken or made by, or relates to information supplied by,
such indemnifying party or indemnified party, and the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section 7 were
to be determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to above in
this Section 7 shall be deemed to include, for purposes of this Section 7, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 7, an
indemnifying party that is a holder of Transfer Restricted Securities or
Exchange Securities shall not be required to contribute any amount in excess of
the amount by which the total price at which the Transfer Restricted Securities
or Exchange Securities sold by such indemnifying party to any purchaser exceeds
the amount of any damages which such indemnifying party has otherwise paid or
become liable to pay by reason of any 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.
8. Rules 144 and 144A. The Company and the Guarantors shall use
their reasonable 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 Guarantors are not required to file such reports, they
will, upon the written request of any holder of Transfer Restricted Securities,
make publicly available other information so long as necessary to permit sales
of their securities pursuant to Rules 144 and 144A.
<PAGE> 16
16
The Company and the Guarantors covenant that they will take such further action
as any holder of Transfer Restricted Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell Transfer
Restricted Securities 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)). Notwithstanding the foregoing,
nothing in this Section 8 shall be deemed to require the Company to register any
of its securities pursuant to the Exchange Act.
9. Underwritten Registrations. If any of the Transfer Restricted
Securities 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 Transfer Restricted Securities
included in such offering, subject to the consent of the Company (which shall
not be unreasonably withheld or delayed), and such holders shall be responsible
for all underwriting commissions and discounts in connection therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
lock-up letters, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions of
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities and the Exchange Securities, taken as a
single class. 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 the Holders of Securities or Exchange Securities whose Securities or
Exchange Securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of a majority in aggregate principal amount of the Securities or
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
<PAGE> 17
17
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 10(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy
in like manner to the Initial Purchaser;
(2) if to the Initial Purchaser, initially at its address set forth
in the Purchase Agreement; and
(3) if to the Company or a Guarantor, initially at the address of
the Company set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) 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.
(e) Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
<PAGE> 18
18
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(h) Remedies. In the event of a breach by the Company or the
Guarantors, or by any holder of Transfer Restricted Securities, of any of their
obligations under this Agreement, each holder of Transfer Restricted Securities
or the Company and each Guarantor, as the case may be, in addition to being
entitled to exercise all rights granted by law, including recovery of damages
(other than the recovery of damages for a breach by the Company or any of the
Guarantors of any of their obligations under Sections 1 or 2 hereof for which
liquidated damages have been paid pursuant to Section 3 hereof), will be
entitled to specific performance of its rights under this Agreement. The
Company, the Guarantors and each holder of Transfer Restricted Securities 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 agree 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.
(i) No Inconsistent Agreements. The Company and each of the
Guarantors represents, warrants and agrees that (i) it has not entered into and
shall not, on or after the date of this Agreement, enter into any agreement that
is inconsistent with the rights granted to the holders of Transfer Restricted
Securities in this Agreement or otherwise conflicts with the provisions hereof,
(ii) it has not previously entered into any agreement which remains in effect
granting any registration rights with respect to any of its debt securities to
any person and (iii) 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 Transfer Restricted Securities, it shall not grant to
any person the right to request the Company to register any debt securities of
the Company under the Securities Act unless the rights so granted are not in
conflict or inconsistent with the provisions of this Agreement.
(j) No Piggyback on Registrations. Neither the Company nor any of
its security holders (other than the holders of Transfer Restricted Securities
in such capacity) shall have the right to include any securities of the Company
in any Shelf Registration or Registered Exchange Offer other than Transfer
Restricted Securities.
(k) 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 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
<PAGE> 19
19
or invalidated, and the parties hereto shall use their reasonable best 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.
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Guarantors and you.
Very truly yours,
NEENAH CORPORATION
By______________________________
Name:
Title:
HARTLEY CONTROLS CORPORATION
By______________________________
Name:
Title:
NEENAH TRANSPORT, INC.
By______________________________
Name:
Title:
<PAGE> 20
20
Accepted:
CHASE SECURITIES INC.
By____________________________
Authorized Signatory
<PAGE> 21
ANNEX A
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Registered Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Securities received in
exchange for Securities where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company and the Guarantors have agreed that, for a period of 180
days after the Expiration Date (as defined herein) they will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
<PAGE> 22
ANNEX B
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities, where such Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE> 23
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Registered Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Securities received in exchange for Securities where such Securities were
acquired as a result of market-making activities or other trading activities.
The Company and the Guarantors have agreed that, for a period of 180 days after
the Expiration Date, they will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until _______________, 1997, all dealers effecting transactions in the
Exchange Securities may be required to deliver a prospectus. 1/
Neither the Company nor the Guarantors will receive any
proceeds from any sale of Exchange Securities by broker-dealers. Exchange
Securities received by broker-dealers for their own account pursuant to the
Registered Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Securities or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for its
own account pursuant to the Registered Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be deemed to
be an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of Exchange Securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of 180 days after the Expiration Date, the
Company and the Guarantors will promptly send additional copies of this
Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer that requests such documents in the
- --------
1/ In addition, the legend required by Item 502(e) of Regulation
S-K will appear on the back cover page of the Registered
Exchange Offer prospectus.
<PAGE> 24
Letter of Transmittal. The Company and the Guarantors have agreed to pay all
expenses incident to the Registered Exchange Offer (including the expenses of
one counsel for the Holders of the Securities) other than commissions or
concessions of any broker-dealers and will indemnify the Holders of the
Securities (including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
<PAGE> 25
ANNEX D
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:__________________________________________________________________
Address:_______________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE> 1
Exhibit 4.10
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("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/
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE 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.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE
- --------
1 This paragraph should only be added if the Security is issued in global
form.
<PAGE> 2
2
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT 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 WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) 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 SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PURCHASE
PRICE OF $250,000 FOR SUCH SECURITIES FOR INVESTMENT PURPOSES 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 THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE
(D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF ANY OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
COMPANY AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
NEENAH CORPORATION
11-1/8% SERIES C SENIOR SUBORDINATED NOTE DUE 2007
No. # CUSIP No. [ ]
$[ ]
NEENAH CORPORATION, a Wisconsin corporation, promises to pay
to [ ], or registered assigns, the principal sum of $[ ] on May 1, 2007.
<PAGE> 3
3
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: July 1, 1997
NEENAH CORPORATION,
by
-----------------------
Name:
Title:
-----------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee, certifies [Seal]
that this is one of
the Securities referred
to in the Indenture,
by
---------------------------
Authorized Signatory
<PAGE> 4
4
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
11-1/8% Series C Senior Subordinated Note due 2007
1. Interest
Neenah Corporation, a Wisconsin corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above. The Company and the
Guarantor Subsidiaries will use their best efforts to have the Exchange Offer
Registration Statement or, if applicable, the Shelf Registration Statement (each
a "Registration Statement") declared effective by the Commission as promptly as
practicable after the filing thereof. If (i) the Shelf Registration Statement or
Exchange Offer Registration Statement, as applicable under the Exchange and
Registration Rights Agreement is not filed with the Commission on or prior to 45
days after the Issue Date, (ii) the Exchange Offer Registration Statement or, as
the case may be, the Shelf Registration Statement, is not declared effective
within 105 days after the Issue Date, (iii) the Exchange Offer is not
consummated on or prior to 135 days after the Issue Date, or (iv) the Shelf
Registration Statement is filed and declared effective within 105 days after the
Issue Date but shall thereafter cease to be effective (at any time that the
Company is obligated to maintain the effectiveness thereof) without being
succeeded within 30 days by an additional Registration Statement filed and
declared effective (each such event referred to in clauses (i) through (iv), a
"Registration Default"), the Company will pay liquidated damages to each
<PAGE> 5
5
holder of Transfer Restricted Securities, during the period of such Registration
Default, in an amount equal to $0.192 per week per $1,000 principal amount of
the Securities constituting Transfer Restricted Securities held by such holder
until the applicable Registration Statement is filed or declared effective, the
Exchange Offer is consummated or the Shelf Registration Statement again becomes
effective, as the case may be. All accrued liquidated damages shall be paid to
holders in the same manner as interest payments on the Securities on semi-annual
payment dates which correspond to interest payment dates for the Securities.
Following the cure of all Registration Defaults, the accrual of liquidated
damages will cease. The Trustee shall have no responsibility with respect to the
determination of the amount of any such liquidated damages. For purposes of the
foregoing, "Transfer Restricted Securities" means each Initial Security until
(i) the date on which such Initial Security has been exchanged for a freely
transferable Exchange Security in the Exchange Offer, (ii) the date on which
such Initial Security has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement or (iii) the
date on which such Initial Security is distributed to the public pursuant to
Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under
the Securities Act.
The Company will pay interest and liquidated damages, if any,
semiannually on May 1 and November 1 of each year. Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from July 1, 1997. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay interest
on overdue principal at the rate borne by the Securities plus 1% per annum, and
it shall pay interest on overdue installments of interest at the same rate to
the extent lawful.
2. Method of Payment
The Company will pay interest (except defaulted interest) on
and liquidated damages, if any, in respect of the Securities to the Persons who
are registered holders of Securities at the close of business on the April 15 or
<PAGE> 6
6
October 15 next preceding the interest payment date even if Securities are
canceled after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money or by wire transfer of federal funds.
<PAGE> 7
7
3. Paying Agent and Registrar
Initially, UNITED STATES TRUST COMPANY OF NEW YORK, a New York
banking corporation ("Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice to the Holders. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. Indenture and First Supplemental Indenture
The Company issued the Securities under an Indenture dated as
of July 1, 1997 ("Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
Section 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are unsecured senior subordinated obligations
of the Company limited to $45,000,000 aggregate principal amount at any one time
outstanding (subject to Section 2.07 of the Indenture). This Security is one of
the Initial Securities referred to in the Indenture. The Securities include the
Initial Securities and any Exchange Securities issued in exchange for the
Initial Securities pursuant to the Indenture. The Initial Securities and the
Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on the Incurrence of
Indebtedness by the Company and its Restricted Subsidiaries; the payment of
dividends on, and redemption of, Capital Stock of the Company and its Restricted
Subsidiaries and the redemption of certain Subordinated Obligations of the
Company and its Restricted Subsidiaries; Investments; sales of assets and
Restricted Subsidiary Capital Stock; certain transactions with Affiliates of the
Company; the sale or issuance of Capital Stock of the Restricted Subsidiaries;
the creation
<PAGE> 8
8
of Liens; the lines of business in which the Company and its Restricted
Subsidiaries may operate; Sale/Leaseback Transactions and consolidations,
mergers and transfers of all or substantially all of the Company's assets. In
addition, the Indenture prohibits certain restrictions on distributions and
dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Initial Guarantors have
guaranteed the Company's obligations under the Indenture on a senior
subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the next two paragraphs, the Securities
may not be redeemed prior to May 1, 2002. On and after that date, the Company
may redeem the Securities in whole at any time or in part from time to time at
the following redemption prices (expressed in percentages of principal amount),
plus accrued and unpaid interest, if any, to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date that is on or prior to the date of
redemption), if redeemed during the 12-month period beginning on or after May 1
of the years set forth below:
<TABLE>
<CAPTION>
Redemption
Period Price
- ------ -----
<S> <C>
2002........................................................ 105.5625%
2003........................................................ 103.7083%
2004........................................................ 101.8542%
2005 and thereafter......................................... 100.0000%
</TABLE>
Notwithstanding the foregoing, at any time prior to May 1,
2000, the Company may redeem in the aggregate up
<PAGE> 9
9
to 40% of the original aggregate principal amount of Securities with the
proceeds of one or more Public Equity Offerings by the Company at a redemption
price (expressed as a percentage of principal amount) of 111.125% plus accrued
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date); provided, however, that at least 60% of the original
aggregate principal amount of the Securities must remain outstanding after each
such redemption.
Notwithstanding the preceding two paragraphs, the Company
shall not redeem the Original Securities unless, substantially concurrently with
such redemption, the Company redeems an aggregate principal amount of Securities
(rounded to the nearest integral multiple of $1000) equal to the product of: (1)
a fraction, the numerator of which is the aggregate principal amount of Original
Securities to be so redeemed and the denominator of which is the aggregate
principal amount of Original Securities outstanding immediately prior to such
proposed redemption, and (2) the aggregate principal amount of Securities
outstanding immediately prior to such proposed redemption. The Company shall not
redeem the Securities unless, substantially concurrently with such redemption,
the Company redeems an aggregate principal amount of Original Securities
(rounded to the nearest integral multiple of $1000) equal to the product of: (1)
a fraction, the numerator of which is the aggregate principal amount of
Securities to be so redeemed and the denominator of which is the aggregate
principal amount of Securities outstanding immediately prior to such proposed
redemption, and (2) the aggregate principal amount of Original Securities
outstanding immediately prior to such proposed redemption.
At any time prior to May 1, 2002, the Securities may be
redeemed, in whole or in part, at the option of the Company within 180 days
after a Change of Control, at a redemption price equal to the sum of (i) the
principal amount thereof plus (ii) accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date that
is on or
<PAGE> 10
10
prior to the date of redemption) plus (iii) the Applicable Premium.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. Put Provisions
Upon a Change of Control, unless the Company has elected to
redeem the Securities pursuant to paragraph 5, any Holder of Securities will
have the right, subject to certain conditions specified in the Indenture, to
cause the Company to repurchase all or any part of the Securities of such Holder
at a purchase price equal to 101% of the principal amount of the Securities to
be repurchased plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of purchase) as provided in, and subject to the terms of, the
Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid before the Securities may be
paid. In addition, each Subsidiary Guaranty is subordinated to Senior
Indebtedness of the relevant Guarantor Subsidiary,
<PAGE> 11
11
as defined in the Indenture. The Company and each Guarantor Subsidiary agrees,
and each Securityholder by accepting a Security agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give it
effect and appoints the Trustee as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay
any taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
<PAGE> 12
12
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be. The Company shall not exercise its option to
defease the Securities unless it defeases the Original Securities equivalently
and substantially simultaneously, and the Company shall not exercise its option
to defease the Original Securities unless it defeases the Securities
equivalently and substantially simultaneously.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any past default or noncompliance with any provision may be waived
with the consent of the Holders of a majority in principal amount then
outstanding of the Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company and the
Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article V of the Indenture,
or to provide for uncertificated Securities in addition to or in place of
certificated Securities, or to add guarantees with respect to the Securities or
to secure the Securities, or to release Guarantor Subsidiaries when permitted by
the Indenture, or to add additional covenants or surrender rights and powers
conferred on the Company, or to comply with any request of the SEC in connection
with qualifying the Indenture under the Act, or to make any other change that
does not adversely affect the rights of any Securityholder, or to provide for
the issuance and authorization of the Exchange Securities.
<PAGE> 13
13
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph
5 of the Securities, or failure by the Company to redeem or purchase, upon
declaration or otherwise (whether or not such payment is prohibited by Article
X), Securities when required; (iii) failure by the Company or any Guarantor
Subsidiary to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds
$5,000,000 or its foreign currency equivalent; (v) certain events of bankruptcy,
insolvency or reorganization with respect to the Company and its Restricted
Subsidiaries; (vi) certain judgments or decrees not covered by insurance for the
payment of money in excess of $5,000,000 or its foreign currency equivalent
against the Company or a Restricted Subsidiary; and (vii) a Subsidiary Guaranty
ceasing to be in full force and effect (other than in accordance with its terms)
or any Guarantor Subsidiary denies or disaffirms its obligations under the
Indenture or any Subsidiary Guaranty and such Default continues for 10 days. If
an Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Securities may declare all the Securities
to be due and payable immediately. Certain events of bankruptcy or insolvency
are Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may with hold from Securityholders notice of any continuing
Default (except a Default in payment of principal, premium, if any, or interest)
if and so long as a committee of its Trust
<PAGE> 14
14
Officers in good faith determines that withholding notice is in the interest of
the Holders.
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may other wise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Guarantor Subsidiary shall not have any liability for any
obligations of the Company or a Guarantor Subsidiary under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Governing Law
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. Authentication
This Security shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Security.
<PAGE> 15
15
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TENENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITY HOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
NEENAH CORPORATION
2121 BROOKS AVENUE
NEENAH, WI 54957
ATTENTION OF CHIEF FINANCIAL OFFICER
<PAGE> 16
16
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Company. The
agent may substitute another to act for him.
____________________________________________________________
Date: ________________ Your Signature: _____________________
Signature Guarantee:_______________________________________
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
____________________________________________________________
Sign exactly as your name appears on the other side of this Security.
<PAGE> 17
17
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
/ / has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depository a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated
above);
/ / has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such
<PAGE> 18
18
Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW:
(1) / / to the Company; or
(2) / / pursuant to an effective registration
statement under the Securities Act of
1933; or
(3) / / inside the United States to a "qualified
institutional buyer" (as defined in
Rule 144A under the Securities Act of
1933) that purchases for its own account
or for the account of a qualified
institutional buyer to whom notice is
given that such transfer is being made
in reliance on Rule 144A, in each case
pursuant to and in compliance with
Rule 144A under the Securities Act of
1933; or
(4) / / outside the United States in an offshore
transaction within the meaning of Regulation
S under the Securities Act in compliance
with Rule 904 under the Securities Act of
1933; or
(5) / / pursuant to another available exemption
from registration provided by Rule 144
under the Securities Act of 1933.
<PAGE> 19
19
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however,
that if box (4) or (5) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act.
------------------------
Signature
Signature Guarantee:
- --------------------- --------------------------
Signature must be guaranteed Signature
- ------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has
<PAGE> 20
20
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated: ________________ ______________________________
NOTICE: To be executed by
an executive officer
<PAGE> 21
21
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase) Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 22
22
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security
purchased by the Company pursuant to Section 4.06 or 4.08 of the
Indenture, check the box:
/ /
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.06 or
4.08 of the Indenture, state the amount: $
Date: __________________ Your Signature: __________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:_______________________________________
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
<PAGE> 23
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
[Global Securities Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("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 OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. (2)
NEENAH CORPORATION
11-1/8% SERIES D SENIOR SUBORDINATED NOTE DUE 2007
No. Cusip No. [ ]
$[ ]
NEENAH CORPORATION, a Wisconsin corporation, promises to pay to [ ],
or registered assigns, the principal sum of $ on May 1, 2007.
Interest Payment Dates: May 1 and November
Record Dates: April 15 and October 15
- --------
(2) This paragraph should only be added if the Security is issued in global
form.
<PAGE> 24
2
Additional provisions of this Security are set forth on the other
side of this Security.
Dated:
NEENAH CORPORATION,
by______________________________
Name:
Title:
______________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee, certifies [Seal]
that this is one of
the Securities referred
to in the Indenture,
by______________________________
Authorized Signatory
<PAGE> 25
3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
11-1/8% Series D Senior Subordinated Note due 2007
1. Interest
NEENAH CORPORATION, a Wisconsin corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above. The Company will pay
interest and liquidated damages, if any, semiannually on May 1 and November 1 of
each year. Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from July 1,
1997. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the April 15 or October 15 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may pay principal and interest by
check payable in such money or by wire transfer of federal funds.
3. Paying Agent and Registrar
Initially, UNITED STATES TRUST COMPANY OF NEW YORK, a New York
banking corporation ("Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice to the Holders. The Company or any of its domestically
incorporated
<PAGE> 26
4
Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture; First Supplemental Indenture
The Company, issued the Securities under the Indenture. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are unsecured senior subordinated obligations of the
Company limited to $45,000,000 aggregate principal amount at any one time
outstanding (subject to Section 2.07 of the Indenture). This Security is one of
the Exchange Securities referred to in the Indenture. The Securities include the
Initial Securities and any Exchange Securities issued in exchange for the
Initial Securities pursuant to the Indenture. The Initial Securities and the
Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on the Incurrence of
Indebtedness by the Company and its Restricted Subsidiaries; the payment of
dividends on, and redemption of, Capital Stock of the Company and its Restricted
Subsidiaries and the redemption of certain Subordinated Obligations of the
Company and its Restricted Subsidiaries; Investments; sales of assets and
Restricted Subsidiary Capital Stock; certain transactions with Affiliates of the
Company; the sale or issuance of Capital Stock of the Restricted Subsidiaries;
the creation of Liens; the lines of business in which the Company and its
Restricted Subsidiaries may operate; Sale/Leaseback Transactions and
consolidations, mergers and transfers of all or substantially all of the
Company's assets. In addition, the Indenture prohibits certain restrictions on
distributions and dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Initial Guarantors have
<PAGE> 27
5
guaranteed the Company's obligations under the Indenture on a senior
subordinated basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the next two paragraphs, the Securities may
not be redeemed prior to May 1, 2002. On and after that date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest, if any, to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date that is on or prior to the date of
redemption), if redeemed during the 12-month period beginning on or after May 1
of the years set forth below:
<TABLE>
<CAPTION>
Redemption
Period Price
- ------ -----
<S> <C>
2002.................................................................... 105.5625%
2003.................................................................... 103.7083%
2004.................................................................... 101.8542%
2005 and thereafter..................................................... 100.0000%
</TABLE>
Notwithstanding the foregoing, at any time on or prior to May 1, 2000,
the Company may redeem in the aggregate up to 40% of the original aggregate
principal amount of Securities with the proceeds of one or more Public Equity
Offerings at a redemption price (expressed as a percentage of principal amount
thereof) of 111.125% plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption); provided, however, that at least 60% of the original
aggregate principal amount of the Securities must remain outstanding after each
such redemption.
Notwithstanding the preceding two paragraphs, the Company shall not
redeem the Original Securities unless, substantially concurrently with such
redemption, the Company redeems an aggregate principal amount of Securities
(rounded to the nearest integral multiple of $1000) equal to the product of: (1)
a fraction, the numerator of which is the aggregate principal amount of Original
Securities to be so redeemed and the
<PAGE> 28
6
denominator of which is the aggregate principal amount of Original Securities
outstanding immediately prior to such proposed redemption,and (2) the aggregate
principal amount of Securities outstanding immediately prior to such proposed
redemption. The Company shall not redeem the Securities unless, substantially
concurrently with such redemption, the Company redeems an aggregate principal
amount of Original Securities (rounded to the nearest integral multiple of
$1000) equal to the product of: (1) a fraction, the numerator of which is the
aggregate principal amount of Securities to be so redeemed and the denominator
of which is the aggregate principal amount of Securities outstanding immediately
prior to such proposed redemption,and (2) the aggregate principal amount of
Original Securities outstanding immediately prior to such proposed redemption.
At any time prior to May 1, 2002, the Securities may be redeemed, in
whole or in part, at the option of the Company within 180 days after a Change of
Control, at a redemption price equal to the sum of (i) the principal amount
thereof plus (ii) accrued and unpaid interest, if any, to the redemption date
(subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption) plus (iii) the Applicable Premium.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued interest
on all Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
<PAGE> 29
7
7. Put Provisions
Upon a Change of Control, unless the Company has elected to redeem
the Securities pursuant to paragraph 5, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to purchase all or any part of the Securities of such Holder at a
repurchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of purchase) as provided in, and subject to the terms of, the
Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid before the Securities may be
paid. In addition, each Subsidiary Guaranty is subordinated to Senior
Indebtedness of the relevant Guarantor Subsidiary, as defined in the Indenture.
The Company and each Guarantor Subsidiary agrees, and each Securityholder by
accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the Trustee
as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
<PAGE> 30
8
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be. The Company shall not exercise its option to defease the
Securities unless it defeases the Original Securities equivalently and
substantially simultaneously, and the Company shall not exercise its option to
defease the Original Securities unless it defeases the Securities equivalently
and substantially simultaneously.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any past default or noncompliance with any provision may be waived with
the consent of the Holders of a majority in principal amount then outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article V of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to add
<PAGE> 31
9
guarantees with respect to the Securities or to secure the Securities, or to
release Guarantor Subsidiaries when permitted by the Indenture or to add
additional covenants or surrender rights and powers conferred on the Company, or
to comply with any request of the SEC in connection with qualifying the
Indenture under the Act, or to make certain changes in the subordination
provisions, or to make any change that does not adversely affect the rights of
any Securityholder.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30
days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities, or failure by the Company to redeem or purchase, upon
declaration or otherwise (whether or not such payment is prohibited by Article
X), Securities when required; (iii) failure by the Company or any Guarantor
Subsidiary to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds
$5,000,000 or its foreign currency equivalent; (v) certain events of bankruptcy,
insolvency or reorganization with respect to the Company and its Restricted
Subsidiaries; and (vi) certain judgments or decrees not covered by insurance for
the payment of money in excess of $5,000,000 or its foreign currency equivalent
against the Company or a Restricted Subsidiary; and (vii) a Subsidiary Guaranty
ceasing to be in full force and effect (other than in accordance with its terms)
or any Guarantor Subsidiary denies or disaffirms its obligations under the
Indenture or any Subsidiary Guaranty and such Default continues for 10 days. If
an Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Securities may declare all the Securities
to be due and payable immediately. Certain events of bankruptcy or insolvency
are Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
<PAGE> 32
10
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal, premium, if any, or interest) if and
so long as a committee of its Trust Officers in good faith determines that
withholding notice is in the interest of the Holders.
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Guarantor Subsidiary shall not have any liability for any
obligations of the Company or a Guarantor Subsidiary under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Governing Law
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
<PAGE> 33
11
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
NEENAH CORPORATION
2121 Brooks Avenue
Neenah, WI 54957
Attention of Chief Financial Officer
<PAGE> 34
12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint _________________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
________________________________________________________________________________
Date: ________________ Your Signature: _____________________
Signature Guarantee:_______________________________________
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
<PAGE> 35
13
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
<TABLE>
<CAPTION>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase) Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 36
14
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
/ /
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.06 or
4.08 of the Indenture, state the amount: $
Date: __________________ Your Signature: __________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:_______________________________________
(Signature must be guaranteed by a
participant in a recognized signature
guarantee medallion program)
<PAGE> 37
EXHIBIT C
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS TO NON-QIB
INSTITUTIONAL ACCREDITED INVESTORS]
Transferee Letter of Representation
Neenah Corporation
c/o United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Dear Ladies and Gentlemen:
This certificate is delivered to request a transfer of $ _________
principal amount of the 11-1/8% Series C Senior Subordinated Notes due 2007 (the
"Securities") of Neenah Corporation (the "Company").
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name: ___________________________________
Address: ________________________________
Taxpayer ID Number: _____________________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Securities
and invest in or purchase securities similar to the Securities in the normal
course of our business. We and any accounts for which we are acting are each
able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence.
<PAGE> 38
2
We agree on our own behalf and on behalf of any investor account for which we
are purchasing Securities to offer, sell or otherwise transfer such Securities
prior to the date which is two years after the later of the date of original
issue and the last date on which the Company or any affiliate of the Company was
the owner of such Securities (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under the
Securities Act, to a person we reasonably believe is a qualified institutional
buyer under Rule 144A (a "QIB") that purchases for its own account or for the
account of a QIB and 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 within the meaning of Regulation S under the Securities Act or (e)
to an institutional "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act that is purchasing for its own account
or for the account of such an institutional "accredited investor", in each case
in a transaction involving a minimum principal amount of Securities of $250,000
or (f) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of our property or the property of
such investor account or accounts be at all times within our or their control
and in compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Securities is proposed
to be made pursuant to clause (e) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Company and the Trustee, which
shall provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act and that it is acquiring such Securities for investment
purposes and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that the Company and the Trustee reserve the right prior
to any offer, sale or other transfer prior to the Resale Termination Date of the
Securities
<PAGE> 39
3
pursuant to clause (d), (e) or (f) above to require the delivery of an opinion
of counsel, certifications and/or other information satisfactory to the Company
and the Trustee.
TRANSFEREE:___________________
BY____________________________
<PAGE> 40
EXHIBIT D
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"),
dated as of [ ], among [NEW GUARANTOR SUBSIDIARY] (the "New
Guarantor Subsidiary"), a subsidiary of NEENAH CORPORATION (or
its successor), a Wisconsin corporation (the "Company"), THE
COMPANY, on behalf of itself and the Guarantor Subsidiaries
(the "Existing Guarantor Subsidiaries") under the Indenture
referred to below, and UNITED STATES TRUST COMPANY OF NEW
YORK, a New York banking corporation, as trustee under the
indenture referred to below (the "Trustee").
W I T N E S S E T H :
WHEREAS the Company and the Existing Guarantor Subsidiaries have
heretofore executed and delivered to the Trustee an Indenture (the "Indenture"),
dated as of July 1, 1997, providing for the issuance of an aggregate principal
amount of $45,000,000 of 11-1/8% Series C Senior Subordinated Notes due
2007 (the "Securities").
WHEREAS Section 4.15 of the Indenture provides that under certain
circumstances the Company is required to cause the New Guarantor Subsidiary to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the New Guarantor Subsidiary shall unconditionally guarantee all of the
Company's obligations under the Securities pursuant to a Subsidiary Guaranty on
the terms and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the
Company and Existing Guarantor Subsidiaries are authorized to execute and
deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor Subsidiary, the Company, the Existing Guarantor Subsidiaries and the
Trustee
<PAGE> 41
2
mutually covenant and agree for the equal and ratable benefit of the holders of
the Securities as follows:
1. Definitions. (a) Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
(b) For all purposes of this Supplemental Indenture, except as
otherwise herein expressly provided or unless the context otherwise requires:
(i) the terms and expressions used herein shall have the same meanings as
corresponding terms and expressions used in the Indenture; and (ii) the words
"herein," "hereof" and "hereby" and other words of similar import used in this
Supplement refer to this Supplement as a whole and not to any particular section
hereof.
2. Agreement to Guarantee. The New Guarantor Subsidiary hereby
agrees, jointly and severally with all other Guarantor Subsidiaries, to
Guarantee the Company's obligations under the Securities on the term and subject
to the conditions set forth in Article 11 of the Indenture and to be bound by
all other applicable provisions of the Indenture.
3. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
4. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
5. Trustee Makes No Representation. The Trustee makes
no representation as to the validity or sufficiency of this
Supplemental Indenture.
6. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
<PAGE> 42
3
7. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW GUARANTOR SUBSIDIARY],
by __________________________________
Name:
Title:
NEENAH CORPORATION, on behalf
of itself and the Existing
Guarantor Subsidiaries,
by __________________________________
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK as Trustee,
by __________________________________
Name:
Title:
<PAGE> 43
EXHIBIT E
[FORM OF CERTIFICATE TO BE DELIVERED
UPON TERMINATION OF RESTRICTED PERIOD]
On or after August 10, 1997
Neenah Corporation
c/o United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: [ ]
Re: Neenah Corporation (the "Company") 11-1/8% Series C Senior
Subordinated Notes due 2007 (the "Initial Securities") and
11-1/8% Series D Senior Subordinated Notes due 2007 (the
"Exchange Securities" and, together with the Initial
Securities, the "Securities")
Ladies and Gentlemen:
This letter relates to Securities represented by a temporary global
note certificate (the "Temporary Certificate"). Pursuant to Section 2.01 of the
Indenture dated as of July 1, 1997 relating to the Securities (the "Indenture"),
we hereby certify that (1) we are the beneficial owner of $[ ] principal amount
of Initial Securities represented by the Temporary Certificate and (2) we are a
person outside the United States to whom the Initial Securities could be
transferred in accordance with Rule 904 of Regulation S promulgated under the
Securities Act of 1933, as amended. Accordingly, you are hereby requested to
issue a Certificated Note representing the undersigned's interest in the
principal amount of Initial Securities represented by the Temporary Certificate,
all in the manner provided by the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any
<PAGE> 44
2
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.
Very truly yours,
[Name of Holder]
By:___________________________
Authorized Signature
<PAGE> 45
EXHIBIT F
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS PURSUANT TO RULE 144A]
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: [ ]
[date]
Re: Neenah Corporation (the "Company") 11-1/8%
Series C Senior Subordinated Notes due 2007
(the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $_______ aggregate principal
amount at maturity of the Securities, we hereby certify that such transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, we hereby further certify that the Securities are being transferred
to a person that we reasonably believe is purchasing the Securities for its own
account, or for one or more accounts with respect to which such person exercises
sole investment discretion, and such person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Securities are being transferred
in compliance with any applicable blue sky securities laws of any state of the
United States.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter
<PAGE> 46
2
or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.
Very truly yours,
_________________________________
[Name of Transferor]
By:_________________________
Authorized Signature
<PAGE> 47
EXHIBIT G
[Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S]
[date]
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: [ ]
Re: Neenah Corporation (the "Company") 11-1/8%
Series C Senior Subordinated Notes due 2007
(the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Securities was not made to a
person in the United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
<PAGE> 48
2
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_______________________
Authorized Signature
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF KIRKLAND & ELLIS]
To Call Writer Direct:
212 446-4800
July 25, 1997
Neenah Foundry Company
Hartley Controls Corporation
Neenah Transport, Inc.
2121 Brooks Avenue, Box 729
Neenah, Wisconsin 54927
Re: Series B 11-1/8% Senior Subordinated Notes due 2007
Ladies and Gentlemen:
We are acting as special counsel to Neenah Foundry Company, a Wisconsin
corporation (the "Company"), Hartley Controls Corporation, a Wisconsin
corporation ("Hartley") and Neenah Transport, Inc., a Wisconsin corporation
("Transport", and together with the Company and Hartley, the "Registrants") in
connection with the proposed registration by the Company of up to $150,000,000
in aggregate principal amount of the Company's Series B 11-1/8% Senior
Subordinated Notes due 2007 (the "Exchange Notes"), pursuant to a Registration
Statement on Form S-4 filed with the Securities and Exchange Commission (the
"Commission") on July 25, 1997 under the Securities Act of 1933, as amended (the
"Securities Act") (such Registration Statement, as amended or supplemented, is
hereinafter referred to as the "Registration Statement"), for the purpose of
effecting an exchange offer (the "Exchange Offer") for the Company's 111/8%
Senior Subordinated Notes due 2007 (the "Old Notes"). The Exchange Notes are to
be issued pursuant to the Indenture (the "Indenture"), dated as of April 30,
1997, among the Registrants and United States Trust Company of New York, as
Trustee, in exchange for and in replacement of the Company's outstanding Old
Notes, of which $150,000,000 in aggregate principal amount is outstanding.
In that connection, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary for the purposes of this
opinion, including (i) the corporate and organizational documents of each of the
Registrants, (ii) minutes and records of the corporate proceedings of each of
the
<PAGE> 2
Neenah Foundry Company
July 25, 1997
Page 2
Registrants with respect to the issuance of the Exchange Notes, (iii) the
Registration Statement and exhibits thereto and (iv) the Exchange and
Registration Rights Agreement, dated as of April 30, 1997, among the
Registrants, Chase Securities, Inc. and Morgan Stanley & Co. Incorporated.
For purposes of this opinion, we have assumed the authenticity of all
documents submitted to us as originals, the conformity to the originals of all
documents submitted to us as copies and the authenticity of the originals of all
documents submitted to us as copies. We have also assumed the genuineness of the
signatures of persons signing all documents in connection with which this
opinion is rendered, the authority of such persons signing on behalf of the
parties thereto other than the Registrants, and the due authorization, execution
and delivery of all documents by the parties thereto other than the Registrants.
As to any facts material to the opinions expressed herein which we have not
independently established or verified, we have relied upon statements and
representations of officers and other representatives of the Registrants and
others.
Based upon and subject to the foregoing qualifications, assumptions and
limitations and the further limitations set forth below, we are of the opinion
that:
(1) Each of the Registrants is a corporation existing and in good
standing under the Wisconsin Business Corporation Law.
(2) The sale and issuance of the Exchange Notes has been validly
authorized by the Company.
(3) When, as and if (i) the Registration Statement shall have become
effective pursuant to the provisions of the Securities Act, (ii) the Indenture
shall have been qualified pursuant to the provisions of the Trust Indenture Act
of 1939, as amended, (iii) the Old Notes shall have been validly tendered to the
Company and (iv) the Exchange Notes shall have been issued in the form and
containing the terms described in the Registration Statement, the Indenture, the
resolutions of each of the Registrant's Board of Directors (or authorized
committee thereof) authorizing the foregoing and any legally required consents,
approvals, authorizations and other order of the Commission and any other
regulatory authorities to be obtained, the Exchange Notes when issued pursuant
to the Exchange Offer will be legally issued, fully paid and nonassessable and
will constitute valid and binding obligations of the Registrants.
<PAGE> 3
Neenah Foundry Company
July 25, 1997
Page 3
Our opinions expressed above are subject to the qualifications that we
express no opinion as to the applicability of, compliance with, or effect of (i)
any bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent
conveyance, moratorium or other similar law affecting the enforcement of
creditors' rights generally, (ii) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law), (iii)
public policy considerations which may limit the rights of parties to obtain
certain remedies and (iv) any laws except the laws of the State of New York. We
advise you that issues addressed by this letter may be governed in whole or in
part by other laws, but we express no opinion as to whether any relevant
difference exists between the laws upon which our opinions are based and any
other laws which may actually govern. For purposes of the opinion in paragraph
1, we have relied exclusively upon recent certificates issued by the Wisconsin
Secretary of State and such opinion is not intended to provide any conclusion or
assurance beyond that conveyed by such certificates. We have assumed without
investigation that there has been no relevant change or development between the
respective dates of such certificates and the date of this letter.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. We also consent to the reference to our firm under the
heading "Legal Matters" in the Registration Statement. In giving this consent,
we do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of the rules and regulations of
the Commission.
We do not find it necessary for the purposes of this opinion, and
accordingly we do not purport to cover herein, the application of the securities
or "Blue Sky" laws of the various states to the issuance of the Exchange Notes.
This opinion is limited to the specific issues addressed herein, and no
opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of the State of New York be changed by legislative action, judicial
decision or otherwise.
<PAGE> 4
Neenah Foundry Company
July 25, 1997
Page 4
This opinion is furnished to you in connection with the filing of the
Registration Statement, and is not to be used, circulated, quoted or otherwise
relied upon for any other purposes.
Yours very truly,
KIRKLAND & ELLIS
<PAGE> 1
EXHIBIT 8.1
July 25, 1997
Neenah Foundry Company
2121 Brooks Avenue -- Box 729
Neenah, Wisconsin 54927
Re: Offer for all outstanding 11 1/8% Series A Senior Subordinated Notes due
2007 in exchange for 11 1/8% Series B Senior Subordinated Notes due 2007 of
Neenah Foundry Company
Ladies and Gentlemen:
We have acted as counsel to Neenah Foundry Company (the "Company") in
connection with the proposed offer (the "Exchange Offer") to exchange an
aggregate principal amount of up to $150,000,000 of its 11 1/8% Series B Senior
Subordinated Notes due 2007 (the "New Notes") for a like principal amount of its
11 1/8% Series A Senior Subordinated Notes due 2007 (the "Old Notes").
On the basis of the foregoing, it is our opinion that the statements
regarding the Exchange Offer described in the section titled "Certain Federal
Income Tax Considerations" in the Company's Amendment No. 1 Registration
Statement on Form S-4 (File No. 333-28751), filed with the Securities and
Exchange Commission on July 25, 1997 (the "Registration Statement"), are correct
in all material respects.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm in the Registration
Statement.
Very truly yours,
/s/ KIRKLAND & ELLIS
--------------------------------------
Kirkland & Ellis
<PAGE> 1
Exhibit 10.2
REDACTED
NEENAH FOUNDRY
T-78155
ATTACHMENT A
SPECIAL PROVISIONS
1) CONTRACT TERM
The initial term of this Agreement shall begin effective April 1, 1995
and end March 31, 1998. The parties agree to meet to negotiate new
Agreement not less than 90 days prior to contract expiration and
further agree to complete said negotiations not less than 60 days from
the date said negotiation began, except that the date may be extended
or otherwise changed upon mutual agreement in writing signed by both
parties.
2) VOLUME/CAPACITY COMMITMENT
Buyer agrees to purchase at least of its requirements for the Products
listed on Attachment 1A, 1 B. 1 C and 1 D; subject to ISIR approval by
Buyer and subject to Products demonstrating acceptable machineability
during pre-production qualification testing at Buyers plant or at a
designated outside machining source.
<PAGE> 2
REDACTED
Seller agrees to provide Buyer the necessary capacity to meet 100% of
Buyers U. S. and Canadian schedules, unless Buyer's product
requirements exceed Sellers total equipment capacity.
3) SCRAP SURCHARGE
a) The prices set forth on Attachments 1A through 1D at the time
this Agreement is signed shall be known as Base Prices. The
Base Price for each Product shall be adjusted up Of down for
the cost associated with changes in specifications and for the
adjustments made pursuant to Paragraph 4, and each price, as
adjusted, shall be the new Base Price for the Product in
question. Base Prices shall not be affected by any scrap
adjustments made pursuant to this Paragraph 3.
b) The effective price for a Product shall be determined by
application of a steel scrap adjustment to the then current
Base Price according to the formula provided below. Steel
scrap adjustment shall be calculated on a semi-annual basis
and shall be effective beginning April 1, 1995 and upon each
October 1 and April 1 thereafter.
c) The base cost of scrap included in the base pricing is
$150.00/gross ton. The formula set forth below shall be used
to calculate the amount of the steel scrap adjustment when
average price (HAP-) exceeds $150.00 per gross ton, downward
when price drops below S135.00 per gross ton per the formula
shown below.
2
<PAGE> 3
REDACTED
d) The AP of scrap for six months immediately prior to the April
1 or October 1 steel scrap adjustment date shall be determined
by averaging the midpoint of the range shown for the prices
for the preceding six months as shown in the Chicago District
Iron Ace for low phosphate steel plate 2' and under.
e) The amount of the scrap adjustment equals ({AP-BP}/2240) x A
where BP equals the scrap base of $150.000/gross ton, A equals
the weight in pounds per part number as shown on the
Attachments.
f) The amount of the scrap adjustment for each period shall be
added to the Base Price to determine the operative price for
the period. If the AP of steel scrap is between $135.00/ton
and $150.00/ton, We Base Price shall be used as the operative
price for the applicable period.
g) The AP effective on April 1, 1995 and reflected in the initial
purchase order prices shall be 'gross ton.
4) PRICING
Seller agrees chat base prices for Products identified on Attachments
1A - 1D shall be in accordance with the attached schedule.
5) MACHINE SCRAP
3
<PAGE> 4
REDACTED
Seller agrees that if Buyer returns Products as defective or
non-conforming, Seller shall reimburse Buyer Me When effective price of
the Product as shown on the Attachments. Additionally, in the event
Buyer has begun machining of Products prior to their identification as
unacceptable, Seller agrees to reimburse Buyer on a part number basis
its cost not to exceed the value indicated in Attachment II, of said
machining as outlined below (hereinafter, the Machine Chargeback
Policy).
a) In the event Buyer identifies Products as unacceptable, Buyer
agrees to promptly notify Seller as below:
i. Buyer will promptly contact Seller by telephone or
fax, identifying any defective material problem prior
to any action by Buyer.
ii. Buyer will provide Seller with the opportunity to
promptly replace or repair defective material. Seller
agrees that replacement of defective material must be
done so as not to interrupt Buyer's production
schedule.
iii. Buyer may in certain instances considered critical by
Buyer and after notification to Seller proceed with
the machining of defective material in order to
salvage satisfactory parts. Buyer agrees to pursue
all practical alternatives in an attempt to minimize
cost for such work. Seller agrees to absorb machine
scrap costs resulting from defective Products at the
rate indicated in Attachment 11.
4
<PAGE> 5
REDACTED
iv. In the event sorting or salvage of Products must be
done by the Buyer to accommodate customer needs, a
rate of /hour will be charged to Seller for actual
hours required for this task. Seller has the right to
sort in Buyers plant if time permits.
v. If Products are not salvageable and replacement is
the only resource, all costs as listed in paragraph 5
are applicable.
vi. Seller field quality personnel will make pant visits
in a timely manner to review rejected Products and
make dispositions. Buyer will provide assistance to
Sellers representative without cost to Seller.
6) DELIVERY
Seller will be financially responsible for all costs which result from
the Sellers failure to deliver Products within the following
parameters:
All Products ordered on Buyers Vendor Release & Shipping
Schedule supplied from Seller's plants two (2) and three (3)
will be guaranteed shipped within twenty (20) working days
from receipt of the schedule. Working days are defined as
Mondays through Fridays exclusive of national holidays. Seller
agrees to attempt to make schedule changes upon shorter notice
from Buyer; however, Buyer recognizes that Sellers production
scheduling system limits aggregate volume changes to +/ 10%
for change requests for shipment within twenty (20) working
5
<PAGE> 6
REDACTED
days from the change request. Buyer also agrees h use its
release to schedule material according to the normal
parameters of that schedule and afford Seller of as much
advance notice of schedule changes as possible within the
above.
Sellers responsibility for costs attributable to late delivery are
limited to the sum of the elements listed below
a. Premium freight cost both to Buyer and to the end customer.
b. Overtime premium costs at Buyer or its subcontractors.
c. Incremental setup costs at Buyer or its subcontractors.
d. Other delivery related costs which are mutually agreeable to Buyer
and Seller.
Buyer recognizes that circumstances arise where failure to perform
within specified time frames is not entirely under Sellers control
(i.e., timely feedback from Buyer on quality problems, blue print
interpretation differences, machine tool setup changes, or events
of force majeure). Under such circumstances, Buyer and Seller will
mutually agree to responsibilities and incidental delivery costs.
7) THIRD PARTY AUTHORIZATION
Products on the Purchase Order and Products which may be added to the
Purchase Order during the term of this Agreement, may be purchased by a
Buyer location other than that shown on Buyer's purchase order during
the term of this Agreement. Furthermore, Buyer may direct shipments of
their product to a third park location. These Products will be
6
<PAGE> 7
REDACTED
supplied to the designated location at the same price as at the
original location. Shipping terms shall be FOB Sellers plant. In the
event Buyers non-North American locations desire to purchase Products
from Seller, the price of said Products will be the same as the price
for Products hereunder. Any such purchase will be made under a
separately negotiated Agreement but under terms and conditions in
commensurate with those of this Order.
8) TECHNOLOGY CHANGE
If, at any time during the term of this Agreement, a major
technological change should occur which would, in Buyers sole judgment,
make like Products purchased from another supplier more attractive or
necessary to Buyer, then Buyer may terminate separate Products of the
Agreement by giving written notice to Seller, which will become
effective twelve (12) months (or such shorter time as may be mutually
agreed upon by the parties) after receipt of said notice by Seller.
During said notice period Seller shall have the opportunity to acquire
such technology and produce and substitute Products derived therefrom
at competitive prices, or, subject to Buyers consent, supply the
Products shown on the Purchase Order at prices competitive to those
derived by the new technology and at a quality similar to those derived
from such new technology. Seller shall have the right to renegotiate
pricing with Buyer if major technology changes results in purchase by
Buyer being less than 50% of the previous annual tonnage.
7
<PAGE> 8
REDACTED
9) PLANT CLOSING
In the event Seller contemplates the closing of a plant or plants that
affects Seller's performance hereunder, Seller shall immediately notify
Buyer of such __________________. Seller further agrees to provide
manufacturing, engineering, and technical assistance to Buyer to
provide a smooth transition and to aid the new supply source selected
by Buyer.
10) TOOLING
Seller will provide day to day maintenance of tooling due to normal use
Once tooling has been determined to be worn out from normal production
use, Buyer agrees to pay replacement costs to a level not to exceed a
total of per agreement year. Seller is responsible to initiate a
request to replace tooling with appropriate justification. Tool
modification resulting from Buyer's engineering changes will be at the
cost and expense of Buyer.
11) RETURNABLE CONTAINER PROGRAM
Seller agrees to assist Buyer in the event a "returnable container"
program is established. In the event a returnable container program is
initiated Seller agrees to reduce it's prices for the Products on the
Purchase Order by an amount equal to the costs charged to Buyer
8
<PAGE> 9
REDACTED
for packaging which includes but may not be limited to costs for
pallets, dividers, separators, binding, wrapping, preservatives and
labor.
12) VALUE ENGINEERING
Seller agrees to provide technical assistance and implement value
engineering programs which include weigh/cost reductions. Seller agrees
that Buyer will share equally all cost savings associated with any
value engineering effort upon implementation of same.
13) QUALITY RATING
Buyer shall have the right to terminate this Agreement for cause in the
event that Seller fails to maintain the below listed Buyer Quality
Ratings:
Location Ratings
-------- -------
Sellers Plant #2, #3 Rating #2
14) ACCOUNTS PAYABLE
Seller agrees that Buyers scheduled payments are net 5th proxl2nd 5th
prox. (Shipments made during the first month through the tenth of the
current month will be paid by the fifth of the following month.
Shipments made during the 11th through the 31st of the current month
will be paid by the fifth of the second following month).
9
<PAGE> 10
REDACTED
15) COMPARATIVE PRICING GUARANTEE
Seller agrees that Buyer may add additional Products to this contract.
Seller agrees that for Products added to the Attachments, Buyer shall
receive prices in accordance with Paragraph 4 based on reasonable
comparative pricing with like part numbers from the same product family
processed from similar molding equipment.
16) CATASTROPHIC MATERIAL COST INCREASES
In the event Seller should experience catastrophic increases in the
cost of materials used in the production of the Products in this order
which drastically affect profit margins, Buyer will assist in seeking
alternatives to the increase. Seller agrees to aggressively pursue
practical alternatives to offset the price increase and to submit
written documentation supporting any price increase request a minimum
of sixty (60) days prior to the requested effective date. Justification
for the increase includes evidence of ail efforts to avoid the material
increase. If no agreement is reached on price within the sixty (60) day
notification period, either party may terminate this Agreement upon
thirty (30) days written notice given on or after the requested
effective date of price increase.
17) VACATION SHUTDOWN
10
<PAGE> 11
REDACTED
In the event Seller contemplates the closing of a plant for vacation
shutdown, Seller shall immediately notify Buyer of such contemplated
action. Seller further agrees to provide delivery of Products, as
identified in the Products, so as not to interrupt Buyers schedule.
18) DELEGATION AND ASSIGNMENT
Seller shall not delegate any of its duties of this Agreement without
Buyer s written approval and Seller shall not assign any of its rights
hereunder without prior notice to Buyer.
19) ALTERATIONS
a) Paragraphs 3,'Warranty"; 15, ~Termination; 9, "Information";
and paragraph 17 Recall Campaigns on the reverse of Buyers
Purchase Order are hereby deleted in their entirety and the
following is substituted in lieu thereof.
"3 Warranty: Seller warrants that Products ordered to
specifications will conform thereto and to any
drawings, samples or deviations furnished or adopted
by Buyer. All Products furnished hereunder will be
merchantable, of good material and workmanship, and
free from defects. Such warranties shall survive
inspections test, acceptance of and payment for the
Products and shall run to Buyer its successors,
assigns, and customers. The warranty period shall be
for five (5) years or 500,000 miles of use,
11
<PAGE> 12
beginning with the first use of the vehicle by its
first legal and lawful owner. Seller's obligation to
reimburse Buyer for warranty costs is limited to
$300.00 per individual failure and an aggregate of
$250,000 per contract year. To the extent Products
supplied hereunder are of Buyers design and
specifications, the implied warranty of fitness for a
particular purpose is excluded for Products shipped
under this Agreement".
"15 Termination: Buyer shall have the right to
terminate this Agreement or any part thereof at any
time upon ninety (90) days written notice for cause
if Seller chronically fails to make shipments in
accordance with the obligations described in
Paragraph 6 otherwise fails to observe or comply with
any of the other instructions, terms, conditions, or
warranties applicable to this Agreement or fails to
make progress so as to endanger performance of this
Agreement, or fails to maintain adequate capacity to
handle Buyer's requirements, or fails to maintain
machineability in accordance with drawing
specifications, or fails to maintain quality ratings
as specified in Paragraph 14. Buyer may, in addition
to any other right or remedy provided by this
Agreement or by law, terminate all or any part of
this Agreement for cause by telegraphic or other
written notice to Seller without any liability by
Buyer to Seller on account thereof. In the event of
12
<PAGE> 13
REDACTED
termination for cause, Buyer may produce or purchase
or otherwise acquire Products elsewhere on such terms
or in such manner as Buyer may deem appropriate and
Seller shall be liable to Buyer for any excess cost
or other expenses incurred by Buyer.
"9 Information: (a) Drawings, data, designs,
inventions, computer software and other technical
information supplied by Buyer, or generated, by
Seller, in the performance of this Agreement, shall
be and remain Buyers and shall be held in confidence
by Seller. Such information shall be not reproduced,
used or disclosed to others by Seller without Buyers
prior written consent, and shall be returned to Buyer
upon completion by Seller of its obligations under
this Agreement or upon demand. (b) In the event that
Seller discloses any trade secret information
originated by, or within the knowledge of Seller on
or before the effective date of the Agreement, to
Buyer, in connection with the performance of this
Agreement which is neither generally available to
others, previously known to Buyer, nor independency
developed by Buyer, Buyer shall hold such information
in confidence; provided, however, that nothing in
this Agreement shall require Buyer to exercise any
greater degree of care for the protection of such
information than Buyer normally exercises for its own
information of
13
<PAGE> 14
like character. Buyer's obligation of confidentiality
shall be limited to information disclosed in writing
which is marked or stamped "confidential" or
"proprietary".
"17 Recall Campaigns: Seller shall indemnify and hold
Buyer harmless against all damages and expenses
incurred by Buyer as a result of Buyer being required
by law (a) to recall from Buyer's customers or others
any Products furnished hereunder or an end product
employing any such Products as a part or component
thereof and (b) to repair, replace or refund the
purchase price of such Products or end product,
provided that such recall and such repair,
replacement or refund is based upon a defect of
manufacture in the Products furnished by Seller or
the failure of such Products to conform to any
specification or standard to which it is ordered
which creates the reasonable possibility of injury to
persons or property.
Buyer shall notify Seller promptly of the
possibility that Buyer may be required to take an
action described in this paragraph. Seller
acknowledges that Buyer has the right to make the
final decision about such action independent of
Seller.
In the event that Products supplied by
Seller shall not be the sole cause for such a recall,
repair, replacement, or refund, the costs, damages
14
<PAGE> 15
REDACTED
and expenses shall be apportioned according to the
proportion of cause in such manner as is reasonable
and equitable under the circumstances.
Buyer shall not be required to consult with,
or seek Seller's concurrence in, the reporting by
Buyer to any administrative or regulatory body, of
any information which Buyer obtains indicating chat
the Products furnished by Seller either fail to
conform to any standard required by law, or
constitute or create of Themselves or within the end
product of which they are a part or component, a
situation requiring recall or notice as defined by
the applicable law. Buyer shall promptly furnish to
Seller a copy of any information reported to any
administrator or regulatory body under this paragraph
with respect to Products furnished by Seller.
Seller shall prepare, maintain and file with
the appropriate authority such records and reports as
pertain to the manufacture, sale, use and
characteristics of the Products furnished to Buyer
hereunder as may be required by any federal, state,
or local law or regulation concerning Me manufacture,
sale, or use of the Products or the end Products of
which ale Products may be a part or component and
shall provide Buyer with copies of such records as
Buyer may require and permit Buyer access to Sellers
records to permit Buyer to ascertain Seller's
obligation to reimburse Buyer for recall expenses is
limited to $500,000 per contract year".
15
<PAGE> 16
REDACTED
b) Buyer agrees to provide its own fire and other hazard
insurance on all Buyers property in storage at Seller's
facility and Seller agrees to provide reasonable and adequate
physical protection for Buyers property as stated".
20) TERMINATION CLAUSE
a) Buyer or Seller shall have the right to terminate this
agreement at any time upon ninety (90) days written notice for
cause if the Buyer or Seller fails to observe or comply with
any other instructions, terms, conditions or warranties
applicable to this Agreement or in the event of any
proceedings by or against Buyer or Seller in bankruptcy or
insolvency or appointment of a receiver or trustee or any
assignment for the benefit of creditors.
b) The breaching party shall have sixty (60) days in which to
cure the default, breach, or such reason identified in the
notice of termination for cause under paragraph 1. Should the
breaching party fail to cure within the sixty (60) day period,
this Agreement automatically expires at the end of the ninety
(90) day period identified in the Notice of Termination.
NEENAH FOUNDRY COMPANY ROCKWELL INTERNATIONAL CORPORATION
By: _________________________ By: ____________________________
Title:_________________________ Title:____________________________
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<PAGE> 17
REDACTED
17
<PAGE> 18
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ATTACHMENT 1A
DIFF CARRIERS
<TABLE>
<CAPTION>
PART NUMBER WEIGHT 4/1/95 4/1/96 4/1/97
----------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
</TABLE>
MISCELLANEOUS PARTS
<TABLE>
<CAPTION>
PART NUMBER WEIGHT 4/1/95 4/1/96 4/1/97
----------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
</TABLE>
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REDACTED
ATTACHMENT 1B
DIFF CASES
<TABLE>
<CAPTION>
PART NUMBER WEIGHT 4/1/95 4/1/96 4/1/97
----------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
</TABLE>
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REDACTED
ATTACHMENT 1C
BEARING CAGES
<TABLE>
<CAPTION>
PART NUMBER WEIGHT 4/1/95 4/1/96 4/1/97
----------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
</TABLE>
20
<PAGE> 21
REDACTED
ATTACHMENT 1D
BEARING CAPS
<TABLE>
<CAPTION>
PART NUMBER WEIGHT 4/1/95 4/1/96 4/1/97
----------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
</TABLE>
STEERING KNUCKLES
<TABLE>
<CAPTION>
PART NUMBER WEIGHT 4/1/95 4/1/96 4/1/97
----------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
</TABLE>
21
<PAGE> 22
REDACTED
ATTACHMENT II
DIFF CARRIERS
PART NUMBER PRICING
----------- -------
DIFF CASES
PART NUMBER PRICING
----------- -------
22
<PAGE> 23
REDACTED
ATTACHMENT II
BEARING CAGES
PART NUMBER PRICING
----------- -------
MISCELLANEOUS PARTS
PART NUMBER PRICING
----------- -------
23
<PAGE> 1
Exhibit 10.3
April 4, 1996
Mr. Oren Gillette
EATON Corporation
13100 E. Michigan Ave.
Galesburg, MI 49053-9674
Dear Mr. Gillette:
This letter confirms our understanding of future pricing and part sourcing with
Neenah Foundry. The steel scrap surcharge base will be lowered to $130/ton
effective May 1, 1996. An economic increase of 2% to the then effective base
price will be implemented on January 1, 1997, and again on January 1, 1998. Part
sourcing will be as follows:
- -- Current parts and sourcing revisions as noted below, will remain at
least at the present or established sourcing level thru December 31,
1998.
- -- Part numbers will be sourced to
Neenah Foundry.
- -- Part number will be sourced to Neenah Foundry.
- -- Part numbers will be sourced 100% to Neenah Foundry.
Economics for these parts will remain firm until January 1, 1998.
- -- Part numbers will become 100% sourced to Neenah Foundry.
- -- Additional parts being quoted (including the 404 axle bearing caps and
adjusters) will be evaluated with intention to source with Neenah
Foundry based on pricing that is competitive with viable North American
Foundries.
We ask that you review our understanding and confirm you concurrence. Eaton
Corporation remains a major customer at Neenah Foundry Company. We desire that
this position erodes no further and appreciate your efforts to afford us
replacement business opportunity.
Sincerely,
William Barrett
General Sales Manager
Industrial Division
djh
cc: Andy Aylward
Chuck Perry
<PAGE> 1
EXHIBIT 10.5
NEENAH FOUNDRY COMPANY
1996-1998
COLLECTIVE BARGAINING AGREEMENT
<PAGE> 2
1986-1988
AGREEMENT
THIS AGREEMENT is made and entered into between the NEENAH FOUNDRY
COMPANY, NEENAH, WISCONSIN, party of the first part, and LOCAL 121 B of the
GLASS, MOLDERS, POTTERY, PLASTICS, and ALLIED WORKERS INTERNATIONAL UNION,
affiliated with the AFL-CIO-CLC, party of the second part.
The Company and the Union will comply with all applicable Federal and
State Statutes concerning discrimination in employment. Wherever the words he,
him, his or other such male gender references appear in this Agreement, such
references shall include and will apply equally to the female gender.
ARTICLE 1 - RECOGNITION
1.1 The Company recognizes Local 121B of the Glass, Molders, Pottery,
Plastics, and Allied Workers International Union, AFL-CIO-CLC, as the sole
bargaining agency for all employees of the Company's Plants 2 and 3 and any
truck terminals established now or during the period of this Agreement, relative
to wages, hours, and working conditions as provided by the National Labor
Relations Act, as amended, but excluded office-clerical, office janitors,
watchmen, patternmakers and supervisors as defined by the National Labor
Relations Act. The Company's Plants 2 and 3 shall be considered as a single
bargaining unit for purposes of this Labor Agreement.
A. It is understood that this Agreement will apply to any
Bargaining Unit employee assigned to perform work at Plant 1.
1.2 In the event the Company erects a new foundry facility in the State
of Wisconsin, the Company will voluntarily recognize the Union as the bargaining
representative of the appropriate bargaining unit of employees consisting of
production, maintenance, shipping and receiving and truck driver employees.
A. In the event that the foregoing paragraph may not be
lawfully applied, then in that event, the Company will voluntarily recognize the
Union for the appropriate bargaining unit, as described above, upon a proper
showing of majority representation as demonstrated by a lawful card check
conducted under the authority of the NLRB.
1.3 All present employees and all new employees shall join and become
members of the Union no later than their 31st day of employment or no later than
31 days after the execution of this Agreement, whichever is later, and shall, as
a condition of employment, maintain their membership in the Union in good
standing for the duration of this contract, subject to the provisions of the
Labor Management Act, as amended.
<PAGE> 3
1.4 The Company agrees to check off the Initiation Fees and Union Dues
of such employees who authorize the same, in writing, in proper legal form. The
Company will remit the International Union's portion of all dues so collected
the first payday of each month and the Local Union's portion of all dues so
collected the first payday of each month, to the parties designated by the Union
by the 12th day of each month. The written authorization for check-off of dues
by any employee will not be effective for any dues or fees owing by such
employee prior to the date of the signed authorization executed by him and
delivered to the Company and will be effective the first payday of the month
following the delivery of such signed authorization to the Company.
ARTICLE 2 - HOURS OF WORK
2.1 Eight (8) hours shall constitute a day's work and there shall be a
recognized starting and quitting time which shall determine the overtime, if
any.
2.2 Except as hereinafter provided, all time in excess of eight (8)
hours in any one day or forty (40) hours in any one week, shall be paid for at
the rate of one and one-half times the regular hourly earnings computed on the
basis of the average straight time weekly earnings excluding overtime premium of
any kind and pay received for hours not worked. Such overtime shall be paid for
time in excess of eight (8) hours in any one day or forty (40) hours in any one
week, whichever is greater but not for both, so that payment of overtime rates
shall not be duplicated for the same hours worked.
A. Where eight (8) hours appears in Article 2.2, it shall be
changed to ten (10) hours for employees working on automated production system
operations when they are scheduled for four, ten-hour days in a week.
2.3 SATURDAY WORK is to be paid at the rate of one and one-half times
the regular rate. However, if the shift begins on Friday and extends into
Saturday the regular rate shall be paid.
2.4 SUNDAY WORK - All work performed from 12:00 A.M. Sunday to midnight
Sunday shall be paid at the rate of double the regular rate.
2.5 All employees will be allowed a paid ten (10) minute lunch period
at an established time during each scheduled shift. The dinner period shall be a
minimum of one-half (1/2) hour, unpaid.
A. For automated and/or continuous production systems,
including BMD and Disamatic Operations as well as continuous shifts such as
melting operations, employees will be provided twenty (20) minutes of total paid
break time during each shift if an unpaid dinner period is not provided.
B. For automated production systems with a schedule of four,
ten-hour shifts, an additional ten (10) minute break period will be provided.
2
<PAGE> 4
C. All employees scheduled for ten (10) hours or more and who
are provided with 20 minutes of total paid break time instead of an unpaid
dinner period will be provided an additional ten (10) minute break period.
2.6 Any employee who is required to start his work shift before his
regular starting time shall be permitted to work until his regular quitting
time.
2.7 It is mutually agreed that the working hours and overtime schedule
provided for in this Agreement shall be governed by all applicable Federal laws.
2.8 REPORTING PAY - When employees are required to report to work or
have not been advised at the end of the previous day that there will be no work,
they shall be given a minimum of four (4) hours employment or a minimum of four
(4) hours pay at their regular straight time hourly earnings, before being
dismissed for the day, provided, however, that the Company shall not be liable
under this section for unavoidable breakdowns of machinery, power failure, Acts
of God, or conditions beyond the control of the Management.
2.9 CALL-IN PAY - If an employee is notified after he has punched out
for the work day, that he is to report for work at any time earlier than the
scheduled start time of his next shift, he shall be paid two (2) hours straight
time call-in pay at his regular base rate, in addition to pay at the appropriate
rate for his actual time worked.
A. An employee on Company premises prior to his scheduled
shift start time who volunteers and is permitted to perform work before the
shift start time will not qualify for call-in pay.
2.10 OVERTIME NOTIFICATION - Notice of scheduled Saturday or Sunday
overtime will be given to the employees) affected by no later than the end of
his (their) scheduled shift on Thursday preceding the weekend.
A. When the schedule of a department is to be changed, the
Company shall notify the department employees) affected prior to the end of his
(their) shift on the preceding day.
B. Employees may be notified by bulletin board notice and/or
personal communication. Employees so scheduled to work will be expected to work
as scheduled unless excused in advance by their supervisor. Should the Company
fail to provide such advance notice Of weekend or department schedule changes,
the employee or employees affected are free to reject the opportunity to work at
the time it is offered.
C. It is understood that the preceding paragraphs are not
applicable to casual or emergency overtime on a daily basis.
ARTICLE 3 - VACATIONS
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<PAGE> 5
3.1 The Company will grant paid vacations to employees covered by this
contract during each year as follows:
A. Except as hereinafter provided, each employee on the active
payroll on June I in any year who has completed one (1) year or more of
continuous service shall be granted a paid vacation.
1. Employees with one year but less than three
years of service on June I will be entitled
to one week of vacation.
2. Employees with three years but less than
eight years of service on June I will be
entitled to two weeks of vacation.
3. Employees with eight years but less than
fourteen years of service on June I will be
entitled to three weeks of vacation.
4. Employees with fourteen years but less than
twenty years of service on June I will be
entitled to four weeks of vacation.
5. Employees with twenty years but less than
twenty-eight years of service on June I will
be entitled to five weeks of vacation.
6. Employees with twenty-eight years or more of
service on June I will be entitled to six
weeks of vacation.
3.2 June 1 shall be the anniversary date for all employees for the
purpose of determining vacation eligibility. Employees hired on or after June 1
and before November 1 shall have June 1 as an anniversary date for purposes of
becoming eligible for more than one week of vacation.
3.3 The vacation pay basis period shall be the last fifty-two (52) week
period ending before May 18.
3.4 Each week of vacation shall be one calendar week. Each week of
vacation pay shall be two percent (2%) of the employee's gross earnings in the
basis period. However, an employee who has worked 1500 hours or more during the
basis period shall have the option of receiving forty (40) hours of pay at his
regular straight time base rate for each week of vacation. Time lost as a result
of compensable injury incurred while on duty at Neenah Foundry Company shall be
included in hours worked, at the rate of eight (8) hours per work day, for
purposes of determining vacation pay eligibility.
3.5 The vacation year shall be June I through May 31. The Company
reserves the right to establish a vacation shutdown period of up to two weeks in
any vacation year for any or all of its operations. The Company shall notify the
Union of its selection prior to April I of each year. All
4
<PAGE> 6
employees affected must schedule at least one week of their vacation during the
first vacation shutdown.
A. It is understood that if the plant closes, a certain amount
of maintenance and/or production work may be carried on during the shutdown. The
Company will arrange with employees who are to work during the shutdown period.
B. Those employees who are entitled to more than one week
vacation shall arrange for the additional vacation time by agreement with the
Plant Manager. No employee entitled to two weeks or more vacation shall have his
remaining vacation scheduled immediately before or after the scheduled vacation
shutdown period except by mutual agreement with the Company.
C. Employees eligible for three or more weeks of vacation
shall have the option of accepting vacation pay only for weeks over two, instead
of taking time off, by mutual agreement with the Company and the Union
President.
3.6 Vacation requests shall be considered on the basis of Company
seniority, providing normal operations of the Company are not impaired. There
will be a vacation sign-up period each year January 1 through January 15 for the
vacation year commencing the next June 1. Vacation requests received during this
sign-up period, after approval, are not subject to change through exercise of
seniority by other employees. Vacation requests made after the sign-up period
shall be submitted to the Company in writing at least thirty (30) days prior to
the requested vacation period. To insure normal operations, the Company shall
have the right to limit the number of employees taking vacation simultaneously.
A. During the sign-up period, each employee in each vacation
group will be asked, in Company seniority order, to submit his vacation request.
Any employee failing to submit his vacation request at the time he is asked will
not be eligible to use the vacation sign-up period for that vacation year.
EMPLOYEES WITH LESS THAN ONE YEAR'S SERVICE
3.7 Any employee who has been continuously employed for three months or
more and who is on the active payroll on June I shall be granted vacation pay,
which shall be two percent (2%) of his gross earnings as vacation pay for such
period, as computed above.
LAYOFF, MILITARY LEAVE, RETIREMENT, DEATH
3.8 In the event any employee who was eligible for vacation pay on June
1 is laid off, enters military service, retires, or dies during the vacation
ear, he shall receive his unused vacation plus pro-rata vacation pay in the
amount of two percent (2%) of his gross earnings up to and including the date of
termination, for each week of vacation for which he would otherwise have
qualified.
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<PAGE> 7
EMPLOYEES RETURNING FROM MILITARY LEAVE OR LAYOFF
3.9 Any employee who returns from Military Leave or Layoff and who is
on the active payroll June I shall be entitled to a vacation computed the same
as any other employee on the active payroll June 1.
ARTICLE 4 - SENIORITY
4.1 Seniority of employees shall be on the basis of length of
employment. In the event of scarcity of work necessitating reduction in the size
of the total work force, the last man hired shall be the first laid off, and
such layoffs shall be in accordance with straight seniority until the work force
has been reduced to two thirds of the average employment for the twelve (12)
months preceding the last layoff. After such layoffs according to seniority, the
Company may deviate from straight seniority if by following the rule of straight
seniority the efficient operation of the plant(s) would be impaired. If the
Company proposes to deviate, it will discuss all such deviations with the Union
Business Committee and if agreement is reached, deviations shall be as agreed
upon. If no agreement is reached, the Company will be at liberty to make such
deviations and in any event all employees affected by such deviations shall have
the right of grievance pursuant to the grievance procedure outlined in the
contract.
A. The above is applicable to Maintenance Department
employees, Electrical Maintenance Department employees, and Over-the-Road
Drivers only if the layoff of the employees would exceed sixty (60) days.
4.2 All new employees shall serve a probationary period of sixty (60)
days worked. Probationary employees shall have no seniority rights and may be
released at any time prior to the expiration of their probationary period.
However, the Company may not discharge or discipline for the purpose of evading
this Agreement or for the purpose of discriminating against Union members. If
they are retained at the expiration of their probationary period, their Company
seniority shall be from the date of hire. Departmental seniority will begin at
the completion of the probationary period. The Union may represent such
probationary employees on wages, hours and conditions of employment, but it is
agreed that the termination of employment of such employees during the
probationary period shall not be subject to the grievance procedure or
arbitration.
4.3 Student workers hired for the purpose of working during school
vacation period shall not be required to join the Union and shall not be
eligible for any fringe benefits and will accumulate no seniority. When a
student becomes a regular full-time employee, his seniority begins as of the
date of change in his work status.
4.4 Part-time workers who are employed on a regular basis throughout
the year but are normally scheduled for short hour weeks shall be required to
Join the Union pursuant to Article 1 and shall acquire seniority only as it
relates to other part-time workers and shall be entitled to eligibility for
vacations on a percentage of pay basis only and paid holidays on a pro-rata
basis and
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<PAGE> 8
excluded from all other fringe benefits. In the event a part-time worker becomes
a regular full-time employee he shall be entitled to one week of retroactive
seniority for each 40 hours of work employed on a part-time basis.
4.5 Prior to laying off any regular employees, students and
probationary employees shall be laid off first and part-time employees shall be
laid off next if additional layoffs are necessary.
4.6 Under no conditions shall new employees be added to the payroll
before those on layoff are notified to return to work. New employees shall not
be added to the payroll during short work weeks.
4.7 When a vacancy occurs, prior to posting such vacancy, available
employees qualified to fill the vacancy who are within that department and plant
will be given the opportunity to change their shift, by virtue of department
seniority. it is understood, so as not to impair normal operations, that from
time to time it may be necessary to reassign senior employees temporarily to
other shifts or temporarily delay the above shift change assignment pending the
training of employees.
4.8 On recall to work the most senior employee on active layoff will be
the first called to work and the remainder of the employees on the active recall
list will be recalled in the same manner.
A. The Company may deviate from recalling employees on a
straight seniority basis by recalling people qualified to perform necessary work
for Maintenance Mechanics, Maintenance Electricians, and Over-the-Road Drivers
(in their seniority order) if by following the rule of straight seniority the
efficient operation of the plant(s) would be impaired. If the Company proposes
to deviate, it will discuss all such deviations with the Union Business
Committee and if agreement is reached, deviations shall be as agreed upon. If no
agreement is reached, the Company will be at liberty to make such deviations and
in any event all employees affected by such deviations shall have the right of
grievance pursuant to the grievance procedure outlined in the contract.
4.9 In the event of layoff or layoffs due to lack of work, the
employees affected and the Union Business Committee Chairman shall be given
written notice of at least two (2) days prior to such layoffs.
A. When an employee can no longer perform the essential
functions of their assigned job, due to permanent medical restrictions, and they
are placed on medical leave, the Company will notify the Union President, in
writing, within two (2) working days of such leave.
4.10 Members of the Union, who hold positions that require part of
their functions to perform in the capacity of "Steward-like Duties", shall be
granted Super Seniority in the case of lay-off. Super Seniority shall be limited
to thirty (30) members or 5% of the average bargaining unit employment for the
previous six (6) months, whichever is greater. It shall be the responsibility of
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<PAGE> 9
the Union Recording Secretary to notify the Company, in writing, as to who shall
be granted Super Seniority.
LOSS OF SENIORITY
4.11 An employee shall lose his seniority for the following reasons
only:
A. If he shall quit.
B. If he shall have been discharged for just cause.
C. If a laid-off employee or employees on leave of absence
shall fail to report for work within five (5) working days after notice was-
sent by the Company to his last known address, unless a satisfactory reason for
failure to report is given. A copy of such notice to report to work is to be
given to the Union President.
D. If an employee has been laid off for a period equal to his
length of service with the Company. However, the minimum shall be one (1) year
and the maximum three (3) years.
SPECIAL PROCEDURE TO FOLLOW DURING
SHORT WORK WEEKS
4.12 The purpose of this procedure is to afford senior qualified
employees an opportunity to replace students, probationary, and part-time
employees on those days when the work week schedule is reduced to less than five
(5) days due to economic conditions. The number of senior qualified employees
given this opportunity must be consistent with production requirements.
A. When the Company determines it is necessary to reduce the work
schedule to less than five (5) days (excluding holiday weeks) in a department or
a plant for two consecutive weeks or more, the following procedure will be
followed:
1. The Company shall meet with the Union
Business Committee on the day following the
decision to implement the short weeks, and
notice of the short work weeks shall be
posted no later than Wednesday preceding,
the first short work week.
2. Beginning with the first week of the reduced
work schedule, a list of jobs occupied by
student, probationary, and part-time
employees will be prepared. A senior
employee who is on the reduced work schedule
in his own department or plant will be asked
to work a listed job on the day or days when
he is not scheduled in his own department or
plant. Selection will be by seniority,
experience and ability. The number of senior
qualified employees selected shall be
limited to the
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<PAGE> 10
number of student, probationary, and
part-time jobs. The student, probationary,
or part-time employee so replaced will then
work the reduced schedule in his own
department or plant.
3. Beginning with the second consecutive week
of the reduced work week schedule, part-time
employees will be offered regular full-time
work, if available. If the part-time
employee declines the offer or full-time
work is not available, he shall be
terminated.
4. A senior qualified employee who agrees to
work shall be paid the higher of his regular
base rate or the base rate of the . ob to
which he is assigned, plus incentive, if
any. If such employee fails to report for
work without just cause, the absence shall
be treated as an unauthorized absence.
5. During the fourth consecutive week of the
reduced work schedule, Management and the
Union Business Committee shall meet for the
purpose of reviewing the reduced work week
schedule, and to discuss the future outlook.
6. The foregoing is not a guarantee expressed,
implied or otherwise, that the Company will
operate on a five-day work schedule or 40
hour work schedule.
SPECIAL PROCEDURE TO FOLLOW DURING SHORT-TERM
SHUTDOWNS OF ONE OR MORE PLANTS
OR PARTS OF ONE OR MORE PLANTS
4.13 The purpose of this section is to set forth the procedure to be
followed when all or part of one or more of the Company's plant operations are
scheduled to be shut down due to economic conditions for one week or two
consecutive weeks, excluding vacation shutdown periods.
A. The Company shall inform the Union Business Committee of
the decision to schedule as indicated above on the day following the day the
decision is made.
B. The Company shall schedule the employees needed in the
plant(s) that is shut down according to the following procedure:
1. Schedule the necessary work.
2. Schedule the job(s) necessary to accomplish
the scheduled work.
3. Schedule the people who normally perform the
job(s) that is scheduled.
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<PAGE> 11
4. Replace all summer, part-time and
probationary employees with regular
full-time employees.
5. If all the people who normally perform the
jobs scheduled are not needed, then schedule
employees who have the most Company
seniority who normally perform those jobs.
6. If more people are needed than normally
perform the scheduled job, then schedule the
employees) assigned to that plant most
qualified to perform that job. If two or
more employees are equally qualified, then
schedule the employees) who has the most
Company seniority within that plant.
C. When the Company determines it is necessary to extend the
shutdown or partial operations in a plant for more than two consecutive weeks
(excluding vacation shutdown periods) it will follow the provisions of Article
4.1.
D. The intent of this procedure is to provide work to as many
employees as we have work available for, rather than having to shut down
additional operations in order to meet the deviation requirements provided for
in Article 4.1.
ARTICLE 5 - GRIEVANCES
5.1 It is recognized that from time to time, incidents may occur or
events may take place which question the interpretation of the provisions of
this Agreement. It is the intent of the parties to this Agreement to promptly
investigate and resolve differences of opinion or job-related problems.
Accordingly, each employee is encouraged to discuss with his supervisor any
problem that may arise in connection with his work. The Company will not
discriminate against any employee for thereafter referring the problem as a
grievance through the grievance procedure.
5.2 Should differences arise between the Company and its employees,
either individually or collectively, as to the meaning and application of this
Agreement, an earnest effort shall be made to settle any such differences at the
earliest possible time by use of the following grievance procedure:
Step 1. a. As soon as possible but not more than ten (10) working
days of the occurrence of the incident or condition giving
rise to any grievance, an aggrieved employee shall present his
grievance to his supervisor, accompanied by his Committeeman
or Steward. If a settlement is not reached within two (2)
working days from the time the grievance is presented, then;
b. It shall be reduced to writing within two (2) working days,
signed by the aggrieved employee or his representative, and
presented to the supervisor, who will provide a written answer
within three (3) working days of the receipt of the written
grievance. Should this procedure not result in settlement,
then;
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Step 2. Within two (2) working days of receipt of the Supervisor's
Step 1 written answer, the grievance shall be presented by a
member of the Shop Stewards Committee to the Plant Manager or
his representative, who will schedule a grievance hearing to
be held within three (3) working days following receipt of the
Step 2 grievance, and who will within three (3) working days
of such meeting, provide his written answer to the grievance.
If such answer does not result in settlement of the grievance,
then;
Step 3. Within two (2) working days of the receipt of the Step 2
written answer, the grievance shall be referred to the Union
Business Committee and the Company Committee, who will meet on
a date satisfactory to both parties, within ten (10) working
days following receipt of the Step 3 grievance to resolve the
issue. Either or both parties may be represented at this
meeting by outside representatives of their own choosing.
Within three (3) working days of such meeting, the Company
will provide a written answer to the Grievance.
Within the times outlined above, the meetings will be scheduled on a date
satisfactory to both parties. In the event that this procedure does not result
in settlement of the Grievance, then;
Step 4. Within forty (40) days from the date of the Step 3 answer,
the grievance may be referred by either party to arbitration
by serving written notice on the other. If either party fails
to refer an unresolved grievance to arbitration within the
forty (40) day period, the grievance shall be considered
withdrawn and not arbitrable.
5.3 The Union Business Committee and the Company Committee referred to
above in Step 3 shall consist of a maximum of nine (9) employees each,
designated respectively by the Union and the Company.
5.4 The time limits referred to above may be accelerated, or extended,
or any step of the procedure may be continued upon mutual agreement of the
parties to this Agreement. If the Union fails to comply with the time
requirements in Steps lb, 2, or 3, the grievance shall be automatically dropped.
If the Company fails to comply with the time requirements in Steps lb, 2, or 3,
the grievance shall be automatically granted.
5.5 An agreement reached between the committees shall be final and
binding on the Company, the Union and the employees involved.
SELECTION OF ARBITRATOR
5.6 The Arbitrator for the purpose of this contract, shall be selected
in the following manner, to wit:
A. In the event a grievance has not been resolved under Step 3
of this Article, either party may notify the Federal Mediation and Conciliation
Service of the dispute and request
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<PAGE> 13
a panel of seven arbitrators. If the panel is not acceptable to either party,
then either party shall request a second panel, prior to striking any names from
the first panel. The parties will select one arbitrator, by alternately striking
from the panel a total of six arbitrators. The Arbitrator chosen by this
procedure will then arbitrate the grievance. More than one grievance may, by
mutual agreement, be submitted simultaneously to the same Arbitrator.
5.7 The Arbitrator shall have no authority to change or modify the
terms of this Agreement, but he shall have authority to apply or interpret the
meaning of the terms of this Agreement, and resolve all grievances referred to
him under the terms of this Agreement.
5.8 Within a reasonable time after the hearing the Arbitrator shall
tender to the parties his disposition of the grievances involved. Such
disposition shall be final and binding upon both parties.
5.9 The Arbitrator's charge and expense in connection with any
grievance submitted to arbitration shall be borne by the party losing the
arbitration.
5.10 The Company shall compensate Union officers and members of the
Business and Shop Stewards committees at their average straight time hourly
earnings, and individual aggrieved employees at the straight time hourly base
rates at which they are then employed, for all time actually spent with
representatives of the Company in collective bargain' nations and Grievance
adjustments pursuant to this Agreement, when the officers, committeemen and
employees so engaged otherwise would be at work. Time spent in negotiations and
grievance ad' handled outside of the normal working adjustments handled outside
of the normal working day will not be paid by the Company. Negotiations and
grievance adjustment meetings will be scheduled by the Company and may be held
during regular working hours. The number of employees in attendance at
bargaining and Grievance meetings shall be scheduled to the extent that the
number of employees attending such meetings shall not interfere with normal
production.
ARTICLE 6 - DISCHARGE AND DISCIPLINE
6.1 The Company agrees not to discharge or suspend any of its employees
except for In the event of discharge or just cause. In the event of discharge or
suspension, the Company agrees to give the Shop Stewards Assistant written
notice of such discharge or discipline, stating the reason therefor. Such notice
shall be delivered to the Union within twenty-four (24) hours of the occurrence
of such event. Any employee who is discharged or suspended under the provisions
of this contract shall have the right of grievance as provided herein.
6.2 Grievances involving discharge shall enter the grievance procedure
at Step 3.
6.3 It is further agreed that in all cases of discharge or suspension,
if the employee or employees affected desire to file a grievance, he must file a
written grievance immediately or at least within ten (10) days of such discharge
or discipline. In the event it is decided that an employee was
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<PAGE> 14
unjustly discharged or suspended, he shall be reinstated to his former position
without loss of seniority and reimbursed for all time lost while under discharge
or suspension, unless some other agreement is reached between the Company and
the Union Business Committee.
6.4 Unexcused absence for three (3) or more consecutive working days
shall be considered grounds for discharge or discipline.
6.5 Employees who receive three written warning notices on unexcused
absences for periods less than indicated in Section 6.4 above, within twelve
(12) consecutive months, shall be given a three-day suspension from duty without
pay. More than three written warning notices on unexcused absences, for periods
less than indicated above in Section 6.4 within twelve (12) consecutive months,
shall be considered just cause for discharge or discipline. As a written warning
notice is issued, one copy shall be delivered to the employee and one copy to
the Union Shop Steward Assistant within 24 hours of the time such warning is
issued.
6.6 Written warning notices for any disciplinary reasons shall remain
in effect for twelve (12) months from date of issuance. Written warning notices
more than twelve (12) months old shall not be used against the employee in
future progressive discipline.
ARTICLE 7 - WAGES
7.1 The Company and the Union hereby agree that the minimum wage rates
for each job classification are as set forth in the attached schedules marked
Exhibit "A" entitled "Minimum Rates" and Exhibit "D" entitled "Trucking" and
will be effective for the periods indicated during the term of this Agreement.
7.2 For shift premium pay purposes only, the hours of the first shift
will be 6:00 A.M. to 2:00 P.M.; the second shift will be from 2:00 P.M. to 10:00
P.M.; and the third shift will be from 10:00 P.M. to 6:00 A.M. The employee will
be paid the shift premium applicable to the shift on which he works the majority
of hours. Shift premiums will be 250 per hour for the second shift and 35(cent)
per hour for the third shift.
7.3 All employees shall be paid weekly on Thursday during their regular
shift. If a Holiday occurs, the payday may be advanced or delayed within the
same work week, Saturday excluded.
7.4 The Contract rates shown in Exhibits "A" and "D" are minimum rates,
and are guaranteed.
WAGE INCENTIVE PROVISIONS
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<PAGE> 15
7.5 The Company agrees to establish incentive plans on the basis of
fairness and equity consistent with the quality of workmanship, efficiency of
operations and reasonable working capacities of normal operators working at
incentive pace.
7.6 Other matters pertaining to production standards or incentives
shall be contained in a supplementary agreement. Such agreement, attached to
this contract as Exhibit "C," shall become a part of this contract and a part of
each individual incentive plan.
PAID HOLIDAYS
7.7 Effective during the life of this contract the Company will pay
holiday pay for the following holidays: New Year's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, Day following Thanksgiving
Day, Christmas Eve Day, Christmas Day, a "floating holiday" to be scheduled by
the Company annually, and New Year's Eve Day. Such pay is to be eight (8) hours
at the average straight time hourly earnings, and all employees covered by this
Agreement, performing service, except those who have not completed their
probationary period, will be entitled to paid holidays.
A. The Company will pay ten (10) hours (in lieu of 8) holiday
pay at average straight time hourly earnings to all employees who are working
four, ten-hour shifts on all auto mated systems the week before and/or the week
after and the week of the holiday(s).
When a holiday(s) falls during a scheduled vacation
shutdown week, the Company will pay ten (10) hours holiday pay to all employees
who are working four, ten-hour shifts on all automated systems the week before
and/or the week after the holiday(s).
B. All work performed on any of the holidays recognized in 7.7
or on the day celebrated in lieu thereof, such as when a holiday falls on Sunday
and is celebrated on Monday, shall be paid for at the rate of double (2) time.
If a shift starts during a holiday and extends into a non-holiday period, all
hours worked on such shift shall be paid for at double time. The above premium
pay for time worked shall be in addition to holiday pay.
C. To qualify for holiday pay an employee who is scheduled to
work must have worked his last scheduled work shift prior to and his first
scheduled work shift after such holiday unless excused by the Plant Manager for
personal compelling reasons.
D. Employees who have been laid off because of lack of work
within fifteen (15) days immediately prior to the date of the holiday, or who
after having been laid off are recalled to work within fifteen (15) days after
the date of the holiday shall be eligible for holiday pay.
ARTICLE 8 -TRANSFERS, JOB POSTINGS,
AND PROMOTIONS
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<PAGE> 16
TEMPORARY TRANSFERS
8.1 When any employee is temporarily transferred by the Company for a
period of one week or less, he shall be paid the base rate of his regular job or
the base rate of the temporary job, whichever is higher, plus any applicable
shift premium. If the employee is not returned to his regular job after one
week, and his temporary transfer is renewed, he will continue to be paid the
base rate of his regular job or the base rate of the temporary job, whichever is
higher, plus any applicable shift premium. While on temporary transfer, the
employee will continue to accrue seniority in his home department.
8.2 When any employee is temporarily transferred at his own request, he
shall be paid the base rate of the temporary job, plus any applicable shift
premium.
8.3 For the purpose of protecting the earnings of senior incentive
employees who are temporarily transferred by the Company, the following
procedures will be used:
A. When any incentive employee is temporarily transferred to
another department while any employee with less departmental seniority performs
incentive work in the department (defined in 8.4, E below) of the transferred
employee, such transferred employee will be paid his average earnings or his
earnings on the temporary job, whichever are higher.
B. When any incentive employee is temporarily transferred
within his department to another Work Section (defined in 8.4, F below) while
any employee with less departmental seniority performs incentive work in the
Work Section of the transferred employee, the transferred employee will be paid
his average earnings or his earnings on the temporary job, whichever are higher.
C. However, if any incentive employee is temporarily
transferred as a result of machinery breakdown which occurs during his scheduled
shift, he will be paid base rate of his regular job or the base rate of the
temporary job, whichever is higher, plus any applicable shift premium, but not
average earnings.
TRANSFERS OTHER THAN TEMPORARY
8.4 In the event an employee is transferred as provided for below, he
shall be paid the rate of the Job to which he is transferred, effective on the
date of transfer.
A. When it is necessary to reduce the number of employees in a
department, the last man assigned to the department shall be the first selected
for transfer. Such employee transferred out of the department shall have the
right to transfer back to his last department, except he shall not replace any
employee in his former department who has greater departmental seniority. If his
last department is not open to him by application of departmental seniority, he
will be assigned to available work within the Company.
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<PAGE> 17
B. Any employee who is displaced from his department as a
result of the foregoing procedure shall also have the right to transfer back to
his former department in the same manner.
C. When the department or departments increase the number of
employees required in such department, the employees transferred out by the
operation of the above paragraphs shall be first entitled to transfer back to
the original departments from which they were transferred. If employees elect
not to exercise their department seniority rights in the application of this
paragraph (8.4, C), they will lose seniority rights in all departments and will
be assigned to available work within the Company.
D. Whereas the above paragraphs consider the usual and normal
transfer procedures, it is recognized that from time to time unforeseen or
unusual conditions may occur which may require deviations. Deviations proposed
by either party, shall be discussed between the Company and the Union Business
Committee and shall include such factors as employee's ability and efficiency of
operation. If no agreement is reached, the Company will be at liberty to make
such deviations, and in any event all employees affected by such deviation shall
have the right of Grievance pursuant to the grievance procedure outlined in this
contract.
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<PAGE> 18
E. For purpose only of administration of the above,
departments are defined, but not restricted, to the following:
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<PAGE> 19
<TABLE>
<CAPTION>
Plant 2 Plant 3
<S> <C> <C> <C>
1. Hydro Slinger Molders........................................ X
2. BMD.......................................................... X
3. BMD Finishing................................................ X
4. Pourers...................................................... X
5. Other Molding Indirect....................................... X
6. Chippers, Grinders, Fitters.................................. X
7. Bore, Mill and Drill Operators............................... X
8. All Cleaning, Indirect....................................... X
9. Shipping..................................................... X
*10. Maintenance.................................................. X X
*11. Electrical Maintenance....................................... X X
12. Over-the-Road Drivers........................................ X X
13. Pattern Storage.............................................. Transport
*14. Receiving and Stores......................................... X
15. Inspection................................................... X
16. Utility Truck Drivers........................................ X
17. All Others................................................... Transport
18. Disamatic System............................................. X X
19. Casting Processing........................................... X
20. Quality Assurance............................................ X
21. Core Support................................................. X X
22. Core Operations.............................................. X X
34. Melt......................................................... X X
</TABLE>
*Combined all plants
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<PAGE> 20
F. For the purpose of administering temporary transfers, each
incentive employee is assigned to one of the Work Sections listed below.
Departmental Seniority shall be used to determine Work Section seniority, in the
employee's regularly assigned Work Section, to establish the relative seniority
of the transferred employee.
WORK SECTIONS
PLANT 2
1. Hydro Slinger Molders
4. Pourers
Other Molding Indirect:
5. Shakeout
6a. Chippers, Grinders
6b. Fitters
7a. Bore, Mill Operators
7b. Radial Drill Operators
9. Shipping
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<PAGE> 21
JOB POSTING
8.5 All vacancies or new jobs are to be filled by the job posting
procedure with the following exceptions: Leadman, Janitor Labor, Core Room
Labor, Yard and General Labor, and Cleaning Room General. A vacancy occurs when
a new job is created and defined or an established job requires filling to meet
manpower planning requirements.
A. The Company will post the notice of the vacancy on the
bulletin board within three (3) work days from the date the vacancy becomes
official.
B. The vacancy will remain posted for three (3) work days
during which time interested employees who have passed their probationary period
may apply.
C. The Company shall make its selection within five (5) work
days after the posting is closed except in the cases of truck drivers and
maintenance and electrical maintenance employees. The employee selected and the
Union Shop Stewards Committee Assistants will be notified promptly in writing,
normally within two (2) working days, after selection is made.
D. The selected employee shall be transferred within one (1)
week from date of notification of selection, or receive the higher base rate of
his present or new job.
E. The employee's date of notification of selection shall be
the date the employee begins to accrue seniority in the new department.
F. The Company will post on the bulletin board weekly the
names of the previous week's successful bidders, their seniority dates and the
jobs for which they were selected.
G. Employees shall be limited to one (1) successful lateral or
downward bid each year from date of selection. There shall be no limit on bids
for promotions to higher base rate jobs.
H. If the Company selects an employee or employees for such
from the bargaining, unit such selection shall be made
8.6 In the event a job or jobs are posted pursuant to 8.5 and no
application is made within the period set forth, the Company is at liberty to
fill the vacancy as it sees fit. The Company will advise the Union Shop Stewards
Assistants and President of the fact that no applications were filed.
A. If applications are made as herein provided and after
investigation the Company finds that the applicants are qualified or have
qualifications for the posted job, selection will be made from the applicants
whose applications are on file for the job, as provided in 8.5 hereof. Selection
shall be made within five (5) days after the expiration of posting. If, however,
the Company is satisfied that none of the applicants is qualified for the job in
question then it may fill such job by selection outside of the bargaining unit.
The Company shall give the Chairman of the
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<PAGE> 22
Union Business Committee a list of all the applicants who applied and the name
of the employee(s) selected to fill the posted job or jobs within two (2)
working days after selection is made, whether the selection is made from the
bargaining unit or not.
B. When an employee is involuntarily selected by the Company
in accordance with its right in the above paragraphs such employee will retain
and accumulate seniority in his prior department for all time worked in the job
to which he was involuntarily placed.
C. When an employee through job posting enters a new
department as defined in 8.4, E, he shall retain his departmental seniority in
immediate prior department until he has worked thirty (30) days. If for any
reason, it is necessary to return the employee to his former job during this
period, he will then do so with continued accumulated departmental seniority.
The employee shall lose all seniority in his former department the day after he
completes thirty (30) days worked in the new department, except in the
application of Section 8.4. New department seniority shall then be retroactive
to the first day of assignment to the new department.
8.7 The employee or employees who file application for a job pursuant
to job posting notice and who are not selected and who desire to file a
grievance shall file such Grievance immediately but not later than ten (10)
working days from the date of selection notice. Such grievance shall be subject
to arbitration in accordance with the terms of this contract; but the grievance,
if filed, shall not prohibit the Company from filling the job.
8.8 Any employee requesting transfer, other than temporary, out of a
department or into another department, without using the job posting procedure,
will forfeit all former department seniority rights when the transfer takes
place.
8.9 The Company shall establish an apprenticeship and training program
in conformity with the State of Wisconsin Department of Industry, Labor and
Human Relations Apprenticeship Division for those in maintenance
classifications.
A. Apprentices must be indentured and attend the appropriate
school in accordance with the Wisconsin Apprenticeship Law, Chapter 106 and meet
all requirements as may be set up by the Wisconsin Department of Industry, Labor
and Human Relations and the Company.
TRANSFERS OUT OF THE BARGAINING UNIT
8.10 Both parties agree to the principle of advancing employees to
positions outside the bargaining unit. In the event an employee so advanced is
demoted or requests demotion during the first year, he shall be promptly
returned to his former job at the going rate of pay with credited departmental
and Company seniority.
A. Employees previously advanced prior to January 1, 1972,
shall accrue departmental seniority for a maximum of three (3) years. Employees
advanced outside the
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<PAGE> 23
bargaining unit subsequent to January 1, 1972, shall continue to accrue
departmental seniority for a maximum of one year.
In the event there is a reduction in force the employee
shall be entitled to use his departmental seniority he had at the expiration of
the accrual period in order to return to the bargaining unit.
B. Employees advanced outside the bargaining unit subsequent
to January 1, 1993 who do not return to the bargaining unit during the first
year shall forfeit all departmental seniority rights.
In the event there is a reduction in force during the first
ten(10) years after an employee is so advanced, he shall be entitled to use his
Company seniority in order to return to the bargaining unit.
In the event there is a reduction in force subsequent to
ten (10) years after an employee is so advanced, he shall not be entitled to
return to the bargaining unit.
C. The employee's Company seniority shall continue to accrue
during the employee s entire period of employment with the Company.
ARTICLE 9 - LEAVES OF ABSENCE
9.1 Employees desiring a leave of absence shall be required to make
written request for said leave of absence, outlining the reason for such
request. The granting of such request shall be by mutual written consent of the
Company and the Union Business Committee Chairman, in triplicate, the original
to be retained by the employee, the duplicate by the Company and the triplicate
by the Union. A leave of absence shall be granted to members designated by the
Chairman of the Union Business Committee for the purpose of attending
conventions and Union conferences. Employees on leave of absence shall accrue
departmental seniority for a maximum of one (1) year in addition to that already
accrued at the time of the leave.
9.2 When members of the Union are serving full time on behalf of the
Union, or are selected to represent the International Union, necessitating a
leave of absence from the Company, the Company will grant such leave of absence
for up to three (3) years. Such leave of absence shall be automatically renewed
by request for up to a maximum of ten (10) years. Reasonable advance notice of
such leaves shall be given to the Company.
A. In the event an employee so serving the Union returns to
bargaining unit work during the first year, he shall be promptly returned to his
former job at the going rate of pay with credited departmental and Company
seniority.
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<PAGE> 24
In the event there is a reduction in force during the first
ten (10) years after an employee is so serving, he shall be entitled to use his
Company seniority to return to bargaining unit work.
In the event there is a reduction in force subsequent to
ten (10) years after an employee is so serving, he shall not be entitled to
return to bargaining unit work.
9.3 The Local Union President shall be excused from work without pay
for the entire day on which the Union Local conducts its regular monthly
meeting, provided he notifies his department superintendent at least one day in
advance of the date of the meeting.
A. When it is necessary for the Local Union President to be
further absent from work without pay for Union business in addition to the day
of the regular monthly meeting, the Local Union President shall obtain approval
in advance from his department superintendent.
ARTICLE 10 - MANAGEMENT
10.1 The management of the Company and the direction of the working
force including the right to hire, suspend or discharge for cause, to transfer
or lay off for lack of work or any other legitimate reason, to make and enforce
reasonable rules and regulations and in general, all other functions of
management unless limited by this Agreement, are reserved to and are vested
exclusively in the Employer, including any of the rights, power or authority the
Employer had prior to the signing of this Agreement.
ARTICLE 11 - NO STRIKE - NO LOCKOUT
11.1 It is agreed that as a part of the consideration of this contract,
any and all disputes and any and all claims or demands growing out of said
contract or involved therein shall be settled and determined exclusively by the
machinery provided herein through the grievance procedure and that during the
term of this contract, there shall be no strike on the part of the Union nor
lockout on the part of the Company.
11.2 It is specifically understood and agreed that the no strike clause
in the preceding paragraph shall not be operative under the following
circumstances: If at the expiration of this contract the parties are unable to
agree upon the terms or conditions of a renewal or modification thereof.
ARTICLE 12 - FUNERAL LEAVE
12.1 In the event of death of an employee's brother, sister, father,
mother, step-father, stepmother, father-in-law, or mother-in-law, the employee
may be absent from work and shall be paid a minimum of eight (8) hours of pay,
per day, up to three (3) days for his scheduled time actually lost from the day
of death to the day of the funeral, inclusive except, if the funeral is in
excess of 200
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<PAGE> 25
miles from the City of Neenah, Wisconsin, then the day after the funeral shall
be considered an additional day of paid funeral leave.
12.2 In the case of the employee's spouse or child or stepchild, paid
funeral leave shall be up to five (5) scheduled days lost at a minimum of 8
hours pay, per day, from the day of death to the seventh day following the day
of death.
12.3 In the event of the death of an employee's grandparent,
grandchild, sister-in-law, brother-in-law, daughter-in-law, son-in-law, or of an
employee's spouse's grandparent, the employee may be absent from work and shall
be paid for scheduled time actually lost up to a minimum of eight (8) hours pay,
per day, on the day of the funeral if it is a scheduled work day and the
employee attends the funeral.
12.4 To qualify for paid funeral leave the employee must-
A. have passed his probationary period prior to the death of the
above mentioned family member.
B. attend the funeral unless unable to do so because of illness,
accident, or other just cause; and
C. notify the Personnel Department as soon as possible that he
will be absent because of the death.
12.5 Funeral leave pay will be computed at the employee's regular
straight time base rate including any shift premium. No funeral leave pay will
be paid for days on which Holiday or Vacation pay is paid, or when an employee
is on any kind of leave of absence or Worker's Compensation. Scheduled time lost
shall not be counted as hours worked for purposes of computing overtime pay.
ARTICLE 13 - GENERAL
13.1 Space for bulletin boards shall be made available by the Company
at convenient places as near as possible to the time clock for the posting of
Union notices.
13.2 Duly accredited representatives of the Union, upon application for
permission, shall have the right of access to the plant to interview any of the
employees affected by this contract or to investigate any grievances. The
Company will provide accommodations for such or on its premises.
A. Upon proper notice to the Company from the Union requesting
time off for representatives to perform Union business, the Company shall give
written notice of work release to the affected employee, his immediate
supervisor and/or department manager.
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<PAGE> 26
SICK PAY
13.3 Any employee covered by this Agreement who is absent because of a
non-industrial accident or Illness long enough to collect benefits from the
Neenah Foundry Company Sickness and Accident Insurance Program will be paid up
to the first three (3) scheduled work days of such absence or absences not
covered by the insurance program at the rate of eight (8) hours per day at the
employee's straight time hourly base rate. It is understood that not more than a
total of three (3) scheduled work days will be due an employee during any
calendar year because of a non-industrial sickness or accident or combination
thereof.
A. Any employee who is absent due to an industrial injury incurred
at Neenah Foundry Company will be paid, under this Agreement, for the first
three (3) scheduled work days of absence or absences not covered by Worker's
Compensation Insurance, for each such injury or illness, if, (1) the injury
sustained was properly reported on the day of injury, and, (2) these same days
are not later paid for by Worker's Compensation.
B. In any event, no sick pay will be paid for any day not a
scheduled work day, or on which holiday pay or vacation pay is paid.
13.4 The Company will continue to provide, and with the cooperation of
its employees, maintain proper sanitary and safety conditions. A joint
Company-Union Safety Committee shall function as outlined in the December 17,
1974 policy letter.
13.5 The Company agrees, within thirty (30) days from the execution of
this contract, to furnish a current seniority list and to keep it current at
such times as may be agreed upon between the Company and the Union.
13.6 The Union will, at the execution of this contract, furnish the
Company with a list of the names of its Shop Stewards Committee or other
committees designated to handle negotiations and grievances on behalf of the
Union.
13.7 The Company will, at the execution of this contract, furnish the
Union Business Committee with a list of the names of its Bargaining Group who
will have authority to negotiate or adjust Grievances.
13.8 The Company shall furnish a meal at a cost not to exceed $4.00 for
each employee who works more than two (2) hours beyond his scheduled shift. A
paid twenty minute lunch period will be provided when meals are furnished; such
period will not be included in the "more than two (2) hour" qualifying period,
but will be counted as time worked for overtime purposes.
13.9 The Company and the Union will comply with all laws and
regulations established by Federal and State Governments regarding their
respective obligations under this Agreement.
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<PAGE> 27
A. Any Federal or State law which mandatorily changes any of the
provisions of this Agreement shall govern. However, such required change shall
not change any of the other provisions of the contract.
13.10 Non-bargaining unit personnel shall not perform work normally
done by bargaining unit employees except for the purpose of instruction or in
the case of emergency. (See policy dated December 9, 1974.)
13.11 Upon presentation of proper pay voucher, an employee required to
serve jury duty shall be paid the difference between his jury duty pay and eight
(8) hours of straight time pay at his base rate for each scheduled work day he
lost as a result of the jury duty.
13.12 A tool allowance of $150.00 will be paid annually to each
maintenance employee on the payroll as of January 1.
13.13 The Company will reimburse each employee $50.00 for one pair of
approved safety shoes purchased by the employee for his personal wear, each
year. For designated employees who have outside jobs, the Company will provide
an additional $50.00 reimbursement for purchase of one pair of insulated safety
boots per year. Employees regularly assigned to the following outside are
eligible for the additional $50.00 reimbursement:
Plant 2 Plant 3
------- -------
Charge Yard Charge Yard
Shipping
Yard
Paint
Knockout
Skid Repair
Front End
Loader Operator
Inter Plant Truck Drivers
Plus: Outside Distribution Yards
To be eligible for any reimbursement allowance, the employee must have completed
his probationary period at the time of purchase.
13.14 The Company will reimburse each employee for replacement of
prescription safety glasses, or parts thereof, which are damaged at work at the
actual cost to a maximum of $35.00 per year.
ARTICLE 14 - PENSIONS
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14.1 The Company agrees to continue its pension program started January
1, 1963, according to separate contract with Connecticut General Life Insurance
Company. This plan is to be wholly financed and owned by the Company.
A. Effective January 1, 1996, the formula for determining monthly
pensions shall provide for $28.00 per month as pension base.
B. Effective January 1, 1998, the formula for determining monthly
pensions shall provide for $29.00 per month as pension base.
C. Employees who retire during 1996 and 1997 will retire at the
$28.00 per month pension base calculation. Effective January 1, 1998, those same
employees will have their pension recalculated on the $29.00 per month pension
base.
14.2 The plan contains a surviving spouse's benefit provision. To be
eligible for such benefit, an employee shall have a minimum of five (5) years of
vested Company service.
14.3 The normal retirement date is the first of the month following the
employee's 65t[i birthday. Provisions for early retirement after age 60 are
provided for in the plan.
14.4 The minimum pension disability benefit shall be $335.00 per month.
To be eligible for such benefit, an employee shall have a minimum of five (5)
years of vested Company service.
A. Effective January 1, 1998, the minimum pension disability
benefit shall be $350.00 per month.
14.5 None of the above increases in pension benefits shall apply to
employees already on retirement.
ARTICLE 15 - INSURANCE
15.1 A PPO Health Insurance Plan, administered by Employers Health
Insurance, Network Health Plan (HMO) and United Health Plan (HMO) will be
offered.
A. Specific benefits offered by the plans listed in 15.1 are
contained in the plan summaries which are available through the Personnel
office.
B. The employee monthly contribution for coverage effective
January 1, 1996, is as follows:
Network HMO PPO Plan United HMO
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<PAGE> 29
Single Coverage $27.95 $38.88 $32.92
Family Coverage $76.59 $105.89 $92.61
These employee contribution rates for health insurance will be in effect for
calendar year 1996, and for any future premium changes, the employee will pay
20% of the gross premium during the life of this agreement.
C. Effective January 1, 1988, employees with 15 or more years of
service who retire between the ages of 60 and 65 will be eligible for continuing
in one of the health insurance plans offered by Neenah Foundry Company to the
regular hourly employees by paying 50% of the insurance premium costs, until the
employee reaches age 65 or qualifies for medicare coverage earlier. Effective
January 1, 1996, employees who elect to retire between the ages of 62-65 will be
eligible to continue in one of the health insurance plans offered by Neenah
Foundry Company to regular hourly employees, by paying 25% of the insurance
premium cost, until the employee reaches age 65 or qualifies for medicare
coverage earlier. It is further understood that if the employee elects family
coverage, dependents as defined in the policy are also covered, and if the
employee should die during this period of coverage, all coverage for dependents
stops at the end of the month in which the employee dies.
D. It is understood there will be no changes in the coverage or
the carrier except by mutual agreement between the Company and the Union
Business Committee.
15.2 For Life Insurance, Weekly Sickness and Accident Insurance, and
Accidental Death and Dismemberment insurance, the Company will continue to pay
90% of the premiums and the employee will pay 10%.
15.3 The weekly Sickness and Accident benefit shall be $240.00 for a
maximum of 26 weeks.
A. Effective January 1, 1997, the weekly benefit shall be $250.00.
B. Effective January 1, 1998, the weekly benefit shall be $260.00.
15.4 The Accidental Death and Dismemberment coverage is $18,000.
15.5 The Company will pay 65% of the cost and the employee will pay 35%
of the cost of the Employers Insurance Dental Plan, now in effect.
A. Eligibility for this coverage will begin the first day of the
month following the employee's 12 month service anniversary.
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<PAGE> 30
15.6 In the case of a. work-connected death of an employee who carries
family coverage under the Company's health insurance and/or dental insurance
programs, the Company will continue such programs for a period of thirty-six
(36) months for the surviving spouse and dependent children. The Company will
pay the full premium for that coverage the employee had carried at the time of
his death.
15.7 Life Insurance Coverage is $18,000.
15.8 In the event an employee is laid off the Company shall continue to
pay its percentage share of the premium of the health and welfare plan
(excluding sickness and accident benefits) for a period of three (3) months
following the month in which the layoff became effective provided the employee
arranges with the Personnel Office for payment of his percentage share of the
premium.
15.9 Eligibility for coverage by the insurance programs, except Dental
Coverage, shall commence on the first of the month following completion of
thirty (30) days worked.
15.10 The insurance benefits outlined herein are subject to the express
limitations, exclusions and all other terms and conditions as fully and
completely set forth in the actual insurance policies in effect between the
Company and the respective carriers.
ARTICLE 16 -TRUCKING
16.1 An Over-the-Road Truck Driver is one who is classified as such and
operates tractor-trailer type of equipment used generally for long hauling.
16.2 Rates and conditions applicable only to Over-the-Road Truck
Drivers are set forth in Exhibit "D" which by this reference is made a part of
this Agreement.
ARTICLE 17 -TERMINATION CLAUSE
THIS CONTRACT agreed upon the 29th Day of December, 1995, and signed
this ___________ Day of _____________, 1996, shall be in full force and effect
from January 1, 1996, until and including the 31st day of December, 1998.
29
<PAGE> 31
NEENAH FOUNDRY COMPANY
E. W. Aylward, President & CEO
LOCAL NO. 121B GLASS, MOLDERS, POTTERY, PLASTICS AND ALLIED WORKERS
INTERNATIONAL UNION, AFL-CIO-CLC
Jerry L. Cotton
John A. Mansfield Sr.
Darrin Miracle
Lynn C. Broege
Tom Lorge
Fred Clay
Reuben H. Stoegbauer
Mick Dietzen
Jim Strompolis
Donald Benotch, Executive Officer
GMP, AFL-CIO-CLC
EXHIBIT "A"
MINIMUM RATES
NON-INCENTIVE
<TABLE>
<CAPTION>
EFFECTIVE DATES
12/31/95 12/29/96 12/28/97
-------- -------- --------
<S> <C> <C> <C>
Janitor Labor $11.33 11.68 11.98
Yard and General Labor 11.33 11.68 11.98
Cleaning Room General 11.36 11.71 12.01
Truck Loader Helper - Plant 2 11.41 11.76 12.06
Gangway Man 11.41 11.76 12.06
Pattern Storage 11.41 11.76 12.06
Pattern Setup 11.46 11.81 12.11
Utility Man - Plant 2 11.49 11.84 12.14
Jeep Driver General 11.51 11.86 12.16
Sand Tester 11.51 11.86 12.16
Flask Welder 11.51 11.86 12.16
Shipping Clerk Helper 11.56 11.91 12.21
Pattern Storage Truck 11.56 11.91 12.21
Receiving Clerk 11.57 11.92 12.22
Inspector 11.59 11.94 12.24
Front End Loader Operator 11.59 11.94 12.24
Jeep Driver, Metal Delivery 11.59 11.94 12.24
Casting Processing - Plaint 3 11.60 11.95 12.25
</TABLE>
30
<PAGE> 32
<TABLE>
<CAPTION>
12/31/95 12/29/96 12/28/97
-------- -------- --------
<S> <C> <C> <C>
Core Support - Plant 3 11.60 11.95 12.25
Stock Room Clerk 11.61 11.96 12.26
Utility - Distribution Yards 11.61 11.96 12.26
Maintenance Helper, Mechanical $11.67 $12.02 $12.32
Salvage Welder 11.67 12.02 12.32
BMD Operator Assistant 11.82 12.17 12.47
BMD Finishing Operator Assistant 11.82 12.17 12.47
Truck Driver/Utility - Distribution
Yards 11.82 12.17 12.47
Melt Systems Plant 2 11.90 12.25 12.55
BMD Iron Pourer 11.90 12.25 12.55
Melt System - Plant 3 11.90 12.25 12.55
Qaulity Assurance - Plant 3 12.10 12.45 12.75
Utility Truck Driver 12.12 12.47 12.77
Maintenance General, Mechanical 12.13 12.48 12.78
Core Operations - Plant 3 12.55 12.90 13.20
BMD Finishing Operator 12.90 13.25 13.55
BMD Pattern Change Operator 12.90 13.25 13.55
Disa System 12.90 13.25 13.55
BMD Maintenance Operator 14.38 14.83 15.23
Maintenance Mechanic 14.38 14.83 15.23
Journeyman Electrician 15.20 15.65 16.05
</TABLE>
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<PAGE> 33
APPRENTICE PAY SCHEDULE
(ELECTRICAL)
Minimum Compensation to be paid:
1st period of 1,050 hours 75% of the skilled rate
2nd period of 1,050 hours 78% of the skilled rate
3rd period of 1,050 hours 81% of the skilled rate
4th period of 1,050 hours 84% of the skilled rate
5th period of 1,050 hours 87% of the skilled rate
6th period of 1,050 hours 90% of the skilled rate
7th period of 1,050 hours 93% of the skilled rate
8th period of 1,050 hours 96% of the skilled rate
INCENTIVE
<TABLE>
<CAPTION>
12/31/95 12/29/96 12/28/97
-------- -------- --------
<S> <C> <C> <C>
Chipper 11.21 11.56 11.86
Grinder 11.21 11.56 11.86
Machine Shop Operator - Plant 2 11.21 11.56 11.86
Core Maker 11.21 11.56 11.86
Core Finisher 11.21 11.56 11.86
Shifter and Shakeout 11.21 11.56 11.86
Jeep Driver/Load Checker - Plant 2 11.30 11.65 11.95
Radial Drill Operator 11.31 11.66 11.96
Truck Loader/Order Picker - Plant 2 11.31 11.66 11.95
Iron Pourer 11.40 11.75 12.05
Slinger Molder 11.40 11.75 12.05
Slinger Operator, Hydro 11.54 11.89 12.19
</TABLE>
Leadmen, when utilized, will be selected by the Company. Leadmen will
receive a minimum of 15(cents) over the rate of the job led.
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<PAGE> 34
EXHIBIT "B"
DRUG AND ALCOHOL ABUSE POLICY BETWEEN NEENAH FOUNDRY COMPANY AND LOCAL
121B, GLASS, MOLDERS, POTTERY, PLASTICS & ALLIED WORKERS INTERNATIONAL UNION,
(AFL-CIO-CLC)
POLICY FOR SCREENING FOR ABUSE OF ALCOHOL, MARIJUANA AND CHEMICAL
SUBSTANCES
Neenah Foundry Company and GMP Local 121B have a strong commitment to
provide a safe and secure workplace for all employees and to promote high
standards of employee health and productivity. Because of this commitment, both
Neenah Foundry Company and GMP Local 121B agree to a program of screening for
use and/or abuse of alcohol or chemical substances in the workplace.
It is the purpose of this agreement to provide guidelines for
addressing such substance use/abuse by employees.
1. There will be no random drug/alcohol testing except as mandated by
law.
12. This agreement applies to employees in situations where the Company
has determined the employee to be under the influence of drugs, marijuana,
chemical or controlled sub stances, or alcohol while at work or on Company
property.
23. If an employee appears to be under the influence of alcohol or
drugs, the supervisor should, if possible, secure the assistance of another
supervisor in observing the employee's action and in escorting the employee to
an appropriate office or area for further investigation. A Union representative
or designee shall be secured to be present during the investigation.
34. If, as a result of the investigation, the supervisor has reasonable
cause to believe that the employee is in a condition that is jeopardizing
workplace safety or cannot perform his or her job because of on-the-job
intoxication or impairment, the employee will be suspended and will be required
to submit to a screen for alcohol/drugs. The supervisor may and if requested by
the employee, a Union representative may accompany the employee to the test
site. However, neither shall be permitted to impede the testing process. The
Union representative will continue to be paid during the time required to
accompany the employee, wait at the test site, and return to work, if he would
otherwise be scheduled to work during this time.
5. The initial screen for suspected drug, marijuana, and chemical
substance use will be an enzyme multiplied immunoassay test. The confirmatory
test will be a gas chromatography-mass spectrometry (GC-MS) test. A confirmatory
will automatically be performed on any sample that is initially positive.
However, the Company reserves the right to test directly by using the gas
33
<PAGE> 35
chromatography-mass spectrometry (GC-MS) test rather than the initial enzyme
multiplied immunoassay (EMIT) test.
In those situations where there may be reason to believe that the
sample may have been tampered with by the person giving the sample prior to the
sealing and signing of the samples, the Company may authorize the laboratory to
perform a Specific Gravity test prior to the EMIT/GC-MS test being performed.
6. If available, the appropriate test for suspected alcohol use will
be a breathalyser test. A blood sample may also be utilized at the discretion of
the Company to determine or verify the results of the test.
6A. State law standards as defined in the motor vehicle code in the
state where the plant exists or incident occurs, will be utilized to determine
if the employee is intoxicated.
47 The initial sample taken for screening for illegal chemical
substance, drugs, marijuana and controlled substances will be split into three
samples. They will be sealed and signed at the time of the taking of the sample
by the person taking the sample and the person giving the sample. One sample
will be used for the EMIT and/or the confirmatory (GC-MS) test. The remaining
two (2) sealed and signed samples will be retained by the testing laboratory. If
it is determined that the GC-MS screen is positive, the employee will have the
right within two (2) weeks of notification of said positive screen test results,
to have the second sample sent to a certified lab of their choice to be tested.
The laboratory selected by the Company will transmit the sample directly to the
laboratory selected by the employee, with the seal and signature intact to
protect the chain of custody, where a GC-MS confirmatory screen test will be
performed.
The employee will be reimbursed for the cost of any screen
performed at his discretion provided the laboratory selected is certified for
testing by the National Institute of Drug Abuse (NIDA) (or a comparable
independent state certified laboratory), and provided the results are negative.
The employee will sign a consent agreement authorizing the release of the
results of the screen to the Company.
In situations where the results of the screen test from the two
(2) labs reach opposite conclusions, then a third certified laboratory will be
selected by the two (2) respective laboratories and the remaining sealed and
signed sample of the original specimen will be sent to the third certified
laboratory to perform a GC-MS screen test.
The results of the third certified laboratory will be binding on
all parties and if the tests are negative then the employee's record would be
cleared of any suspension or reference to the incident. The Company will
reimburse the employee for time lost at the applicable rate, as specified in the
Union contract, from the date of suspension.
34
<PAGE> 36
8. Any employee who is asked to submit to a screen for alcohol or drug
use will sign a consent agreement authorizing the release of the results of the
screen to the Company.
9 Refusal to submit to a screen for items covered under this Drug and
Alcohol Abuse Policy or to sign a consent agreement or to take rehabilitation
recommended by appropriate medical authorities will be considered
insubordinations and the employee will be suspended pending termination.
10. If the employee is taking prescription or over-the-counter
substances that might affect the results of the screen, the Company will be
advised by the employee prior to the screen being administered.
11. The Company will select a properly licensed, accredited testing
NIDA or comparable state approved/certified facility and follow testing
procedures specified above to assure the most accurate results, maintain the
most complete chain of custody and quality control procedures and assure the
maximum of confidentiality.
11A. Outside of the Neenah/Menasha area, the Company and Union will
accept reasonable facilities and the results of law enforcement agencies.
512. All screening as well as the results of any screen will be treated
in a confidential manner. All employees who are tested will be given the results
of their tests in writing.
613. Any employee found to be intoxicated (in accordance with 6A),
under the influence of illegal chemical substance, marijuana or controlled
substances, will be offered the opportunity for rehabilitation on the first
incident only except as if specified in Item 15 below.
The type of rehabilitation program available will be determined at
the appropriate time after consultation with appropriate medical authorities.
Any treatment must be provided by an approved rehabilitation facility in
accordance with the insurance program specified in the respective Collective
Bargaining Agreement. If the employee agrees to the rehabilitation program, then
the employee will be required to satisfactorily complete such rehabilitation
program. Failure to do so will result in their suspension pending termination.
14. An employee who has completed rehabilitation and is found to be
under the influence of alcohol, (in accordance with 6A), illegal chemical
substance, marijuana, or controlled substance a second time, the employee will
be suspended pending termination.
15. Any employee who initially tests positive for use of alcohol (in
accordance with 6A), illegal chemical substances, marijuana, or controlled
substance and, the test is confirmed, will be subject to future tests upon
reasonable cause as specified in (4) and (5) above.
35
<PAGE> 37
In situations where an employee voluntarily comes forward prior to
any Company inquiry and admits they have an alcohol or drug problem after having
satisfactorily completed the counseling/rehabilitation program shall be given a
second chance at rehabilitation. Any subsequent situations will result in the
employee being suspended pending termination.
716. All new employees will be informed that the Company has an alcohol
and substance abuse testing program.
17. This policy does not replace or interfere in any way with normal
disciplinary procedures.
18. All specimens will be sent to a National Institute of Drug Abuse
Laboratories (NIDA), and all test results will be forwarded to Neenah Foundry
Company.
19. Any dispute with respect to this drug and alcohol policy shall be
subject to the Grievance procedure.
EXHIBIT "C"
NEENAH FOUNDRY COMPANY
SUPPLEMENTAL INCENTIVE AGREEMENT AGREED ON NOVEMBER 27, 1957, amended
January 1, 1960, amended December 27, 1962, amended January 1, 1969, amended
January 2, 1972, renewed January 1, 1975, renewed January 1, 1978, amended
January 1, 1981, renewed January 1, 1984, renewed January 1, 1987, renewed
January 1, 1990, renewed January 1, 1993 and renewed January 1, 1996.
A. The Company agrees to study and install incentive rates for workers
who are not now on any incentive plan, where such plans are practical.
B. Incentive Plans established by the Company are to be set at a level
which affords a normal competent operator working at incentive pace, producing a
quality product, the opportunity to earn 33% over contract base rate, where
performance is fully controlled by the operator's own effort. Where less than
full opportunity for work exists, because performance is restricted by
equipment, operating limitations, or availability of work, the total earnings
opportunity shall be proportionately less by agreement with the Union.
C. All incentive workers shall be guaranteed their base rate for each
day worked. Core makers and core finishers will be guaranteed their incentive
earnings for each division worked during a single day. Divisions are defined as
follows: a) Bench and Bench Blower and CB-22 no-bake.
D. Molders, Coremakers, Core Finishers, Chippers, Grinders, Machine
Shop and Radial Drill Operators working on experimental work or samples will be
paid on the basis of average
36
<PAGE> 38
earnings. For this purpose, the following definitions will apply: (1) SAMPLES
are jobs being run to prove a production process to satisfy customer or Company
requirements, and may involve interruptions by Supervision and/or Quality
Control; (2) EXPERIMENTAL WORK involves the research and/or development of new
materials, processes, or equipment to evaluate the feasibility of incorporating
them into the manufacturing operation.
E. The Union shall be given a copy of all standard data used as basis
for setting incentive rates including future additions or changes to such
standard data. Each Plant Manager will have a copy of the standard data used in
his plant, which will be made to duly appointed Union representatives upon
request. Minor changes shall not cause an adjustment in standard data until the
accumulated changes total at least plus or minus 5%.
F. After incentive rates have been installed, such rates cannot be
changed except as provided in paragraphs 1, 2 and 3 below or by mutual agreement
between the Union and the Company. This does not preclude the Company from
establishing new methods and procedures and assigning applicable rates.
Incentive rates, once established, shall become permanent rates and shall be
guaranteed against change except for the following:
1. Changes due to errors in job content analysis,
clerical errors, managerial changes in material,
method, equipment or process which definitely change
the work elements of the job so that it shall require
more or less time to perform.
2. Where changes affect the time required to perform an
element or elements, only those elements which have
changed will be adjusted.
3. Changes through grievance procedure.
G. Notification of changes will be given to workers affected by the
changed rate. Such notifications will include the reason(s) change was made.
H. Incentive rates will be computed from Standard Data. If the
incentive rate cannot be met by a normal competent operator working at an
incentive pace, the Company agrees to review the elements making up the
incentive rate. In accordance with results of the review, the incentive rate may
be adjusted to provide normal incentive opportunity on the job. Incentive
earnings shall not be averaged to determine whether individual values are fairly
established.
I. Any incentive employee or Committeeman shall have the right to
grieve any new incentive rate which has been established by the Company.
However, as a crude to determine whether an individual is justified in
challenging a particular incentive rate, such individual's overall average
incentive earnings shall be considered. If a rate is changed as a result of a
grievance such rate shall be retroactive to the date on which the grievance was
filed.
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<PAGE> 39
J. The Company shall endeavor to establish rates for unrated . obs
before the job starts. If the rate is not established before the job starts, the
rate shall be set and the employee notified within four hours from job start or
by the end of the shift, whichever is sooner, or pay average earnings
retroactive to job start. An unrated job is any job (excluding plus standard
work) for which a rate is not at the job site when the job starts.
K. If an incentive employee or leadman has a question concerning the
work content of a job, he shall contact his supervisor. The supervisor shall
check the job by observation, by review of the scheduling master, or other data.
If the operator's question cannot be satisfactorily answered, then the
supervisor shall request a copy of the factor sheet and will review the copy of
the factor sheet with the employee. The supervisor may request the Standards
Department to observe the job in question.
L. A duty appointed Union representative, after contacting his
supervisor, shall have the right to examine any incentive rate in effect during
the life of this contract. The Union representative, in order to complete the
examination of an incentive rate, may request the supervisor to get the factor
sheet for said job. All such rates shall at all times remain in the possession
of the Company, subject, however, to the right of inspection by the Union
representative.
M. The International Union Representative or Shop Steward Chairman
Assistant shall have the right to call for a time study on any incentive rate
which the Union feels is improperly established and on which a grievance has
been filed. Such time study shall be made in accordance with accepted Industrial
Engineering practice.
N. When time studies are made as a result of a grievance, the Union
Representative shall be furnished with a copy upon request.
<PAGE> 40
EXHIBIT "D"
TRUCKING
1. The following rates shall apply as indicated:
a. Mileage Rate - The mileage rate for employees who are OTR
Drivers or Relief Drivers on December 31, 1995 shall be 340 per mile from
December 31, 1995, through December 28, 1996. This mileage rate will be
increased to 34.50 per mile December 29, 1996.
b. Hourly Rate - The hourly rate shall be $13.48 per hour from
December 31, 1995, through December 28, 1996. Effective December 29, 1995, the
hourly rate shall increase to $13.83, and effective December 28, 1997, it shall
be $14.13.
2. The Over-the-Road Driver will be paid mileage on the basis of
routings and mileage determined and assigned by Neenah Transport, Incorporated.
Until mileage for a specific route has been determined, the route will be
designated and odometer mileage will be paid.
3. It is understood that mileage compensation covers all time
spent in the service of the Company, including but not limited to pickups,
deliveries, line-haul operations, communications and reporting, exchange of
equipment, waiting time, scaling, fueling, equipment checks, loading or
unloading, verifying the accuracy of products loaded or unloaded, precautionary
measures to protect the load, including tamping, ensuring the trailer is clean
and safe for loading and compliance with all state and federal paperwork and
inspection requirements of any kind whatsoever and any other functions required,
assigned or performed as an Over-the-Road Driver except as provided in
paragraphs 9, 10, 11, 12 and 13 of this Exhibit.
4. "Out-of area" shall be defined as any place in excess of 50
miles from the designated home terminal. "Area" shall be defined as any place
within 50 miles from the home terminal. When assigned to area driving, the
Over-the-Road Driver shall be paid the mileage rate provided in paragraph 1, in
addition to any drop pay for which he qualifies.
5. On out-of-area trips the Company shall have the right to
schedule and route Over-the-Road Drivers to fit its delivery and pickup
requirements and to install and use any recording equipment on the vehicles.
6. Where overnight trips are scheduled, the Over-the-Road Driver
shall be entitled to reasonable expense for lodging.
a. Reasonable expense for lodging will be effective only at
the end of the second consecutive work day, and every other second consecutive
day following, when a driver is on an extended trip. When circumstances make
such impractical, then the driver is to contact Neenah Transport supervision and
obtain advance approval to stay in a motel.
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<PAGE> 41
b. The Company will reimburse each driver for reasonable
expenses when charged for utilizing truck-stop showers, on each day he does not
stay in a motel.
c. The Company will reimburse each driver for parking
fees required to be paid for parking the truck.
d. Drivers must submit paid bills for all expenses.
e. An employee eligible for a motel under 6a, above, may
elect to accept a payment of $35.00 instead of sleeping in a motel.
7. Over-the-Road Drivers shall submit an immediate verbal report
on all accidents, and follow with a written report on any accidents, defects in
equipment or any emergencies as soon thereafter as possible. In case of illness
which precludes the driver from proceeding further to his destination, such
driver shall notify Neenah Transport supervision as soon as possible.
8. Over-the-Road Drivers shall familiarize themselves and comply
with the Neenah Transport Truck Drivers' Manual, as well as all applicable rules
and regulations of the DOT, Wisconsin Department of Transportation, and the
various states in which our operations are conducted.
9. Minimum Daily Guarantee. When an Over-the-Road Driver reports
to work and was not advised at the end of the previous day that there would be
no work, he shall be paid a minimum of four (4) hours employment or a minimum of
four (4) hours pay at the hourly rate provided in paragraph I before being
dismissed for the day, provided, however, that the Company shall not be liable
under this paragraph for unavoidable breakdowns of machinery, power failure,
Acts of God, or conditions beyond the control of the Management. It is
understood that this paragraph (9) applies only to drivers beginning their work
schedule at the designated home terminal or maintenance point.
10. Lost time due to Over-the-Road Emergencies.
When an Over-the-Road Driver on an out-of-area trip is unable
to continue that trip because of accidents, impassable road conditions such as
ice, snow, flood, fog, or other Acts of God for a period of twenty-four (24)
consecutive hours or more, he will receive eight (8) hours pay at the hourly
rate provided in paragraph I and a meal allowance of $15.00. An additional
eight (8) hours of pay at the hourly rate provided in paragraph I and a meal
allowance of $15.00 will be provided at the end of each consecutive twenty-four
(24) hour delay period thereafter.
When an Over-the-Road Driver on an out-of-area trip is unable
to continue that trip because of a breakdown, the driver shall be paid the
hourly rate provided in paragraph I when required to remain with his equipment,
to a maximum of 10 hours total pay for that day. After eight (8) hours from the
time he is no longer required to remain with his equipment, he will be paid up
to an additional 10 hours at the rate provided in paragraph I if his equipment
is not available within the
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24 hour period beginning when he is no longer required to remain with his
equipment, as well as a meal allowance of $15.00. Should his equipment not be
available after that 24 hour period, he will again be paid up to an additional
10 hours at the rate provided in paragraph 1, and a meal allowance of $15.00.
11. Layover Pay.
If an Over-the-Road Driver is directed by Neenah Transport
supervision to lay over for a period exceeding twenty-four consecutive hours,
the driver shall be paid eight (8) hours at the hourly rate provided in
paragraph I and a meal allowance of $15.00. An additional eight (8) hours of pay
at the hourly rate provided in paragraph I and a meal allowance of $15.00 will
be provided at the end of each consecutive twenty-four (24) hour lay-over period
thereafter. In the event a layover consists of 10 hours or more, then the
company will reimburse the driver for reasonable expenses if they chose to stay
in a motel.
12. Drop Pay.
An Over-the-Road Driver on an area or out-of-area trip will be
compensated according to the number of stops for loading and/or unloading
purposes at customer and/or vendor locations for each trip by the following
schedule:
<TABLE>
<S> <C>
1st Stop $20.00
2nd and subsequent stops $10.00
</TABLE>
If a driver is delayed at any one stop for pickup and/or delivery for a period
of more than two (22) hours, and he provides the Company with required
documentation of necessary delay time, he will be paid at the hourly rate
provided in paragraph I for the time that exceeds two (2) hours. However, it is
understood that the driver will not be compensated at the hourly rate for time
periods when the customer or vendor shipping or receiving facilities are closed.
It is further understood that Switch & Go at Neenah Terminal is $ 1 0.00 drop
pay with a maximum of one payment per day.
13. Lumber and Coke Tarping
An Over-the-Road Driver will be paid a special tamping
allowance of $10.00 for the initial tamping of a lumber load, in addition to
any Drop Pay for which he is eligible. It is agreed that this special Tarping
allowance is applicable to the initial loading of a lumber load only, and not
applicable for re-Tarping following subsequent drops of the load.
An Over-the-Road Driver will be paid a special Coke Tarping
allowance of $10.00 for the initial Tarping of a coke load, in addition to any
Drop Pay for which he is eligible, when he is required to tarp from the top of
the load. It is agreed that this special coke tamping allowance is
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<PAGE> 43
applicable to the initial Tarping of a coke load only, and not applicable for
re-Tarping following subsequent drops of the load. When equipment is furnished
which will permit the Driver to tarp the coke load from the ground, then no
special Coke Tarping Allowance will be paid.
14. Call-In Pay - If after returning to his home terminal and
being informed that his dispatch is complete and being dismissed for the day (or
some other specified time), a driver is notified he is to return to work before
his next work day, he shall be paid two (2) hours straight time call-in pay at
his regular base rate, in addition to pay at the appropriate rate for his actual
time worked.
A driver who requests or volunteers for an early dispatch will
not qualify for call- in pay.
15. All other provisions of the current Labor Agreement except
Article 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.8, 2.9, 7.2, 7.3, and 13.8 shall be
applicable to Over-the-Road Drivers while on out-of-area trips. However,
Over-the-Road Drivers will be paid one and one-half times their hourly base wage
for attending scheduled Saturday meetings called by the Company, and shall be
paid at the rate of double the regular rate for work performed on Sunday, except
for Sundays when dispatched from the home terminal, or when paragraph 10 of this
Exhibit applies.
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NEENAH FOUNDRY COMPANY BASIC RULES
In order to maintain the general welfare of the Company and its
employees and to assure fair treatment for all, the following revised rules are
effective immediately.
Disciplinary action, whether it be in the form of a warning, suspension
from work without pay, or discharge, will be based upon the circumstances
surrounding the violation, together with the employee's general record of
employment with the Company.
1. Violation of the contract between the Company and Local No.
121 B.
2. Dishonesty.
3. Insubordination.
4. Unsafe conduct.
5. Unauthorized absence from job for any length of time or
unauthorized presence in the plant.
6. Failure to comply with job requirements and responsibilities.
7. Damage to property on Company premises.
8. Reporting for work while under the influence of intoxicants or
use or possession of intoxicants on Company premises
(includes-illegal controlled substances).
9. Conduct detrimental to the welfare of the Company or its
employees.
These basic rules are subject to change at any time.
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<PAGE> 45
NEENAH FOUNDRY COMPANY
NEGOTIATED POLICIES
1. Molding job difficulty policy.
If after a pattern change, a molder(s) is having difficulty
through no fault of his own in making acceptable molds, then after one-half hour
of such effort, excluding the time required in putting on a pattern, and
following his notification to his supervisor of the difficulty, then:
a. The job would be pulled and the employee would be
paid base rate.
b. If the employee continues the job beyond the half
hour, and such is approved by his supervisor, then he
will be paid his average earnings from the start of
the job, including pattern change time, until he can
make acceptable molds.
2. Maintenance uniforms.
The Company will arrange to provide five sets of laundered
coveralls per week to each maintenance employee. Ownership of the uniforms will
be retained by the laundry service.
3. Core maker and finisher job difficulty policy.
Core makers and finishers, after approval of the supervisor
and for cause beyond control of the worker, may work all or part of a job on
base hourly rate. Minimum time to be considered is 30 minutes.
4. Maintenance tools.
Neenah Foundry Company will furnish necessary tools in 3/4" or
above drive size. These tools will be stored and available to maintenance people
as required for their use. They will be stored in Company approved locations.
5. Non-bargaining unit personnel performing bargaining unit work.
Article 13. 10 reads, as follows:
"Non-bargaining unit personnel shall not perform work normally
done by bargaining unit employees except for the purpose of instruction or in
the case of emergency."
To aid in the interpretation of this paragraph, the following
clarification is provided:
1. What is "for the purpose of instruction"? Any work
performed by a supervisor or foreman for the express
purpose of training the employee is
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<PAGE> 46
"instruction." Generally, a training method of
showing and then having the employee try, making
corrections, and then continuing that process until
the employee has learned to do the particular work is
followed.
2. What is "in the case of emergency"? A supervisor is
required to work in an emergency.
a. An "obvious" emergency exists when prompt
and immediate action for protection of
employees, property, equipment, or materials
is required. This type of emergency is
typified by being unplanned, or unforeseen
and requires immediate action.
b. A "less obvious" emergency can also exist.
For example, due to short crewing, such as
caused by absenteeism and tardiness of
bargaining unit employees, an emergency can
be created. An "emergency" is not
automatically created, however. If the
condition is so critical as to have to shut
down any part of the operation, or to
deprive those working of the opportunity to
perform work, then an "emergency" condition
exists. In order to make a valid
determination as to whether or not an
emergency exists, we have developed a
procedure for the supervision to follow for
the various shifts. The procedure does not
have to be followed in the order it is
presented; however, all the steps should be
taken before a supervisor decides whether or
not an emergency exists.
(1) One shift operation.
Step 1: Check with the labor pool. Leave word to send employee as soon
as they are available.
Step 2: Reassign people within your department to get necessary work
done.
Step 3: Ask yourself the question of any work that remains to be done,
"Does it have to be done now?"
Step 4: Can any work needing to be done be accomplished by further
rearrangement of the work force?
Step 5: Can any work needing to be done be performed on an
intermittent basis by coordinating existing people?
Step 6: If, after the above steps are exhausted and the condition
becomes so critical as to have to shut down any part of the
operation, or to deprive those working of their opportunity to
perform work, then an emergency exists.
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<PAGE> 47
(2) Two or three shift operation.
Step 1: Check with the labor pool. Leave word to send employee as
soon as they are available.
Step 2: Reassign people within your department to get necessary work
done.
Step 3: Ask yourself the question of any work that remains to be done,
"Does it have to be done now?"
Step 4: Can any work needing to be done be accomplished by further
rearrangement of the work force?
Step 5: Can any work needing to be done be performed on an
intermittent basis by coordinating existing people?
Step 6: Can you call employees in early, or hold employees over and do
the job?
Step 7: If, after the above steps are exhausted and the condition
becomes so critical as to have to shut down any part of the
operation, or to deprive those working of their opportunity to
perform work, then an emergency exits.
The steps listed above are designed to help when a "less obvious"
emergency exists. These steps will help to establish that there is (or isn't) an
emergency in fact, and not in name only.
6. Safety Committee operations.
Article 13.4 of the Collective Bargaining Agreement provides
for a joint Company-Union Safety Committee to function as outlined in the
December 17, 1974, policy letter. Below is the content of the referred to
letter:
The following is an outline of the composition and function of
the joint Company-Union Safety Committee to effectively improve the Neenah
Foundry Company safety results.
1. Safety inspections. At least one safety inspection of
each plant will be held quarterly. During such safety
inspection, a (one) local plant Safety Committeeman
would be included in the walk-around safety
inspection. The Company representatives will include
a member of the Safety Department, the Plant Manager,
or his delegate, and the Maintenance Superintendent,
or his delegate.
Prior to the inspection of plant departments, the
Department Superintendent and a Safety Committeeman
designated by the Union for the area will hold a
brief conference with the inspection team. The
committee shall hold a post inspection conference to
discuss and analyze the inspection.
The Union Committeeman involved will be paid at his
average earnings for all time spent in such activity.
The Safety Committeeman so involved will be
transferred to the shift of the inspection and paid
accordingly.
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<PAGE> 48
2. OSHA inspections. In the event an OSHA or State of
Wisconsin inspection is conducted, the Company will
make available a Safety Committee person for each
plant, and compensate him as outlined in L, above.
3. Safety Committee meetings. Safety Committee meetings
will be held as often as necessary by mutual
agreement, but at least once each quarter.
The joint committee will be comprised of four Union
representatives and four Management representatives.
The Director of Personnel and Safety will serve as
Chairman of the joint committee.
The nature of these meetings will be to communicate
what items are of joint interest in achieving the
goals of the joint committee. They will include, but
not be limited to, the following:
(a) An updating of any equipment for technology
adopted by the Company to improve safety
performance.
(b) An opportunity for two-way communication as
to the effectiveness of the general safety
program.
(c) Response by the Union Committeemen of
constructive ideas to improve the safety
results.
(d) Communication about the plans for the
following quarter to achieve and improve
safety records, better compliance with
applicable regulations, etc.
(e) Review OSHA Form 200 (Log of Industrial
Accidents).
(f) Discuss inspections conducted by the Safety
Inspection Team.
When such meetings are held, employees will be compensated as in I., above.
4. Company monitoring. The Company will, under its
program of environmental auditing, housekeeping
inspections, local departmental or plant safety
inspections, etc. from time to time independently
conduct audits and inspections. These may be for the
purpose of determining the impact of changes,
experimentation with noise reduction or dust
suppression technology or methods, etc.
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<PAGE> 49
The position of the Company is that participation by hourly Safety
Committee employees is not required, particularly in environmental auditing, and
so Safety Committeemen will not be invited to participate in this type of
activity.
If, under law, employees or their representatives are
authorized to participate in such, they will do so without pay. (The position of
the Company is that on walk-around safety inspections, an employee
representative may be able to make a positive contribution to either
identification of unsafe conditions or acts; however, in environmental sampling,
instrumentation and technology of environmental control employees is applied,
and, therefore, no effective contribution is anticipated to be made by the
hourly employees in this type activity.)
5. Serious accidents. In the event of a serious
accident, requiring hospitalization of a bargaining
unit employee, the Director of Personnel and Safety
will promptly notify the President of Local 12113, or
his delegate, and inform him of the incident,
describe the circumstances, make available to him a
report of the accident, and keep communications open.
7. Weekend overtime when more than a normal department crew is
required.
When a department needs more than the people assigned to that
department to perform overtime work on Saturdays or Sundays, the following
procedure should be followed if employees wish to be considered for such work:
1. Employees with good work records should notify their
supervisors that they wish to be considered for extra
overtime work on weekends.
2. Employees within that plant so notifying their
supervisor will be scheduled for available work on
the basis of qualifications. If two or more of these
employees are equally qualified, the employee(s) who
has the most company seniority within that plant will
be scheduled.
8. Assignment of overtime.
Where overtime is required for an entire department, the
overtime will be worked by the department in the plant where the overtime is to
occur.
Where overtime is required by an entire work section, the
overtime will be worked by the work section in that department of the plant
where the overtime is to occur.
Where overtime is required by less than a department or less
than a work section in a plant, the overtime will be assigned the most senior
qualified employees who normally perform the job in that department or work
section.
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<PAGE> 50
Where overtime is required for work in process the employee(s)
performing the work in process will work the overtime. If additional employees
are needed, the overtime will be assigned to the most senior qualified
additional employees who normally perform the work in that department of the
plant where the overtime is to occur.
On weekend overtime only where less than a full department or
work section is scheduled, work performed by temporary student employees during
the week will be assigned to the senior qualified employees in that department
of the plant who were not otherwise scheduled to work overtime.
9. Transfers from and Cutbacks to Local 121B Jurisdiction
Involving Pattern maker Jurisdictional Jobs
1. When an employee represented by Local 121B is selected by
the Company for a job represented by the Patternmakers Union, that employee
shall retain his or her departmental seniority in his or her Local 121B
department until he or she has worked thirty (30) days, beginning with the first
day of work in the patternmaker jurisdiction job. During this time, if for any
reason the employee is returned to his or her former job, he or she will do so
with continued accumulated departmental seniority. The employee shall lose all
seniority in his former department beginning with the day after he or she
completes thirty (30) days worked in the pattern maker jurisdiction job.
2. If any employee of the Company who has previously occupied
a job represented by Local 121B is cut back or laid off from the pattern shop
jurisdiction, and any employees represented by Local 121B are on layoff at that
time, the employee cut back from the pattern shop shall go to the end of the
Local 121B represented employee layoff list. Should subsequent layoffs occur in
jobs represented by Local 121B, then all employees on layoff from Local 121B
represented jobs will be recalled prior to any pattern shop employee being
recalled to a Local 121B represented job.
3. If any employee of the Company who has previously occupied
a job represented by Local 121B is cut back or laid off from the pattern shop
and no one is on layoff from Local 121B at the time, then that employee will
have rights to a job within Local 121B jurisdiction, provided there are any
openings as determined by the Company. It is agreed that such cut-back employee
brings no departmental seniority to his job in Local 121B jurisdiction. After
six months, that employee may utilize all of the Company seniority he has for
purposes of any other layoff or for seniority determination in job posting.
During his first six months, his seniority will be counted from the day he
transferred to Local 121B jurisdiction from the pattern shop jurisdiction as
though he were a new employee.
This same seniority treatment will be applicable to the
employee for purposes of layoff and job posting seniority until six months are
completed. For purposes of pension plan, vacation eligibility, and all other
provisions except job posting or layoff as outlined above for the first six
months of service in a local 121B represented job which immediately follows a
cutback
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<PAGE> 51
or layoff from the pattern shop jurisdiction, the employee will have retained
his total Company seniority.
4. The parties agree that the transfer and job posting
provisions of ARTICLE 8 of the Collective Bargaining Agreement do not apply to
transfers from Local 121B to patternmaker jurisdiction.
MANAGEMENT POLICIES
1. Average earnings for periods of one week or less.
A. Definition: Average earnings shall be the hourly rate
determined by dividing the sum of money paid for all hours
worked (excluding overtime premium and pay received for time
not worked) by the total hours worked in the last computed
four-work-week period, but excluding any week when a shutdown
occurs or partial operation is necessary due to holidays.
B. This average rate will be used whenever it is necessary to pay
an employee at the average earnings rate as specified in the
Union Contract, for periods not to exceed one week.
C. No adjustment will be made for shift premium.
D. An employee permanently transferred to a higher rated job in a
week in which a holiday occurs will be paid Holiday Pay at
such higher rate, if more than the average earnings rate.
E. When a holiday occurs in a week in which a general wage
increase becomes effective, an adjustment in average rates
will be made.
2. Pay procedure for employees transferred due to temporary disability.
An employee unable to perform his regular job because of accident or
illness, may be temporarily transferred for the period of disability or until a
determination is made that the disability is permanent and he will be unable to
return to his regular job.
Industrial accident or industrial - The employee will receive his
regular base rate, or the base rate of the temporary job, whichever is higher,
plus incentive if any. During the time of transfer, the employee's average will
be frozen.
Non-industrial accidents or non-industrial illness - The employee will
receive the base rate of the temporary job, plus incentive, if any.
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3. Attendance policy - hourly employees.
The purpose of this policy Is to minimize absenteeism. It Is the
general policy of the Company to uniformly administer the attendance rules and
related procedures listed herein.
A. Definitions:
1. Absence - not being at assigned work station during a
scheduled shift.
2. Excused absence - being away from assigned work
station with proper notification to an approval of
supervision and/or the Personnel Department.
3. Unexcused absence - being away from assigned work
station without permission of supervision and/or the
Personnel Department.
B. Responsibility:
1. It shall be the responsibility of plant supervision
with counsel from the Manager of Employee Relations
to administer the provisions of this policy in a
uniform and consistent manner.
C. Procedures:
1. Any absence which is known in advance and able to be
scheduled, such as an appointment, must be reported
to and approved by supervision and/or the Plant
Office at least one day prior to the absence.
2. Any absence which is not known in advance, such as an
emergency arising during off duty hours, must be
reported on the Company's "call-in" telephone line
(7257049) prior to the start of the employee's
scheduled shift. Employees whose shift starts after
4:00 P.M. are requested to report in an unscheduled
absence no later than 4:00 P.M. to enable supervision
to schedule their operations.
3. Any absence to be classified as excused must be
reported within the limits set in the above two
paragraphs of this policy and have approval of
supervision and/or the Personnel Department.
4. Any absence which is unexcused will result in a
disciplinary action as described under Article 6 of
the Collective Bargaining Agreement.
4. Normal pay procedure for incentive jobs without incentive system.
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<PAGE> 53
A. Purpose:
1. To set forth the method of compensating employees
assigned to incentive jobs which are temporarily
without an incentive system, due to an incentive
system change or installation of a new incentive
system.
2. This procedure replaces all procedures which have
been used in the past.
3. This procedure is intended to cover normal
situations. If unusual conditions arise, deviations
from this procedure must be approved by the Vice
President of Manufacturing and Engineering.
B. Definitions:
1. Incentive job - for the purpose of this procedure, an
incentive job is defined as:
a. A job which formerly had incentive and is
temporarily without an incentive system.
b. A job which the Company has determined will
be assigned an incentive system in the near
future.
C. Responsibility:
1. It shall be the responsibility of the Plant Manager
to administer this procedure in a uniform and
consistent manner.
D. Procedures:
1. When the Company determines it is necessary to change
an existing incentive system, or determines an
existing or new job is going to be assigned an
incentive system, the following pay procedures will
be followed:
a. Pay the employee assigned to these jobs,
except those employees who have a current
production average in that skill, or
temporary base rate of 5% over the current
incentive base rate for that job (105%).
b. Each employee who has a current production
average in that skill will be paid at 90% of
his individual four (4) week average or the
temporary rate outlined in D-1.a above,
whichever is higher.
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<PAGE> 54
c. The employee's average will be frozen while
being paid under this procedure.
5. Payment for time missed from work on day of lost time accident.
An employee who is injured during the course of his employment and who
in the opinion of a medical doctor, is unable to complete his shift, will be
paid at average earnings from the time of the injury to the scheduled end of his
shift. An employee who, because of an injury sustained during a particular shift
is unable to complete his regular job on that shift, may be assigned to other
work for the balance of the shift and will be paid his own base rate, or the
rate of the job, whichever is higher, together with any incentive earned.
When it is necessary for an employee to see a doctor because of an
industrial injury sustained at Neenah Foundry Company, the Company will make an
appointment for him with the doctor. If it is necessary to schedule the
appointment during working hours, the employee will be paid at average earnings
for all time lost in keeping such appointment. Appointments scheduled outside
regular working hours will not be covered under this provision.
Appointments not scheduled by the Company, whether scheduled during
working hours or after regular working hours, will not be covered under this
provision.
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<PAGE> 1
EXHIBIT 10.6
NEENAH FOUNDRY COMPANY
1995-1997
COLLECTIVE BARGAINING AGREEMENT
WITH
THE INDEPENDENT PATTERNMAKERS UNION OF NEENAH WISCONSIN
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE 1 - RECOGNITION.................................................... 1
ARTICLE 2 - HOURS OF WORK.................................................. 2
ARTICLE 3 - VACATIONS...................................................... 3
ARTICLE 4 - SENIORITY...................................................... 5
ARTICLE 5 - GRIEVANCES..................................................... 6
ARTICLE 6 - DISCHARGE AND DISCIPLINE....................................... 8
ARTICLE 7 - WAGES.......................................................... 9
ARTICLE 8 - TRANSFERS AND PROMOTIONS....................................... 10
ARTICLE 9 - LEAVES OF ABSENCE.............................................. 12
ARTICLE 10 - MANAGEMENT.................................................... 12
ARTICLE 11 - NO STRIKE - NO LOCKOUT........................................ 12
ARTICLE 12 - FUNERAL LEAVE................................................. 13
ARTICLE 13 - GENERAL....................................................... 13
ARTICLE 14 - PENSIONS...................................................... 15
ARTICLE 15 - INSURANCE..................................................... 16
ARTICLE 16 - TERMINATION CLAUSE............................................ 16
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<PAGE> 3
1995-1997
AGREEMENT
This AGREEMENT made and entered into between the NEENAH FOUNDRY
COMPANY, Neenah, Wisconsin, and its successors, party of the first part, and
Independent Pattern Makers Union of Neenah, Wisconsin and its successors, party
of the second part.
ARTICLE 1 - RECOGNITION
1.1 The Company recognizes the Independent Pattern Makers Union of Neenah,
Wisconsin as the sole bargaining agency for all pattern makers, pattern maker
apprentices, and pattern maintenance employees of the Company's pattern shops
located at Plants 1, 2 and 3, and the Neenah Foundry Pattern Shop, Neenah,
Wisconsin, relative to wages, hours, and working conditions as provided by the
National Labor Relations Act. The above employees shall be considered as a
single bargaining unit for purposes of this agreement.
1.2 The Company and the Union will comply with all applicable Federal and
State Statutes concerning discrimination in employment. Wherever the words he,
him, his or other such male gender references appear in this Agreement, such
references shall include and will apply equally to the female gender.
1.3 All employees who as of the effective date of this Agreement are
members of the Union in accordance with its constitution and by-laws and all
employees who become members after that date, shell, as a condition of
Employment, maintain their membership in the Union for the duration of this
contract.
A. All employees hired on or after the effective date of this Agreement
shall join and become members of' the Union no later than their 31st day of
employment or no later than 31 days after the execution of this Agreement,
whichever is later, and shall, as a condition of employment, maintain their
membership in the Union for the duration of this contract.
1.4 The Company agrees to check off the Union dues of such employees who
authorize the same, in writing, in the manner and form set forth in Exhibit "B"
which is attached hereto and made a part hereof. The Company will remit such
dues so collected to the person or persons designated by the Union by the 12th
day of each month, for all dues collected the first payday of each month. The
written authorization for check-off of dues by any employee will not be
effective for any dues or fees owing by such employee prior to the date of the
signed authorization executed by him and delivered to the Company and will be
effective the first payday of the month following the delivery of such signed
authorization to the Company.
The Company also agrees to check off fees or special assessments similarly upon
proper presentation of individual signed authorization forms directing the
Company to withhold from wages and pay to the Independent Pattern Makers Union
of Neenah, Wisconsin.
<PAGE> 4
1.5 All new employees shall serve a probationary period of thirty (30) days
worked. Probationary employees shall have no seniority rights and may be
released at any time prior to the expiration of the probationary period. If they
are retained at the expiration of the probationary period, their seniority shall
be from the date of hire.
ARTICLE 2 - HOURS OF WORK
2.1 Eight (8) hours shall constitute a day's work and there shall be a
recognized starting and quitting time which shall determine the overtime, if
any.
2.2 Except as hereinafter provided, all time in excess of eight (8) hours
in any one day or forty (40) hours in any one week, shall be paid for at the
rate of one and one-half times the regular hourly earnings computed on the basis
of the average straight time weekly earnings excluding overtime premium of any
kind and pay received for hours not worked. Such overtime shall be paid for time
in excess of eight (8) hours in any one day or forty (40) hours in any one week,
whichever is greater, but not for both, so that payment of overtime rates shall
not be duplicated for the sane hours worked.
2.3 Saturday Work - is to be paid at the rate of one and one-half times the
regular rate. However, if the third shift begins on Friday and extends into
Saturday, the regular rate shall be paid.
2.4 Sunday Work - is to be paid at the rate of double time. However, if the
third shift begins on Sunday and extends into Monday, the regular rate shall be
paid.
2.5 Sixth Day of Work - Third shift employees who start their work week on
Sunday and are scheduled to work on a sixth consecutive work day, will be paid
at the rate of one and one half times the regular rate for all hours worked on
the sixth consecutive shift.
2.6 All employees will be allowed a ten (10) minute lunch period at an
established time during the first half of each shift. The dinner period shall be
a minimum of one-half (1/2) hour.
2.7 Any employee who is required to start work before his scheduled
starting time shall be permitted to work until his scheduled quitting time,
until he is assigned a new work schedule.
2.8 It is mutually agreed that the working hours and overtime schedule
provided for in this Agreement shall be governed by all applicable Federal Laws.
2.9 Reporting Pay - When employees are required to report to work or have
not been advised at the end of the previous day that there will be no work, they
shall be given a minimum of four (4) hours employment or a minimum of four (4)
hours pay at their regular straight time hourly earnings, before being dismissed
for the day, provided however, that the Company shall not be liable under this
section for unavoidable breakdowns of machinery, power failure, acts of God or
conditions beyond the control of the Management.
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<PAGE> 5
2.10 Call-In Pay. Employees called in for work before the regular shift
begins or after it ends on an emergency basis shall receive two (2) hours
straight time pay plus pay at the appropriate rate for time worked.
2.11 Overtime Notification - Notice of scheduled Saturday or Sunday overtime
will given to the employee(s) affected by no later than the end of his (their)
scheduled shift on Thursday preceding the weekend.
A. When the scheduled of a shop is to be changed, the Company
shall notify the shop employee(s) affected prior to the end of his (their) shift
on the preceding day.
B. Employees may be notified by bulletin board notice and/or
personal communication. Employees so scheduled to work will be expected to work
as scheduled unless excused in advance by their supervisor. Should the Company
fail to provide such advance notice of weekend or shop schedule changes, the
employee or employees affected are free to reject the opportunity to work at the
time it is offered.
C. It is understood that the preceding paragraphs are not
applicable 'to casual or emergency overtime on a daily basis.
ARTICLE 3 - VACATIONS
3.1 The Company will grant paid vacations to employees covered by this
contract during each year as follows:
A. Except as hereinafter provided, each employee on the active
payroll on June 1 in any year who has completed one (1) year or more of
continuous service shall be granted a paid vacation.
1. Employees with one year but less than three years of
service on June 1 will be entitled to one week of
vacation.
2. Employees with three years but less than eight years
of service on June 1 will be entitled to two weeks of
vacation.
3. Employees with eight years but less than fourteen
years of service on June 1 will be entitled to three
weeks of vacation.
4. Employees with fourteen years but less than twenty
years of service on June 1 will be entitled to four
weeks of vacation.
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<PAGE> 6
5. Employees with twenty years but less than
twenty-eight years of service on June 1 will be
entitled to five weeks of vacation.
6. Employees with twenty-eight years or more of service
on June 1 will be entitled to six weeks of vacation.
3.2 June 1 shall be the anniversary date for all employees for the purpose
of determining vacation eligibility. Employees hired on or after June 1 and
before November 1 shall have June 1 as an anniversary date for purposes of
becoming eligible for more than one week of vacation.
3.3 The vacation pay basis period shall be the last fifty-two (52) week
period ending before May 25.
3.4 Each week of vacation shall be one calendar week. Each week of vacation
pay shall be two percent (2%) of the employee's gross earnings in the basis
period. However, employees who have worked 1500 hours or more during the basis
period shall have the option of receiving forty (40) hours of straight time pay
for each week of vacation. Time lost as a result of compensable injury incurred
while on duty at Neenah Foundry Company shall be counted as hours worked, at the
rate of eight (8) hours per work day, for purposes of determining vacation pay
eligibility.
3.5 The vacation year shall be June 1 through May 31. The Company reserves
the right to establish vacation shutdown period(s) of up to two weeks in any
vacation year for any or all of its operations. The Company shall notify the
Union of its selection(s) prior to April 1 of each year. All employees affected
must schedule vacation during the shutdown period(s).
A. It is understood that if the plant closes, a certain amount of
maintenance and/or production work may be carried on during the shutdown. The
Company will arrange with employees who are to work during the shutdown period.
B. If a vacation shutdown(s) is/are not scheduled, then all
employees eligible for vacation must schedule at least one week of vacation in a
weekly increment. Any vacation remaining may be scheduled in either weekly
increments (one week of vacation eligibility is five work days) or in single or
multiple days. All vacation requests must be approved by the Manager, Pattern
Operations.
C. Should a paid holiday occur during the period an employee is
on vacation, he may take an additional day of vacation either prior to or
immediately after the vacation period, or at some other time mutually agreeable
to the supervisor and the employee, prior to the end of the vacation year.
3.6 Vacation requests shall be considered on the basis of Company
seniority, providing normal operations of the Company are not impaired. There
will be a vacation sign-up period each year April 1 through April 15 for the
vacation year commencing the next June 1. Vacation requests received during this
sign-up period, after approval, are not subject to change through
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<PAGE> 7
exercise of seniority by other employees. Vacation requests made after the
sign-up period shall be submitted to the Company in writing at least 30 days
prior to the requested vacation period. To insure normal operations, the Company
shall have the right to limit the number of employees taking vacation
simultaneously. It is understood that the Company may extend the vacation
sign-up period by up to one additional week, following April 15, if it is deemed
necessary to finalize vacation scheduling.
3.7 For purposes of vacations, seniority of employees shall be on the basis
of total length of employment with the Company since the date of last hire.
3.8 Employees with less than one year's service:
Any employee who has been continuously employed for three months or
more and who is on the active payroll on June 1 shall be granted vacation pay,
which shall be two percent (2%) of his gross earnings as vacation pay for such
period, as computed above.
3.9 Layoff, Military Leave, Retirement, Death:
In the event an employee who was eligible for vacation pay on June 1 is
laid off, enters military service, retires, or dies during the vacation year, he
shall receive his unused vacation plus pro-rata vacation pay in the amount of
two percent (2%) of his gross earnings up to and including the date of
termination, for each week of vacation for which he would otherwise have
qualified.
3.10 Employees returning from military leave or layoff:
Any employee who returns from Military Leave or layoff and who is on
the active payroll June 1 shall be entitled to a vacation computed the same as
any other employee on the active payroll June 1.
3.11 Cash In:
Employees are not allowed to cash in vacation without approval of the
Company and three members of the Union Negotiating Committee.
ARTICLE 4 - SENIORITY
4.1 The President will have super-seniority over all employees for layoffs
only.
4.2 Pattern makers and apprentices employed as of January 1, 1977, shall
have super-seniority for the duration of their employment for purposes of layoff
over pattern makers, apprentices and pattern maintenance employees hired after
January 1, 1977.
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<PAGE> 8
4.3 For all employees hired after January 1, 1977, for purpose of layoff,
seniority of employment will be on the basis of length of employment in the
pattern shop and such employees shall be recalled in reverse order of layoff.
4.4 In the event a reduction in force requires layoffs among the
super-senior employees, then the following shall apply:
A. For purpose of layoffs and all other provisions-of this contract,
except as provided in Article 3.7, seniority of employees will be on the basis
of length of employment in the pattern shop. In the event of scarcity of work
necessitating reduction in the size of the crew, the last man hired shall be the
first laid off, provided however, the Company may deviate from straight
seniority if by following the rule of straight seniority the efficient operation
of the pattern shop would be impaired. If the Company proposes to deviate, it
will discuss all such deviations with the Union Committee and if agreement is
reached deviations will be as agreed upon. If no agreement is reached, the
Company will be at liberty to make such deviations and in any event all
employees affected by such deviations shall have the right of grievance pursuant
to the grievance procedure outlined in the contract. In the event hours of work
are reduced below 40 per week, the Company will discuss this with the President
and a member of the Union Committee.
4.5 Student workers hired on a temporary or part-time basis will not
accumulate seniority until they are on a permanent full-time basis.
4.6 On recall to work the last man laid off will be the first man called to
work and the remainder of the employees will be recalled to work in the same
order.
4.7 In the event of layoff or layoffs due to lack of work, the employees
affected and the Union shall be given written notice of at least two (2) days
prior to such layoffs.
4.8 Loss of Seniority - an employee shall lose his seniority for the
following reasons only:
A. If he shall quit.
B. If he shall have been discharged for just cause.
C. If a laid-off employee or employee on leave of absence shall
fail to report for work within five (5) working days after notice was sent by
the Company to his last known address, unless a satisfactory reason for failure
to report is given. A copy of such notice to report is to be given to the Union
Committee.
D. If an employee has been laid off for a period equal to his
length of service with the Company. However, the minimum shall be one (1) year
and the maximum three (3) years.
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ARTICLE 5 - GRIEVANCES
5.1 It is recognized from time to time, incidents may occur or events may
take place which question the interpretation of the provisions of this
Agreement. It is the intent of the parties to this Agreement to promptly
investigate and resolve differences of opinion or job-related problems.
Accordingly, each employee is encouraged to discuss with his supervisor any
problem that may arise in connection with his work. The Company will not
discriminate against any employee for thereafter referring the problem as a
grievance through the grievance procedure.
5.2 Should differences arise between the Company and its employees, either
individually or collectively, as to the meaning and application of this
Agreement, an earnest effort shall be made to settle any such differences at the
earliest possible time by use of the following grievance procedure:
Step 1 A. As soon as possible but not more than ten (10) working days of the
occurrence of the incident or condition giving rise to any grievance,
an aggrieved employee shall present his grievance to his supervisor,
accompanied by his Committeeman or Steward. If a settlement is not
reached within two (2) working days from the time the grievance is
presented, then:
B. It shall be reduced to writing within two (2) working days, signed
by the aggrieved employee or his representative, and presented to the
supervisor, who will provide a written answer within three (3) working
days of the receipt of the written grievance. Should this procedure not
result in settlement, then:
Step 2 Within two (2) working days of receipt of the Supervisor's Step 1
written answer, the grievance shall be presented by a member of the
Bargaining Committee to the Manager of Pattern Operations or his
representative, who will schedule a grievance hearing to be held within
three (3) working days following receipt of the Step 2 grievance, and
who will within three (3) working days of such meeting, provide his
written answer to the grievance. If such answer does not result in
settlement of the grievance, then:
Step 3 Within two (2) working days of the receipt of the Step 2 written
answer, the grievance shall be referred to the Union Bargaining
Committee and the Company Committee, who will meet on a date
satisfactory to both parties, within ten (10) working days following
receipt of the Step 3 grievance to resolve the issue. Either or both
parties may be represented at this meeting by outside representatives
of their own choosing. Within three (3) working days of such meeting,
the Company will provide a written answer to the grievance.
Within the times outlined above, the meetings will be scheduled on a date
satisfactory to both parties. In the event that this procedure does not result
in settlement of the grievance, then;
Step 4 Within forty (40) days from the date of the Step 3 answer, the
grievance may be referred by either party to arbitration by serving
written notice on the other. The serving of
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written notice also includes notifying the Federal Mediation and
Conciliation Service of either parties intent to arbitrate the
grievance. If either party fails to refer an unresolved grievance to
arbitration within the forty (40) day period, the grievance shall be
considered withdrawn and not arbitrable.
5.3 The Union Bargaining Committee and the Company Committee shall consist
of a maximum of five (5) employees each, designated respectively by the Union
and the Company.
5.4 The time limits referred to above may be accelerated, or extended, or
any step of the procedure may be continued upon mutual agreement of the parties
to this Agreement. If the Union fails to comply with the time requirements in
Steps lb, 2, or 3, the grievance shall be automatically dropped. If the Company
fails to comply with the time requirements in Steps lb, 2, or 3, the grievance
is automatically granted.
5.5 An agreement reached between the committees shall be final and binding
on the Company, the Union and the employees involved.
SELECTION OF ARBITRATOR
5.6 The Arbitrator for the purpose of this contract, shall be selected in
the following manner, to wit:
A. In the event a grievance has not been resolved under Step 3 of this
Article, either party may notify the Federal Mediation and Conciliation Service
of the dispute and request a panel of seven arbitrators. If the panel is not
acceptable to either party, then either party shall request a second panel,
prior to striking any names from the first panel. The parties will select one
arbitrator, by alternately striking from the panel a total of six arbitrators.
The Arbitrator chosen by this procedure will then arbitrated the grievance. More
than one grievance, may by mutual agreement, be submitted simultaneously to the
same Arbitrator.
5.7 The Arbitrator shall have no authority to change or modify the terms of
this Agreement, but he shall have authority to apply or interpret the meaning of
the terms of this Agreement, and resolve all grievances referred to him under
the terms of this Agreement.
5.8 Within a reasonable time after the hearing the Arbitrator shall tender
to the parties his disposition of the grievances involved. Such disposition
shall be final and binding upon both parties.
5.9 The Arbitrator's charge and expense in connection with any grievance
submitted to arbitration shall be borne equally by the Company and the Union.
5.10 The Company shall compensate Union officers and members of bargaining
and Grievance committees and individual aggrieved employees, at the straight
time hourly rates at which they are then employed for all time actually spent
with representatives of the Company in collective bargaining negotiations and
grievance adjustment pursuant to this Agreement, when
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<PAGE> 11
the officers, committeemen and employees so engaged otherwise would be at work.
Time spent in negotiations and grievance adjustments handled outside of the
normal working day will not be paid for by the Company. Negotiations and
grievance adjustment meetings will be scheduled by the Company and may be held
during regular working hours.
ARTICLE 6 - DISCHARGE AND DISCIPLINE
6.1 The Company agrees not to discharge or suspend any of its employees
except for just cause. In the event of discharge or suspension, the Company
agrees to give the Union Committee written notice of such discharge or
discipline, stating the reason therefor. Such notice shall be delivered to the
Union within 24 hours of the occurrence of such event. Any employee who is
discharged or suspended under the provisions of this contract shall have the
right to grievance as provided herein.
6.2 Absence without notice for three or more consecutive working days shall
be considered grounds for summary discharge or suspension.
6.3 More than three (3) warning notices on unreported or unauthorized
absenteeism less than indicated above within any consecutive twelve (12) month
period shall be considered just cause for discharge or suspension. If the
warning notice is issued, one copy shall be delivered to the employee, and one
to the Union within twenty-four (24) hours of the time such warning notice is
issued.
6.4 It is further agreed that in all cases of discharge or suspension, if
the employee (or employees) affected desires to file a grievance, he must file a
written grievance immediately or at least within ten (10) days of such discharge
or discipline. In the event it is decided that an employee was unjustly
discharged or suspended, he shall be reinstated to his former position without
loss of seniority and reimbursed for all time lost while under discharge or
suspension, unless some other agreement is reached between the Company and the
Union.
6.5 Warning notices shall expire twelve (12) months from the date of issue.
Written warning notices more than twelve (12) months old shall not be used
against the employee in future progressive discipline.
ARTICLE 7 - WAGES
7.1 The Company and the Union hereby agree that the minimum wage rates as
agreed will be effective during the term of this Agreement.
Cost of Living Allowance
A. A cost of living allowance, effective in l988, is agreed as
follows:
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1. The base for calculation purposes will be the
October, 1987, All Urban Consumer Price Index (All
cities, 1967 = 100).
2. The cost of living allowance will be computed on the
basis of $.01 per hour for each 0.4 change in the
CPI, rounded to the nearest cent with a maximum
payment of 10 cents.
3. The adjustment will reflect the change in the CPI for
the six-month period from October, 1967, through
April 1988. The adjustment will be effective July 1,
1988.
4. The contract rates shown in Exhibit "A" are minimum
rates, and are guaranteed. Any increase due to the
Cost of Living formula will be in addition to the
contract rates shown in Exhibit "A".
5. All of Article 7.1(A), including 7.1(A) 1, 2, 3 and 4
except 'he first sentence of Article 7.1(A) 4, shall
be inoperative during the life of this Agreement.
7.2 All employees shall be paid weekly on Thursday during their regular
shift. If a Holiday occurs, the payday may be advanced or delayed within the
same work week, Saturday excluded.
7.3 For shift premium pay purposes only, the hours of the first shift will
be 6:00 A.M. to 2:00 P.M.; the second shift will be from 2:00 P.M. to 10:00
P.M. ; and the third shift will be from 10:00 P.M. to 6:00 A.M. The employee
will be paid the shift premium applicable to the shift on which he works the
majority of hours. Shift premiums will be $.25 per hour for the second shift and
$.35 per hour for the third shift.
7.4 Effective during the life of this contract the Company will pay holiday
pay for the following holidays: New Year's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Day following Thanksgiving Day,
Christmas Eve Day, Christmas Day, New Year's Eve Day, and a "floating holiday"
to be scheduled by the Company annually. Such pay is to be eight (8) hours at
the average straight time hourly earnings, and all employees covered by this
Agreement, performing service, except those who have not completed their
probationary period, will be entitled to paid holidays.
A. All work performed on any of the holidays recognized in 7.4 or on
the day celebrated in lieu thereof, such as when a holiday falls on Sunday and
is celebrated on Monday, shall be paid for at the rate of double (2) time,
except for those hours whereby a shift beginning before the holidays extends
into the holiday period. If a shift starts during a holiday and extends into a
non-holiday period, all hours worked on such shift shall be paid for at double
time. The above premium pay for time worked shall be in addition to holiday pay.
7.5 To qualify for holiday pay, an employee who is scheduled to work must
have worked his last scheduled work shift prior to and his first scheduled work
shift after such holiday unless
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<PAGE> 13
excused by the Manager, Pattern Operations for personal compelling reasons.
Employees who have been laid off because of lack of work within fifteen (15)
days immediately prior to the date of the holiday, or who after having been laid
off are recalled to work within fifteen (15) days after date of holiday shall be
eligible for holiday pay.
ARTICLE 8 - TRANSFERS AND PROMOTIONS
8.1 Transfers Out of the Bargaining Unit - Both parties agree to the
principle of advancing employees to positions outside the bargaining unit. In
the event an employee so advanced is demoted or requests demotion during the
first year, he shall be promptly returned to his former job at the going rate of
pay with credited pattern shop and Company seniority.
A. Employees advanced to positions outside the bargaining unit shall
retain all seniority that they have accrued at the time of such advancement and
shall continue to accrue a maximum of one additional year of pattern shop
seniority after the date of transfer.
B. In the event there is a reduction in force, the employee shall be
entitled to use his pattern shop seniority he had at the expiration of the
accrual period in order to return to the bargaining unit.
C. The employee's Company seniority shall continue to accrue during the
employee's entire period of employment with the Company.
D. The selection of employees for transfer to non-bargaining unit work
shall be solely within the discretion of the Company.
Apprentices
8.2 Apprentices may be employed in the ratio of one apprentice for each
shop, regardless of the number of journeymen, plus one additional apprentice for
each four (4) journeymen in the total group; this ratio to be computed on the
average number of journeymen employed during the previous six months. For the
purpose of determining the maximum number of apprentices only, each of the
Company's pattern shops located at the Company's Plants 1, 2 and 3, and the
Neenah Foundry Pattern Shop, Neenah, Wisconsin, will be counted as one shop,
thus allowing four apprentices for the shops. The last six months of
apprenticeship constitutes completion of the program for the purpose of
replacing an apprentice.
8.3 Apprentices shall be indentured under the rules and supervision of the
Division of Apprenticeship & Training, Department of Industry, Labor and Human
Relations of the State of Wisconsin for ten (10) periods of 1040 hours. The
schedule of periods and percentages of the combined Journeyman rate and
cost-of-living allowance are follows:
<TABLE>
<CAPTION>
<S> <C>
1st period of 1040 hours-- 60% of combined journeyman rate and COLA
2nd period of 1040 hours-- 64% of combined journeyman rate and COLA
</TABLE>
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<PAGE> 14
<TABLE>
<CAPTION>
<S> <C>
3rd period of 1040 hours-- 68% of combined journeyman rate and COLA
4th period of 1040 hours-- 72% of combined journeyman rate and COLA
5th period of 1040 hours-- 76% of combined journeyman rate and COLA
6th period of 1040 hours-- 80% of combined journeyman rate and COLA
7th period of 1040 hours-- 84% of combined journeyman rate and COLA
8th period of 1040 hours-- 88% of combined journeyman rate and COLA
9th period of 1040 hours-- 92% of combined journeyman rate and COLA
10th period of 1040 hours-- 96% of combined journeyman rate and COLA
</TABLE>
8.4 Apprentices who are pattern maintenance employees when they start their
apprenticeship will be paid at 70% of the pattern maker rate.
8.5 In the event a elections is made for an apprenticeship, employees who have
not been selected and are interested, as to the reason why, can contact the
Manager of Pattern Operations or his designate for an explanation.
Pattern Maintenance
8.6 Pattern Maintenance employees may be employed in the ratio of one pattern
maintenance employee for each journeyman and apprentice; this ratio to be
computed on the average number of journeymen and apprentices employed during the
previous six months.
8.7 The rate of pay for the Pattern Maintenance employees will be 70% of the
combined journeyman rate and cost-of-living allowance plus 30 cents.
ARTICLE 9 - LEAVES OF ABSENCE
9.1 Employees desiring a leave of absence shall be required to make written
request for said leave of absence, outlining the reason for such request. The
granting of such request shall be by mutual written consent of the Company and
the Union, in triplicate, the original to be retained by the employee, the
duplicate by the Company and the triplicate by the Union.
9.2 Members of the Bargaining Unit designated by the Union to attend
conventions and union conferences will be granted time off without pay, and such
absence will be treated as an excused absence. No more than two (2) members of
the Bargaining Unit may be absent for this purpose at any one time.
ARTICLE 10 - MANAGEMENT
10.1 Management of the pattern shop and the direction of the working force,
including the right to hire, discharge, or suspend for proper cause, or
transfer, and the right to relieve employees from duty because of lack of work
or for any other legitimate reasons is vested exclusively in the Company. This
will not be used to violate previous paragraphs, nor to
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<PAGE> 15
discriminate against any member of the Union. Any dispute arising hereunder
shall be subject to the grievance procedure.
ARTICLE 11 - NO STRIKE - NO LOCKOUT
11.1 It is agreed that as a part of the consideration of this contract, any
and all disputes and any and all claims or demands growing out of said contract
or involved therein shall be settled and determined exclusively by the machinery
provided herein through the grievance procedure and that during the term of this
contract there shall be no strike on the part of the Union nor lockout on the
part of the Company.
11.2 It is specifically understood and agreed that paragraph 11.1 of this
Article shall not be operative under the following circumstances: If at the
expiration of this contract the parties are unable to agree upon the terms or
conditions of a renewal or modification thereof.
ARTICLE 12 - FUNERAL LEAVE
12.1 In the event of the death of an employee's brother, sister, father,
mother, stepfather, stepmother, father-in-law, or mother-in-law, the employee
may be absent from work and shall be paid a minimum of eight (8) hours of pay,
per day, up to three (3) days for his scheduled time actually lost from the day
of death to the day of the funeral, inclusive except, if the funeral is in
excess of 200 miles from the City of Neenah, Wisconsin, then the day after the
funeral shall be considered an additional day of funeral leave.
12.2 In the event of the death of the employee's spouse, son, daughter, or
step-child, however, paid funeral leave shall be up to five scheduled days lost
from the day of death to the seventh day following the day of death.
12.3 In the event of the death of an employee's grandparent, grandchild,
sister-in-law, brother-in-law, daughter-in-law, son-in-law, or of an employee's
spouse's grandparent, the employee may be absent from work and shall be paid for
scheduled time actually lost up to eight (8) hours on the day of the funeral if
it is a scheduled work day and the employee attends the funeral.
12.4 To qualify for paid funeral leave the employee must:
A. have passed his probationary period prior to the death of the
above mentioned family member,
B. attend the funeral unless unable to do so because of illness,
accident, or other just cause, and
C. notify the Personnel Department as soon as possible that he
will be absent because of the death.
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12.5 Funeral leave pay will be computed at the employee's regular straight
time base rate including any shift premium. No funeral leave pay will be paid
for days on which holiday or vacation pay is paid, or when an employee is on any
kind of leave of absence or Worker's Compensation. Scheduled time lost shall not
be counted as hours worked for purposes of computing overtime pay.
ARTICLE 13 - GENERAL
13.1 Space for bulletin board shall be made available by the Company at a
convenient place in the pattern shop for the posting of Union notices.
13.2 Duly accredited representatives of the Union, upon application for
permission, shall have the right of access to the shop and to interview any of
the employees affected by this contract and the Company will provide
accommodations for such interview or interviews on its premises outside of the
pattern shop proper.
SICK PAY
13.3 Any employee covered by this Agreement who is absent because of a
non-industrial accident or illness long enough to collect benefits from the
Neenah Foundry Company Sickness and Accident Insurance Program will be paid up
to the first three (3) scheduled work days of such absence or absences not
covered by the insurance program at the rate of eight (8) hours per day at the
employee's straight time hourly base rate. It is understood that not more than a
total of three (3) scheduled work days will be due an employee during any
calendar year because of a non-industrial sickness or accident or combination
thereof.
A. Any employee who is absent due to an industrial injury or
illness incurred at Neenah Foundry Company will be paid, under this Agreement,
for the first three scheduled work days of absence or absences not covered by
Worker's Compensation Insurance for each such injury or illness, if, (1) the
injury sustained was properly reported on the day of injury, and, (2) these same
days are not later paid for by Worker's Compensation.
B. In any event, no sick pay will be paid for any day not a
scheduled work day, or on which holiday pay or vacation pay is paid.
13.4 The Company will continue to provide, and with the cooperation of its
employees, maintain proper sanitary and safety conditions. A member of the Union
shall be a member of the Safety Committee.
13.5 The Company agrees, within thirty (30) days from the execution of this
contract, to furnish a current seniority list and to keep it current at such
times as may be agreed upon between the Company and the Union.
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<PAGE> 17
13.6 The Union will, at the execution of this contract, furnish the Company
with a list of the names of its Union Committee or other committees designated
to handle negotiations and grievances on behalf of the Union.
13.7 The Company will, at the execution of this contract, furnish the Union
with a list of the names of its Bargaining Group who will have authority to
negotiate or adjust grievances.
13.8 In the event the Company negotiates contract changes in benefits, other
than pensions, for the production employees, during the term of this Agreement,
such changes shall automatically be made with respect to employees covered by
this Agreement. These pass along benefits include insurance, sick pay, safety
shoes, prescription safety glasses, meal allowance, and shift premium.
13.9 Upon presentation of proper pay voucher, an employee required to serve
jury duty shall be paid the difference between his jury duty pay and eight hours
of straight time pay at his base rate for each scheduled work day he lost as a
result of the jury duty.
13.10 The Company shall furnish a meal at a cost not to exceed $4.00 for each
employee who works more than two (2) hours beyond his scheduled shift. A paid
twenty-minute lunch period will be provided when meals are furnished; such
period will not be included in the "more than 2 hours" qualifying period, but
will be counted as time worked for overtime purposes.
13.11 The Company and the Union will comply with all laws and regulations
established by Federal and State Governments with regard to military service of
employees.
A. Any Federal or State law which mandatorily changes any of the
provisions of the Agreement shall govern. However, such required changes shall
not change any of the other provisions of the contract.
13.12 A tool allowance of $125.00 will be paid each January to each pattern
maker, pattern maker apprentice, and pattern maker leadman on the payroll as of
January 1 of each year. Similarly, a $125.00 tool allowance will be paid to each
pattern maintenance employee.
13.13 The Company will reimburse each employee $50.00 for one pair of
approved safety shoes purchased by the employee for his personal wear each year.
13.14 The Company will reimburse each employee for replacement of
prescription glasses, or parts thereof, which are damaged at work at the actual
cost to a maximum of $35.00 per year.
ARTICLE 14 - PENSIONS
14.1 The Company agrees to continue its pension program started January 1,
l982, according to separate contract with Connecticut General Life Insurance
Company. This plan is to be wholly financed and owned by the Company.
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<PAGE> 18
14.2 The basic coverage of the program provides a normal retirement benefit
based on the years of credited service in the Neenah Foundry Company Pattern
Shops to age 65, with offsets for those years of service which are vested
pension credits earned under the Pattern Makers' Pension Trust Fund as a Neenah
Foundry Company employee through December 31, 1981. The plan provides for
vesting after 5 years of service for pension benefits, and vesting after 10
years of service for disability benefits.
14.3 Effective January 1, 1995, the formula for determining monthly pension
benefits under this plan provides for $23.00 per month as pension base.
14.4 The plan provides a surviving spouse's benefit provision.
14.5 The minimum disability benefit shall be $275.00 per month.
A. Any disability benefits accruing to the employee as a result of
credits earned in the Pattern Makers' Pension Trust Fund as a Neenah Foundry
Company employee will be offset against the above amounts.
14.6 The normal retirement date is the first of the month following the
employee's 65th birthday. Provisions for early retirement after age 60 are
provided for in the plan.
14.7 A 401-K Savings Plan will be implemented by July 1, 1989. (See letter
from Roger Hathaway to Tom Kufahl dated December 22, 1988.) Effective January 1,
1992, employees may elect to place up to 15% of their earnings in the 401-K
savings plan.
ARTICLE 15 - INSURANCE
15.1 The insurance benefits in effect at the signing of this Agreement
include:
Medical Insurance (Choice of Co-Pay plan or an HMO)
Accidental Death and Dismemberment ($15,000)
Sickness and Accident Coverage ($230.00/week)
Life Insurance ($15,000)
Dental Insurance
15.2 All insurance plans are funded on a cost-sharing basis between the
Company and the employee, and any changes in these plans or in the cost-sharing
formulas will be as provided by Article 13.8.
15.3 In case of a work-connected death of an employee, the Company will
continue the medical and dental insurance coverage in effect for the employee at
the time of his death for a period of thirty-six (36) months for the surviving
spouse and dependent children. The Company will pay the full premium.
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<PAGE> 19
15.4 In the event an employee is laid off, the Company shall continue to pay
its percentage share of the premiums of the insurance plans (excluding sickness
and accident benefits) for a period of three months following the month in which
the layoff became effective, provided the employee arranges with the Personnel
Office for payment of his percentage share of the premiums.
ARTICLE 16 - TERMINATION CLAUSE
16.1 This Agreement signed this _____ day of ________, 1995, shall become
effective as of the 1st day of January, 1995, and shall continue until December
31, 1997, and thereafter shall be automatically renewed from year to year unless
at least sixty (60) days prior to the termination of any yearly period either
party shall serve on the other written notice that it desires to modify or
terminate this Agreement.
A. In the event this contract has been reopened pursuant to the
sixty-day notice and no agreement has been reached as of the expiration day, the
contract shall be automatically extended until either party gives a written
notice to the other party, terminating the contract at the end of five days from
receipt of such notice.
Dated this ________ day of ________, 1995
INDEPENDENT PATTERN MAKERS NEENAH FOUNDRY COMPANY
UNION OF NEENAH, WISCONSIN
_________________________________ ____________________________________
_________________________________
_________________________________
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<PAGE> 20
EXHIBIT "A"
The minimum base wage rates shall be effective as follows:
Pattern Makers
<TABLE>
<CAPTION>
<S> <C>
January 1, 1995 $17.13 per hour
December 31, 1995 $17.68 per hour
January 5, 1997 $18.1e per hour
</TABLE>
Pattern Maintenance
<TABLE>
<CAPTION>
<S> <C>
January 1, 1995 $12.33 per hour
December 31, 1995 $12.6e per hour
January 52, 1997 $13.03 per hour
</TABLE>
Minimum premium for pattern shop employees assigned to leadman duties is $.!@@D
- ---@er hour.
<PAGE> 21
EXHIBIT "B"
Employee Automatic Renewal Authorization Form Date_______________
TO: Neenah Foundry Company
You are hereby authorized and directed to check off from my wages my
membership dues in the Independent Pattern Makers Union of Neenah, Wisconsin.
The dues deduction shall be remitted by you to the Union no later than the 12th
of each month, for dues collected the first payday of each month.
This authorization shall remain in effect until revoked by me in
writing and shall be irrevocable for a period of one year from the date
appearing above (or until the expiration of the present Agreement between the
Company and the Union, whichever is sooner), at which time it may be revoked by
written notice given by me to the Company and the Union at any time during a
period of ten days prior to the expiration of the one-year period (or ten days
prior to the expiration of the present Agreement -- whichever is sooner).
If no such notice is given, this authorization shall be irrevocable for
successive periods of one year thereafter, with the same privilege of revocation
at the end of each such period set forth above.
________________________________________________________ _____________________
Committeeman Employee
Dues to be deducted according to the following schedule:
Journeyman Per Month
Apprentice first through fifth period Per Month
Apprentice sixth through tenth period Per Month
Pattern Maintenance Per Month
<PAGE> 22
January 1, 1995
MEMO OF UNDERSTANDING
It is understood that the weekly vacation period is from Sunday through the
following Saturday. The Union has requested that when employees request to be
off from work on Saturday preceding their vacation week, that they will be
granted the time off . Also, when employees take vacation by single days and
their request includes a Friday or Monday as vacation days, again, the request
will be to have Saturday off.
The Company agrees to make every effort to provide employees with the time off
when requested. In the event unusual or emergency situations occur, the Company
rely require the employees to work.
<PAGE> 23
January 1, 1989
POLICY LETTERS
Subcontracting - The Company agrees not to subcontract pattern making work where
Such subcontracting would immediately deprive a pattern maker of work in the
shops at Neenah Foundry when the pattern maker is available to do the work.
However, where it is not appropriate to meet customer demands for delivery
because of the schedule of work in the department, this work may be
subcontracted, even though there might be a temporary shortage of work in
Pattern Shops.
Medical Leave
Upon satisfactory medical proof that an employee is required to leave the employ
of the Company because of his own ill health or that of a member of his family,
shall be given pro-rata vacation pay or partial vacation pay in the same manner
and to the same extent that other employees are entitled thereto.
NEENAH FOUNDRY COMPANY
R. G. Hathaway
Vice President
<PAGE> 24
January 1, 1989
Addendum to Agreement
The Company agrees that all employees in the bargaining unit on January
1, 1977, will be rate-protected on the base wage of Pattern Makers as listed in
Exhibit "A", for the duration of their employment. This means that no pattern
maker employed on January 1, 1977, will be demoted to pattern maintenance rates
as the result of creation of the pattern maintenance classification, unless by
mutual agreement between the employee and the Company.
All employees covered by this agreement may be required to perform any
of the job duties performed by Pattern Maintenance employees.
No pattern maintenance employee in any shop will be given preference
for scheduled overtime in that shop. Unscheduled overtime will be assigned to
the employees in that shop performing the specific work to be done in that shop.
INDEPENDENT PATTERN MAKERS NEENAH FOUNDRY COMPANY
UNION OF NEENAH, WISCONSIN
_________________________________________ _______________________________
_________________________________________
_________________________________________
_________________________________________
_________________________________________
<PAGE> 25
December 16, 1991
DUTIES OF PATTERN MAINTENANCE
1. Make and install bottom boards for self-set cores.
2. Build and install gating systems on patterns and in core boxes.
3. Patch or repair patterns and core boxes using appropriate materials to
restore original contours without use of blueprints and without
establishing new center lines. Install fillets and remove obsolete
patterns from boards.
4. Program CNC machines to produce and repair bolster frames, pattern
plates, copes and drag boards, core masks, core fixtures, checking
fixtures.
5. Set up patterns for jobbing and construction castings.
6. Perform or assist with basic shop duties such as load and unload
trucks, changing saw and jointer blades, basic shop and machine
maintenance, drill hold down end irons and sprue buttons.
7. Follow patterns and core boxes in foundry and core room, make molds for
checking cores.
8. Build cope and drag boards, omitting center lines; build insert boards,
and match boards; install core hook plugs; add venting; build squeeze
boards and install pin or bushing holes with use of fixtures or
machines.
9. Clean and polish pattern equipment.
10. Mount flat back and chill patterns (where no critical alignment
dimension need be determined).
11. Reproduce existing or master pattern or core equipment with the use of
synthetic materials.
12. Put center lines on insert boards by using a fixture.
13. It is understood that Pattern Maintenance employees may perform any
work within the skill level of the job, as represented by the above
duties, and that Pattern-Maintenance employees will not be used to
perform duties requiring Pattern make-skills.
<PAGE> 26
NEENAH FOUNDRY COMPANY
BASIC RULES
In order to maintain the general welfare of the Company and its employees and to
assure fair treatment for all, the following revised rules are effective
immediately.
Disciplinary action, whether it be in the form of a warning, suspension from
work without pay, or discharge, will be based upon the circumstances surrounding
the violation, together with the employee's general record of employment with
the Company.
1. Violation of the contract between the Company and the Independent
Pattern Makers Union of Neenah, Wisconsin.
2. Dishonesty.
3. Insubordination.
4. Unsafe conduct.
5. Unauthorized absence from job for any length of time or unauthorized
presence, in the plant.
6. Failure to comply with job requirements and responsibilities.
7. Damage to property on Company premises.
8. Reporting for work while under the influence of intoxicants or use or
possession of intoxicants on Company premises.
9. Conduct detrimental to the welfare of the Company or its employees.
These basic rules are subject to change at any time.
NEENAH FOUNDRY COMPANY
<PAGE> 1
Exhibit 10.7
NC MERGER COMPANY
(TO BE MERGED WITH AND INTO
NEENAH CORPORATION)
NFC CASTINGS, INC.
$75,000,000
CREDIT AGREEMENT
April 30, 1997
CHASE SECURITIES INC.
AS ARRANGER
THE CHASE MANHATTAN BANK
AS ADMINISTRATIVE AGENT
[CHASE LOGO]
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Definitions
<S> <C> <C>
SECTION 1.01. Definitions........................................................... 1
SECTION 1.02. Terms Generally....................................................... 23
ARTICLE II
The Credits
SECTION 2.01. Commitments........................................................... 23
SECTION 2.02. Loans................................................................. 24
SECTION 2.03. Borrowing Procedure................................................... 25
SECTION 2.04. Evidence of Debt; Repayment of Loans.................................. 26
SECTION 2.05. Fees.................................................................. 26
SECTION 2.06. Interest of Loans..................................................... 27
SECTION 2.07. Default Interest...................................................... 27
SECTION 2.08. Alternate Rate of Interest............................................ 27
SECTION 2.09. Termination and Reduction of Commitments.............................. 28
SECTION 2.10. Conversion and Continuation of Borrowings............................. 28
SECTION 2.11. Repayment of Term Borrowings.......................................... 29
SECTION 2.12. Optional Prepayment................................................... 30
SECTION 2.13. Mandatory Prepayments................................................. 30
SECTION 2.14. Reserve Requirements; Change in Circumstances......................... 32
SECTION 2.15. Change in Legality.................................................... 33
SECTION 2.16. Indemnity............................................................. 34
SECTION 2.17. Pro Rata Treatment.................................................... 34
SECTION 2.18. Sharing of Setoffs.................................................... 34
SECTION 2.19. Payments.............................................................. 35
SECTION 2.20. Taxes................................................................. 35
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate.................................................... 36
SECTION 2.22. Letters of Credit..................................................... 37
</TABLE>
<PAGE> 3
2
<TABLE>
<CAPTION>
ARTICLE III
Representations and Warranties
<S> <C> <C>
SECTION 3.01. Organization; Powers.................................................. 40
SECTION 3.02. Authorization......................................................... 40
SECTION 3.03. Enforceability........................................................ 41
SECTION 3.04. Governmental Approvals................................................ 41
SECTION 3.05. Financial Statements.................................................. 41
SECTION 3.06. No Material Adverse Change............................................ 41
SECTION 3.07. Title to Properties; Possession Under Leases.......................... 41
SECTION 3.08. Subsidiaries.......................................................... 42
SECTION 3.09. Litigation; Compliance with Laws...................................... 42
SECTION 3.10. Agreements............................................................ 42
SECTION 3.11. Federal Reserve Regulations........................................... 42
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act............ 43
SECTION 3.13. Use of Proceeds....................................................... 43
SECTION 3.14. Tax Returns........................................................... 43
SECTION 3.15. No Material Misstatements............................................. 43
SECTION 3.16. ERISA................................................................. 43
SECTION 3.17. Environmental Matters................................................. 43
SECTION 3.18. Insurance............................................................. 44
SECTION 3.19. Security Documents.................................................... 44
SECTION 3.20. Location of Real Property and Leased Premises......................... 45
SECTION 3.21. Labor Matters......................................................... 45
SECTION 3.22. Solvency.............................................................. 45
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Credit Events..................................................... 46
SECTION 4.02. First Credit Event.................................................... 46
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Business and Properties.................................... 50
SECTION 5.02. Insurance............................................................. 51
SECTION 5.03. Obligations and Taxes................................................. 52
SECTION 5.04 Financial Statements, Reports, etc.................................... 52
SECTION 5.05. Litigation and Other Notices.......................................... 53
</TABLE>
<PAGE> 4
3
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 5.06. Maintaining Records; Access to Properties and Inspections............. 53
SECTION 5.07. Use of Proceeds....................................................... 53
SECTION 5.08. Compliance with Environmental Laws.................................... 53
SECTION 5.09. Preparation of Environmental Reports.................................. 54
SECTION 5.10. Audits................................................................ 54
SECTION 5.11. Further Assurances.................................................... 54
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness.......................................................... 55
SECTION 6.02. Liens................................................................. 55
SECTION 6.03. Sale and Lease-Back Transactions...................................... 57
SECTION 6.04. Investments, Loans and Advances....................................... 57
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions............. 58
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends....................................... 59
SECTION 6.07. Transactions with Affiliates.......................................... 60
SECTION 6.08. Business of Borrower and Subsidiaries................................. 60
SECTION 6.09. Other Indebtedness and Agreements..................................... 60
SECTION 6.10. Capital Expenditures.................................................. 60
SECTION 6.11. Consolidated Leverage Ratio........................................... 61
SECTION 6.12. Consolidated Net Worth................................................ 61
SECTION 6.13. Consolidated Interest Coverage Ratio.................................. 61
SECTION 6.14. Fiscal Year........................................................... 61
ARTICLE VII
Events of Default..................................................... 61
ARTICLE VIII
The Administrative Agent and the Collateral Agent..................... 63
</TABLE>
<PAGE> 5
4
<TABLE>
<CAPTION>
ARTICLE IX
Miscellaneous
<S> <C> <C>
SECTION 9.01. Notices............................................................... 65
SECTION 9.02. Survival of Agreement................................................. 66
SECTION 9.03. Binding Effect........................................................ 66
SECTION 9.04. Successors and Assigns................................................ 66
SECTION 9.05. Expenses; Indemnity................................................... 69
SECTION 9.06. Right of Setoff....................................................... 70
SECTION 9.07. Applicable Law........................................................ 70
SECTION 9.08. Waivers; Amendment.................................................... 70
SECTION 9.09. Interest Rate Limitation.............................................. 71
SECTION 9.10. Entire Agreement...................................................... 71
SECTION 9.11. WAIVER OF JURY TRIAL.................................................. 71
SECTION 9.12. Severability.......................................................... 71
SECTION 9.13. Counterparts.......................................................... 72
SECTION 9.14. Headings.............................................................. 72
SECTION 9.15. Jurisdiction; Consent to Service of Process........................... 72
SECTION 9.16. Confidentiality....................................................... 72
SECTION 9.17. Termination........................................................... 73
SCHEDULES:
Schedule 1.01(a) -- Subsidiary Guarantors
Schedule 1.01(b) -- Stockroom Items
Schedule 2.01 -- Lenders and Commitments
Schedule 3.07(d) -- Contractual Rights Regarding Mortgaged Property
Schedule 3.08 -- Subsidiaries
Schedule 3.09(a) -- Litigation
Schedule 3.09(c) -- Certificates of Occupancy
Schedule 3.10 -- Agreements and Instruments
Schedule 3.17 -- Environmental Matters
Schedule 3.18 -- Insurance
Schedule 3.19(d) -- Filing Offices-- Mortgages
Schedule 3.20(a) -- Mortgaged Properties
Schedule 3.20(b) -- Leased Properties
Schedule 4.02(a) -- Local Counsel
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.07 -- Transactions with Affiliates
</TABLE>
<PAGE> 6
5
EXHIBITS:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit A -- Form of Administrative Questionnaire
Exhibit B -- Form of Assignment and Acceptance
Exhibit C -- Form of Borrowing Request
Exhibit D -- Form of Indemnity, Subrogation and Contribution Agreement
Exhibit E -- Form of Mortgages
Exhibit F -- Form of Parent Guarantee Agreement
Exhibit G -- Form of Pledge Agreement
Exhibit H -- Form of Security Agreement
Exhibit I -- Form of Subsidiary Guarantee Agreement
Exhibit J-1 -- Form of Opinion of Kirkland & Ellis
Exhibit J-2 -- Form of Opinion of Local Counsel
Exhibit K -- Form of Borrowing Base Certificate
Exhibit L -- Form of Tax Sharing Agreement
</TABLE>
<PAGE> 7
CREDIT AGREEMENT dated as of April 30, 1997,
among NC MERGER COMPANY, a Wisconsin corporation (the
"Borrower"), NFC CASTINGS, INC., a Delaware corporation
("Holdings"), the Lenders (as defined in Article I), and
THE CHASE MANHATTAN BANK, a New York banking corporation,
as issuing bank (in such capacity, the "Issuing Bank"), as
administrative agent (in such capacity, the "Administrative
Agent") and as collateral agent (in such capacity, the
"Collateral Agent") for the Lenders.
Pursuant to the Merger Agreement (such term and each other capitalized
term used but not defined herein having the meaning given it in Article I), (a)
the Borrower will merge (the "Merger") with and into Neenah Corporation, a
Wisconsin corporation ("Neenah"), with Neenah being the surviving corporation in
the Merger, and (b) the then-outstanding capital stock of Neenah will be
converted into the right to receive aggregate consideration of $240,000,000 in
cash (the "Merger Consideration"), subject to adjustment as set forth in the
Merger Agreement. From and after the Merger, all references herein to the
Borrower shall mean and refer to Neenah, as the surviving corporation in the
Merger.
Holdings and the Borrower have requested the Lenders to extend credit
to the Borrower in the form of (a) Tranche A Term Loans on the Closing Date, in
an aggregate principal amount not in excess of $20,000,000, (b) Tranche B Term
Loans on the Closing Date, in an aggregate principal amount not in excess of
$25,000,000, and (c) Revolving Loans at any time and from time to time prior to
the Revolving Credit Maturity Date, in an aggregate principal amount at any time
outstanding not in excess of $30,000,000. Holdings and the Borrower have
requested the Issuing Bank to issue letters of credit, in an aggregate face
amount at any time outstanding not in excess of $15,000,000, to support payment
obligations incurred in the ordinary course of business by the Borrower and its
Subsidiaries. The proceeds of the Term Loans are to be used, together with the
proceeds of the Equity Contribution, the Senior Subordinated Notes and Revolving
Loans to be made to the Borrower on the Closing Date, solely to pay the Merger
Consideration and related fees, costs and expenses in connection with the
Transactions. The proceeds of the Revolving Loans (other than those used as
described in the immediately preceding sentence) are to be used solely for
general corporate purposes in the ordinary course of the Borrower's business.
<PAGE> 8
2
The Lenders are willing to extend such credit to the Borrower and the
Issuing Bank is willing to issue letters of credit for the account of the
Borrower on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at
a rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Term Borrowing" shall mean a Borrowing comprised of ABR Term
Loans.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Account" shall mean any right to payment for goods sold or for
services rendered, whether or not it has been earned by performance.
"Account Debtor" shall mean, with respect to any Account, the obligor
with respect to such Account.
"ACP Holdings" shall mean ACP Holding Company, a Delaware corporation.
"ACP Merger" shall have the meaning assigned to such term in the
definition of the term "Change in Control".
"ACP Products" shall mean ACP Products, L.L.C., a Delaware limited
liability company.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for such Interest Period and (b) Statutory Reserves.
"Administrative Agent Fees" shall have the meaning assigned to such
term in Section 2.05(b).
<PAGE> 9
3
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount
of the Lenders' Revolving Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. If for any reason the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable to ascertain the Base CD Rate or the Federal Funds Effective Rate or both
for any reason, including the inability or failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms of the definition
thereof, the Alternate Base Rate shall be determined without regard to clause
(b) or (c), or both, of the preceding sentence, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively. The term "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Administrative Agent as its prime
rate in effect at its principal office in New York City; each change in the
Prime Rate shall be effective on the date such change is publicly announced as
being effective. The term "Base CD Rate" shall mean the sum of (a) the product
of (i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the
Assessment Rate.
"Applicable Percentage" shall mean, for any day, with respect to any
Loan, or with respect to the Commitment Fees, as the case may be, the applicable
percentage set forth below under the caption "Eurodollar Spread--Tranche A Term
Loans and Revolving Loans", "Eurodollar Spread--Tranche B Term Loans", "ABR
Spread--Tranche A Term Loans and Revolving Loans",
<PAGE> 10
4
"ABR Spread--Tranche B Term Loans" or "Fee Percentage", as the case may
be, based upon the Consolidated Leverage Ratio as of the relevant date of
determination:
<TABLE>
<CAPTION>
Eurodollar
Spread--
Tranche A
Term Eurodollar ABR Spread-- ABR
Consolidated Loans Spread-- Tranche A Term Spread--
Leverage and Revolving Tranche B Loans and Tranche B Fee
Ratio Loans Term Loans Revolving Loans Term Loans Percentage
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Category 1 2.50% 3.00% 1.50% 2.00% .50%
Equal to or
greater than 4.00
to 1.00
- ----------------------------------------------------------------------------------------------------------------------------
Category 2 2.25% 3.00% 1.25% 2.00% .50%
Equal to or
greater than 3.75
to 1.00
- ----------------------------------------------------------------------------------------------------------------------------
Category 3 2.00% 3.00% 1.00% 2.00% .50%
Equal to or
greater than 3.50
to 1.00
- ----------------------------------------------------------------------------------------------------------------------------
Category 4 1.75% 3.00% .75% 2.00% .375%
Equal to or
greater than 3.00
to 1.00
- ----------------------------------------------------------------------------------------------------------------------------
Category 5 1.50% 3.00% .50% 2.00% .375%
Less than 3.00 to
1.00
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Each change in the Applicable Percentage resulting from a change in the
Consolidated Leverage Ratio shall be effective with respect to all Loans,
Commitments and Letters of Credit outstanding on and after the date of delivery
to the Administrative Agent of the financial statements and certificates
required by Section 5.04(a) or (b) indicating such change until the date
immediately
<PAGE> 11
5
preceding the next date of delivery of such financial statements and
certificates indicating another such change. Notwithstanding the foregoing, (a)
at any time during which the Borrower has failed to deliver the financial
statements and certificates required by Section 5.04(a) or (b), or (b) at any
time after the occurrence and during the continuance of an Event of Default, the
Consolidated Leverage Ratio shall be deemed to be in Category 1 for purposes of
determining the Applicable Percentage.
"Approved Fund" shall mean, with respect to any Lender that is a fund
that invests in bank loans, any other fund that invests in bank loans and is
managed by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor thereto) for insurance
by such Corporation (or such successor) of time deposits made in dollars at the
Administrative Agent's domestic offices.
"Asset Sale" shall mean the sale, transfer or other disposition (by way
of merger or otherwise) by the Borrower or any of the Subsidiaries to any person
other than the Borrower or any Subsidiary Guarantor of (a) any capital stock of
any of the Subsidiaries (other than directors' qualifying shares) or (b) any
other assets of the Borrower or any of the Subsidiaries (other than (i)
inventory, excess, damaged, obsolete or worn out assets, scrap, Permitted
Investments and licenses of patterns developed for customers of the Borrower or
any Subsidiary, in each case disposed of in the ordinary course of business,
(ii) assets transferred for an aggregate purchase price not exceeding $3,000,000
in any fiscal year of the Borrower in connection with the replacement or upgrade
of a tangible asset of the Borrower or any Subsidiary Guarantor within 180 days
of such transfer, (iii) dispositions resulting in Casualty Proceeds or
Condemnation Proceeds or (iv) dispositions resulting in other insurance
settlements or condemnation awards not exceeding $100,000 in any fiscal year of
the Borrower), provided that neither (x) any asset sale or series of related
asset sales described in clause (b) above having a value not in excess of
$100,000 nor (y) any Equity Issuance shall be deemed an "Asset Sale" for
purposes of this Agreement.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrower Tax Amount" shall mean, with respect to any fiscal quarter,
the amount paid by Holdings, the Borrower and the Subsidiaries to ACP Holdings
pursuant to the Tax Sharing Agreement, which amount shall not be greater than
the amount of taxes that would be required to be paid in cash by Holdings, the
Borrower and the Subsidiaries on a consolidated basis if Holdings, the Borrower
and the Subsidiaries were not consolidated with ACP Holdings and its other
subsidiaries for tax purposes.
<PAGE> 12
6
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"Borrowing Base" shall mean, with respect to the Borrower, at any date
of determination thereof, an amount equal to the sum, without duplication, of
(a) 85% of Eligible Accounts Receivable (or the lesser of (i) $500,000 or (ii)
50% of "Eligible Accounts Receivable" described in each of clause (e) and
(i)(i)(B) of the definition of the term "Eligible Accounts Receivable") at such
date, (b) 55% of the Eligible Inventory Value (or (i) the lesser of (A) $250,000
or (B) 25% of the Eligible Inventory Value of Eligible Inventory described in
the second proviso of clause (c) of the definition of the term "Eligible
Inventory" or (ii) the lesser of (A) $500,000 or (B) 25% of the Eligible
Inventory Value of Eligible Inventory consisting of stockroom items listed on
Schedule 1.01(b)) at such date, provided that the amount determined pursuant to
clause (b) shall at no time exceed 50% of the Borrowing Base and (c) during the
period from the Closing Date through the day following the Closing Date only,
$25,000,000. The Borrowing Base shall be computed monthly upon the delivery of a
Borrowing Base Certificate in accordance with Section 5.04(d). The Borrowing
Base at any time in effect shall be determined as set forth in the Borrowing
Base Certificate most recently delivered hereunder; provided that the
information contained in such Borrowing Base Certificate shall not be conclusive
in calculating the Borrowing Base and, after consultation with the Borrower, the
Administrative Agent shall be entitled to adjust the amounts and other
information contained therein to the extent that it believes in its reasonable
judgment that such adjustment is necessary and appropriate to cause the
Borrowing Base (as so adjusted) to reflect the standards set forth in the
definitions of the terms "Eligible Accounts Receivable" and "Eligible Inventory"
(determined as of the last day of the calendar month as to which such Borrowing
Base Certificate relates) and the Borrowing Base (as so adjusted) shall be the
Borrowing Base in effect from the date the Administrative Agent notifies the
Borrower that it has made any such adjustment until the next Borrowing Base
Certificate is delivered.
"Borrowing Base Certificate" shall have the meaning assigned to such
term in Section 5.04(d).
"Borrowing Request" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit C.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Stock" of any Person shall mean any and all shares, interests
(including membership and economic interests in a limited liability company),
rights to purchase, warrants,
<PAGE> 13
7
options, participations or other equivalents of or interests in (however
designated) equity of such Person, including any Preferred Stock, but excluding
any debt securities convertible into such equity prior to such conversion.
"Casualty" shall have the meaning set forth in each of the Mortgages.
"Casualty Proceeds" shall have the meaning set forth in each of the
Mortgages.
A "Change in Control" shall be deemed to have occurred if (a) prior to
the earlier to occur of the first fully distributed public offering of Voting
Stock of Holdings (or, in the event (i) Holdings shall merge with and into ACP
Holdings or the Borrower in a transaction permitted by Section 6.05 (a "Holdings
Merger"), ACP Holdings, or (ii) following a Holdings Merger, ACP Holdings shall
merge with and into ACP Products or the Borrower in a transaction permitted by
Section 6.05 (an "ACP Holdings Merger"), ACP Products), the Permitted Holders
shall cease to own directly or indirectly (including by way of direct or
indirect ownership of economic interests in ACP Products), beneficially or of
record, shares representing at least 51% on a fully diluted, as if converted,
basis of the aggregate ordinary voting power represented by the issued and
outstanding Voting Stock of Holdings (or, in the event of (i) a Holdings Merger,
ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products), (b) after the first
fully distributed public offering of Voting Stock of Holdings (or, in the event
of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP
Products), the Permitted Holders shall cease to own directly or indirectly
(including by way of direct or indirect ownership of economic interests in ACP
Products), beneficially or of record, shares representing at least 25% on a
fully diluted, as if converted, basis of the aggregate ordinary voting power
represented by the issued and outstanding Voting Stock of Holdings (or, in the
event of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings Merger,
ACP Products), (c) after the first fully distributed public offering of Voting
Stock of Holdings (or, in the event of (i) a Holdings Merger, ACP Holdings, or
(ii) an ACP Holdings Merger, ACP Products), any person or group (within the
meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the
date hereof) other than the Permitted Holders shall own directly or indirectly,
beneficially or of record, a percentage of the issued and outstanding Voting
Stock of Holdings (or, in the event of (i) a Holdings Merger, ACP Holdings, or
(ii) an ACP Holdings Merger, ACP Products) on a fully diluted, as if converted,
basis having ordinary voting power in excess of the percentage then owned,
directly or indirectly (including by way of direct or indirect ownership of
economic interests in ACP Products), beneficially and of record, on a fully
diluted, as if converted, basis, by the Permitted Holders; (d) a majority of the
seats (except in the case of any vacancy for 30 days or less resulting from the
death or resignation of any director of Holdings (or, in the event of (i) a
Holdings Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products)) on
the board of directors of Holdings (or, in the event of (i) a Holdings Merger,
ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products) shall at any time be
occupied by persons who were neither (i) nominated by the board of directors of
Holdings, ACP Holdings or ACP Products, as the case may be, nor (ii) appointed
by directors so nominated; (e) any change in control (or similar event, however
denominated) with respect to Holdings (or, in the event of (i) a Holdings
Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products) or the
Borrower shall occur under and as defined in any indenture or agreement in
respect of Indebtedness to which any such person or any Subsidiary is a party;
or (f) Holdings (or in the event of (i) a Holdings Merger, ACP Holdings, or (ii)
an ACP Holdings
<PAGE> 14
8
Merger, ACP Products) shall cease to own, beneficially and of record, 100% of
the issued and outstanding Capital Stock of the Borrower.
"Citicorp" shall mean Citicorp, a Delaware corporation.
"Closing Date" shall mean the date of the first Credit Event.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all the "Collateral" as defined in any Security
Document and shall also include the Mortgaged Properties.
"Commitment" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment and Term Loan Commitments.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Condemnation" shall have the meaning set forth in each of the
Mortgages.
"Condemnation Proceeds" shall have the meaning set forth in each of the
Mortgages.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated January 1997.
"Consolidated Capital Expenditures" shall mean, for any period, the sum
of (a) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability) by the Borrower or any of the
Subsidiaries during such period that, in accordance with GAAP, are or should be
included in "additions to property, plant and equipment" or similar items
reflected in the consolidated statement of cash flows of the Borrower and the
Subsidiaries for such period (including the amount of assets leased in
connection with any Capital Lease Obligation), and (b) to the extent not
included pursuant to clause (a) above, the aggregate of all expenditures
(whether paid in cash or other consideration or accrued as a liability) by the
Borrower or any Subsidiary to acquire, by purchase or otherwise, the business,
property or fixed assets of, or stock or other evidence of beneficial ownership
of, any person (other than expenditures for Permitted Acquisitions); provided,
however, that, for purposes of Section 6.10 only, to the extent the Borrower or
a Subsidiary uses, within 180 days of the receipt thereof, (i) the proceeds of
the disposition of assets described in clause (b)(i), (ii) or (iv) of the
definition of the term "Asset Sale" or (ii) Casualty Proceeds or Condemnation
Proceeds to purchase, construct, repair, lease or replace any property, plant or
equipment, the amount of the related Consolidated Capital Expenditure shall be
reduced by the amount of such proceeds.
"Consolidated Current Assets" shall mean, as of any date of
determination, the total assets that would properly be classified as current
assets (other than cash and cash equivalents) of the Borrower and the
Subsidiaries as of such date, determined on a consolidated basis in accordance
with GAAP.
<PAGE> 15
9
"Consolidated Current Liabilities" shall mean, as of any date of
determination, the total liabilities (other than, without duplication, (a) the
current portion of long-term Indebtedness and (b) outstanding Revolving Loans)
that would properly be classified as current liabilities of the Borrower and the
Subsidiaries as of such date, determined on a consolidated basis in accordance
with GAAP.
"Consolidated EBITDA" shall mean, for any period, Consolidated Net
Income for such period, plus, to the extent deducted in computing such
Consolidated Net Income, (a) the sum of (i) all Federal, state, local and
foreign taxes, (ii) total interest expense and (iii) depreciation, depletion,
amortization of intangibles and other non-cash charges or non-cash losses
(including non-cash transaction expenses and the amortization of debt
discounts), minus, to the extent added in computing such Consolidated Net
Income, (b) the sum of (i) any interest income and (ii) any non-cash income or
non-cash gains, all as determined on a consolidated basis with respect to the
Borrower and the Subsidiaries in accordance with GAAP.
"Consolidated Interest Coverage Ratio" shall mean, for any period, the
ratio for such period of (a) Consolidated EBITDA to (b) Consolidated Interest
Expense; provided, however, that for purposes of determining the Consolidated
Interest Coverage Ratio for the four-fiscal-quarter periods ending on the last
day of the first, second and third quarters of the fiscal year ending March 31,
1998 (the "1998 Fiscal Year"), Consolidated EBITDA and Consolidated Interest
Expense shall be deemed to be (i) in the case of the four-fiscal-quarter period
ending on the last day of the first quarter of the 1998 Fiscal Year,
Consolidated EBITDA and Consolidated Interest Expense for the fiscal quarter
ending on such date, multiplied by 4, (ii) in the case of the
four-fiscal-quarter period ending on the last day of the second quarter of the
1998 Fiscal Year, Consolidated EBITDA and Consolidated Interest Expense for the
two-fiscal-quarter period ending on such date, multiplied by 2 and (iii) in the
case of the four-fiscal-quarter period ending on the last day of the third
quarter of the 1998 Fiscal Year, Consolidated EBITDA and Consolidated Interest
Expense for the three-fiscal-quarter period ending on such date, multiplied by
1-1/3.
"Consolidated Interest Expense" shall mean, for any period, the gross
interest expense of the Borrower and the Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP, including the portion of any
payments or accruals with respect to Capital Lease Obligations that are
allocable to interest expense in accordance with GAAP, but excluding (a) the
amortization of debt discounts and (b) the amortization of all fees (including
fees with respect to Interest Rate Protection Agreements) payable in connection
with the incurrence of Indebtedness to the extent included in interest expense
in accordance with GAAP (including fees and expenses in connection with the
Transactions not exceeding $10,000,000 in the aggregate). For purposes of the
foregoing, gross interest expense shall be determined after giving effect to any
net payments made or received by the Borrower or any Subsidiary with respect to
Interest Rate Protection Agreements.
"Consolidated Leverage Ratio" shall mean, as of any date of
determination, the ratio of (a) Total Debt on such date to (b) Consolidated
EBITDA for the period of four consecutive fiscal quarters ending on such date
(including the Consolidated EBITDA for such four fiscal quarters of any
Subsidiary acquired during such four fiscal quarters constituting a Permitted
Acquisition pursuant to Section 6.04(g)); provided, however, that for purposes
of determining the Consolidated
<PAGE> 16
10
Leverage Ratio for the four-fiscal-quarter periods ending on the last day of the
first, second and third quarters of the fiscal year ending March 31, 1998 (the
"1998 Fiscal Year"), Consolidated EBITDA shall be deemed to be (i) in the case
of the four-fiscal-quarter period ending on the last day of the first quarter of
the 1998 Fiscal Year, Consolidated EBITDA for the fiscal quarter ending on such
date, multiplied by 4, (ii) in the case of the four-fiscal-quarter period ending
on the last day of the second quarter of the 1998 Fiscal Year, Consolidated
EBITDA for the two-fiscal-quarter period ending on such date, multiplied by 2
and (iii) in the case of the four-fiscal-quarter period ending on the last day
of the third quarter of the 1998 Fiscal Year, Consolidated EBITDA for the
three-fiscal-quarter period ending on such date, multiplied by 1-1/3.
"Consolidated Net Income" shall mean, for any period, net income or
loss of the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income of any person in which any other person (other than the
Borrower or any of the Subsidiaries or any director holding qualifying shares in
accordance with applicable law) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to the Borrower or
any wholly owned Subsidiary by such person during such period, (b) the income
(or loss) of any person accrued prior to the date it becomes a Subsidiary of the
Borrower or is merged into or consolidated with the Borrower or any of the
Subsidiaries or the date that person's assets are acquired by the Borrower or
any of the Subsidiaries (except, in the case of any Subsidiary acquired during
such period constituting a Permitted Acquisition pursuant to Section 6.04(g),
which shall not be excluded for purposes of determining Consolidated EBITDA for
purposes of the Consolidated Leverage Ratio only), (c) the income of any
Subsidiary of the Borrower to the extent that the declaration or payment of
dividends or similar distributions by the Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (d) any after tax gains or losses attributable to
sales of assets out of the ordinary course of business and (e) (to the extent
not included in clauses (a) through (d) above) any non-cash extraordinary gains
or non-cash extraordinary losses.
"Consolidated Net Worth" shall mean, as of any date of determination,
the consolidated stockholder's equity of the Borrower and the Subsidiaries at
such date, as determined on a consolidated basis in accordance with GAAP;
provided, however, that common stock or preferred stock (a) with respect to
which no payments that would violate Section 6.06 are required to be made and
(b) that is redeemable not earlier than April 30, 2009 shall be included
regardless of its classification under GAAP.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Event" shall have the meaning assigned to such term in Section
4.01.
"CVC" shall mean Citicorp Venture Capital, Ltd., a New York
corporation.
<PAGE> 17
11
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiaries" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
"Eligible Accounts Receivable" shall mean at the time of any
determination thereof, an amount equal to the aggregate outstanding balance of
all Accounts of the Borrower as set forth in the aging reports of billed
Accounts for the Borrower that satisfy the following criteria at the time of
creation and continue to meet the same at the time of such determination:
(a) all payments on such Account are by the terms of such
Account due not later than 60 days after the original invoice date;
(b) such Account has been invoiced and is not, and not more
than 50% of the aggregate amount of Accounts from the same Account
Debtor and any Affiliates thereof are, unpaid for more than 90 days
(or, in the case of Account Debtors that are state or local
municipalities, 120 days) after the original invoice date as issued;
provided that the aggregate Accounts of any Account Debtor with
original invoice dates more recent than 90 days (or, in the case of
Account Debtors that are state or local municipalities, 120 days) prior
to the date of determination shall be reduced by the amount of net
credit balances of such Account Debtor the dates of which are earlier
than 90 days (or, in the case of Account Debtors that are state or
local municipalities, 120 days) prior to such date of determination;
(c) such Account is denominated in dollars;
(d) such Account arose from a completed, outright and lawful
sale and delivery of goods or from the completed performance and
acceptance of services by the Borrower or a Subsidiary Guarantor and
such Account did not arise from a progress billing or percentage of
completion invoice;
(e) such Account arose from a pattern (tooling) billing;
(f) such Account is owned solely by the Borrower or a
Subsidiary Guarantor, is subject to a valid and perfected first
priority security interest in favor of the Collateral Agent for the
benefit of Secured Parties pursuant to the Security Documents and is
not subject to any other Lien;
(g) such Account arose in the ordinary course of business of
the Borrower or a Subsidiary Guarantor and, to the best knowledge of
the Borrower and its Subsidiaries, no event of death, bankruptcy,
insolvency or inability to pay creditors generally of the Account
Debtor thereunder has occurred, and no notice thereof has been
received;
<PAGE> 18
12
(h) such Account complies in all material respects with the
requirements of all applicable laws and regulations, whether Federal,
state or local, including the Federal Truth in Lending Act and
Regulation Z of the Board;
(i) with respect to such Account, the Account Debtor (i) is a
United States person (or, if such person is not a United States person,
either (A) such Account is supported by a letter of credit approved by
the Administrative Agent in favor of the Borrower or a Subsidiary
Guarantor or (B) such person is a subsidiary of Dana Corporation, Eaton
Corporation or Rockwell International), (ii) is not an Affiliate of the
Borrower or an Affiliate of any of the Borrower's Subsidiaries or any
employee, officer, sales representative, agent, director or stockholder
of the Borrower or a Subsidiary Guarantor and (iii) is not the United
States of America or any department, agency or instrumentality thereof,
unless the Borrower or Subsidiary Guarantor duly assigns its rights to
payment of such Account to the Collateral Agent pursuant to the
Assignment of Claims Act of 1940, as amended, which assignment and
related documents and filings shall be in form and substance reasonably
satisfactory to the Collateral Agent;
(j) such Account constitutes an "account" or "chattel paper"
within the meaning of the Uniform Commercial Code of the state in which
the Account is located;
(k) such Account is in full force and effect and constitutes a
legal, valid and binding obligation of the Account Debtor enforceable
in accordance with its terms;
(l) the Account Debtor with respect to such Account has not
asserted that such Account is, and neither the Borrower nor any of its
Subsidiaries is aware of any basis upon which such Account could be,
subject to any claim or defense, deduction, credit or dispute.
Notwithstanding the foregoing, all Accounts of any single Account
Debtor (unless otherwise agreed to by the Required Lenders) and its
Affiliates which, in the aggregate, exceed 5% in the case of Accounts
arising from construction product line sales and 20% in the case of
Accounts arising from industrial product line sales of the total amount
of all Eligible Accounts Receivable at the time of any determination,
shall be deemed not to be Eligible Accounts Receivable to the extent of
such excess. The percentage limitation set forth in the preceding
sentence must be satisfied when applied to the amount of Eligible
Accounts Receivable after excluding all Accounts required to be
excluded by such percentage limitation;
(m) such Account does not arise from (i) the sale to the
obligor on a bill-and-hold, guaranteed sales, sale-or-return, sale on
approval, consignment, sample or trial basis, (ii) a sale subject to
any retainages or holdbacks of any type or (iii) any other sale made
pursuant to any other written agreement providing for repurchase or
return; provided that no amount owing in respect of such Account shall
be excluded pursuant to this clause solely as a result of customary
quality warranties or the general right to return goods provided by the
Borrower or a Subsidiary Guarantor;
(n) such Account is not the result of a chargeback, debit memo
or a reinvoice of a disputed Account;
<PAGE> 19
13
(o) such Account has not been adjusted to reflect the return
or rejection of, or any loss of or damage to, any of the inventory
giving rise to such Account; provided that amounts owing in respect of
such Account shall only be excluded to the extent of such adjustment;
(p) such Account (other than Accounts owed to Neenah
Transport, Inc.) does not include any material delivery, freight or
financing charges, late or other fees; provided that amounts owing in
respect of such Account shall only be excluded to the extent of such
charges or fees; and
(q) such Account may not be set off or charged against (i) any
adverse security deposit or other similar deposit made by or for the
benefit of the Account Debtor or (ii) any trade payable or similar
liability owing to the Account Debtor; provided that amounts owing in
respect of such Account shall only be excluded to the extent of such
set-off or charge against such adverse security deposit, trade payable
or other similar deposit or liability.
"Eligible Inventory" shall mean at the time of determination thereof,
without duplication, all inventory owned by the Borrower or a Subsidiary
Guarantor, to the extent that
(a) the Borrower or a Subsidiary Guarantor has good and
unencumbered title thereto (subject to the Lien of the Security
Documents);
(b) the Collateral Agent on behalf of the Secured Parties
possesses a valid first priority perfected security interest therein
pursuant to the Security Documents;
(c) such inventory is located at a storage or manufacturing
facility owned or leased by the Borrower or a Subsidiary Guarantor in
the United States; provided, however, that no inventory which is stored
at a facility leased by the Borrower or any Subsidiary Guarantor shall
be considered "Eligible Inventory" unless the Borrower or such
Subsidiary Guarantor, as the case may be, shall have obtained a waiver,
in form and substance satisfactory to the Administrative Agent, from
the lessor of such property of any statutory, contractual or common law
landlord's lien with respect to such leased property; provided further,
that no inventory which is located at a warehouse owned by an
independent sales representative will be considered "Eligible
Inventory" unless the Collateral Agent shall have obtained a written
agreement of such independent sales representative, in form and
substance satisfactory to the Administrative Agent, acknowledging the
Collateral Agent's rights and access to such inventory;
(d) such inventory consists of raw materials, work-in-process,
stockroom items listed on Schedule 1.01(b) and finished goods and is
not pattern, plant core, stockroom (except as set forth on Schedule
1.01(b)), in-plant core and supplies or packing materials used or
consumed in the business of the Borrower;
(e) such inventory is merchantable and is currently salable in
the normal course of the Borrower's business;
<PAGE> 20
14
(f) such inventory has not been consigned and does not
represent any goods sold pursuant to a "bill and hold" or "sale or
return" arrangement, or is otherwise in-transit to third parties; and
(g) such inventory does not represent discontinued, obsolete,
slow moving (aged more than 52 weeks) or defective stock.
"Eligible Inventory Value" shall mean at the time of any determination
thereof the lower of cost or market value determined on a first-in, first-out
basis (less any appropriate reserve for obsolete inventory so long as such
reserve is for inventory which is otherwise eligible) of the Eligible Inventory
at such time, in dollars, determined on a basis consistent with the current and
historical accounting practice of the Borrower.
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution, any adverse
effect on the environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon (a) the existence, or
the continuation of the existence, of a Release (including sudden or non-sudden,
accidental or non-accidental Releases), (b) exposure to any Hazardous Material,
(c) the presence, use, handling, transportation, storage, treatment or disposal
of any Hazardous Material or (d) the violation or alleged violation of any
Environmental Law or Environmental Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Sections 9601 et seq. (collectively
"CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42
U.S.C. Sections 6901 et seq., the Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1977, 33 U.S.C. Sections 1251 et seq., the
Clean Air Act of 1970, as amended 42 U.S.C. Sections 7401 et seq., the Toxic
Substances Control Act of 1976, 15 U.S.C. Sections 2601 et seq., the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Sections 651
et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Sections 11001 et seq., the Safe Drinking Water Act of 1974, as amended,
42 U.S.C. Sections 300(f) et seq., the Hazardous Materials Transportation Act,
49 U.S.C. Sections 5101 et seq., and any similar or implementing state or local
law, and all amendments or regulations promulgated under any of the foregoing.
<PAGE> 21
15
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"Equity Contribution" shall mean (a) the cash equity contribution in an
aggregate amount of not less than $45,000,000 made indirectly by the Investors
to Holdings and (b) the cash common equity contribution in an equal amount made
by Holdings to the Borrower.
"Equity Issuance" shall mean any issuance or sale by Holdings (or, in
the event of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings
Merger, ACP Products), the Borrower or any Subsidiary of any shares of capital
stock or other equity securities of any such person or any obligations
convertible into or exchangeable for, or giving any person a right, option or
warrant to acquire such securities or such convertible or exchangeable
obligations, except in each case for (a) any issuance or sale to Holdings (or,
in the event of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings
Merger, ACP Products), the Borrower or any Subsidiary, (b) any issuance of
directors' qualifying shares, (c) sales or issuances of common stock to
management or key employees of Holdings (or, in the event of (i) a Holdings
Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products), the
Borrower or any Subsidiary under any employee stock option or stock purchase
plan in existence from time to time to the extent that the proceeds from all
sales and issuances described in this clause (c) shall not exceed in the
aggregate $1,000,000 in any fiscal year, (d) any issuance of Capital Stock the
proceeds of which are substantially concurrently used to make Permitted
Acquisitions pursuant to Section 6.04(g) and (e) any issuance of Capital Stock
the proceeds of which are substantially concurrently used to make Consolidated
Capital Expenditures pursuant to Section 6.10.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any
<PAGE> 22
16
notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or
Eurodollar Term Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Term Borrowing" shall mean a Borrowing comprised of
Eurodollar Term Loans.
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at a
rate determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Excess Cash Flow" shall mean, for any fiscal year of the Borrower, the
excess of (a) the sum, without duplication, of (i) Consolidated EBITDA for such
fiscal year, (ii) extraordinary cash income of the Borrower and its consolidated
Subsidiaries, if any, during such fiscal year and not included in Consolidated
EBITDA and (iii) reductions to non-cash working capital of the Borrower and its
consolidated Subsidiaries for such fiscal year (i.e., the decrease, if any, in
Consolidated Current Assets minus Consolidated Current Liabilities from the
beginning to the end of such fiscal year); provided that such working capital as
of the first day of such fiscal year shall be determined on a pro forma basis
adjusted to give effect (as if such event had occurred on the first day of such
fiscal year) to each Permitted Acquisition made pursuant to Section 6.04(g)
during such fiscal year over (b) the sum, without duplication, of (i) the amount
of any cash income taxes payable by the Borrower and its consolidated
Subsidiaries with respect to such fiscal year, (ii) cash interest paid by the
Borrower and its consolidated Subsidiaries during such fiscal year, (iii)
Consolidated Capital Expenditures made in cash in accordance with Section 6.10
during such fiscal year, (iv) scheduled principal repayments of Indebtedness
made by the Borrower and its consolidated Subsidiaries during such fiscal year,
(v) optional and mandatory prepayments of the principal of Loans during such
fiscal year, but only to the extent that such prepayments by their terms cannot
be reborrowed or redrawn and do not occur in connection with a refinancing of
all or any portion of the Loans, (vi) extraordinary cash expenses paid by the
Borrower and its consolidated Subsidiaries, if any, during such fiscal year and
not included in Consolidated EBITDA and (vii) additions to non-cash working
capital for such fiscal year (i.e., the increase, if any, in Consolidated
Current Assets minus Consolidated Current Liabilities from the beginning to the
end of such fiscal year);provided that such working capital as of the first day
of such fiscal year shall be determined on a pro forma basis adjusted to give
effect (as if such event had occurred on the first day of such fiscal year) to
each Permitted Acquisition made pursuant to Section 6.04(g) during such fiscal
year provided, further, that, to the extent otherwise included therein, the Net
Cash Proceeds of Asset Sales, Equity Issuances and dispositions resulting in
Casualty Proceeds or Condemnation Proceeds shall be excluded from the
calculation of Excess Cash Flow.
<PAGE> 23
17
"Excluded Taxes" shall mean, with respect to the Administrative Agent,
any Lender, the Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by the
Borrower under Section 2.21(a)), any withholding tax that is imposed on amounts
payable to such Foreign Lender at the time such Foreign Lender becomes a party
to this Agreement (or designates a new lending office) or is attributable to
such Foreign Lender's failure to comply with Section 2.20(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.20(a).
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for the day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.
"Fee Letter" shall mean the Fee Letter dated January 6, 1997, among
Holdings, 399 Venture Partners Inc. and The Chase Manhattan Bank.
"Fees" shall mean the Commitment Fees, the Administrative Agent's Fees,
the L/C Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such
corporation.
"Foreign Lender" shall mean any Lender that is organized under the laws
of a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including
<PAGE> 24
18
any obligation of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase or lease property, securities
or services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or any other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Indebtedness; provided, however,
that the term "Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business.
"Guarantee Agreements" shall mean the Parent Guarantee Agreement and
the Subsidiary Guarantee Agreement.
"Guarantors" shall mean Holdings and the Subsidiary Guarantors.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
solid, liquid or gaseous wastes, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Holdings Merger" shall have the meaning assigned to such term in the
definition of the term "Change in Control".
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of business),
(d) all obligations of such person under conditional sale or other title
retention agreements relating to property or assets purchased by such person,
(e) all obligations of such person issued or assumed as the deferred purchase
price of property or services (excluding trade accounts payable and accrued
obligations incurred in the ordinary course of business), (f) all Indebtedness
of others of the type described in clauses (a) through (e) and (g) through (j)
of this definition secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such person, whether or not the obligations
secured thereby have been assumed, (g) all Guarantees by such person of
Indebtedness of others, (h) all Capital Lease Obligations of such person, (i)
all obligations of such person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange
rate hedging arrangements and (j) all obligations of such person as an account
party in respect of letters of credit and bankers' acceptances. The Indebtedness
of any person shall include the Indebtedness of any partnership in which such
person is a general partner.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
<PAGE> 25
19
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit D, among the Borrower, the Subsidiary Guarantors and the Collateral
Agent.
"Interest Payment Date" shall mean, with respect to any Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurodollar Borrowing with an Interest Period of more
than three months' duration, each day that would have been an Interest Payment
Date had successive Interest Periods of three months' duration been applicable
to such Borrowing, and, in addition, the date of any prepayment of such
Borrowing or conversion of such Borrowing to a Borrowing of a different Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrower may elect and (b) as to any ABR Borrowing, the period commencing on the
date of such Borrowing and ending on the earliest of (i) the next succeeding
March 31, June 30, September 30 or December 31, (ii) the Revolving Credit
Maturity Date, the Tranche A Maturity Date or the Tranche B Maturity Date, as
applicable, and (iii) the date such Borrowing is converted to a Borrowing of a
different Type in accordance with Section 2.10 or repaid or prepaid in
accordance with Section 2.11 or 2.12; provided, however, that if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, in the case of a
Eurodollar Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates, and not entered into for
speculation.
"Investors" shall mean CVC and certain other investors.
"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).
"L/C Commitment" shall mean the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.22.
"L/C Disbursement" shall mean a payment or disbursement made by the
Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate principal amount of all L/C Disbursements that have not yet been
reimbursed at such time. The L/C Exposure of any Revolving Credit Lender at any
time shall mean its Pro Rata Percentage of the aggregate L/C Exposure at such
time.
<PAGE> 26
20
"L/C Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c).
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01 (other than any such financial institution that has ceased to be a party
hereto pursuant to an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Acceptance.
"Letter of Credit" shall mean any letter of credit issued pursuant to
Section 2.22.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate appearing on Page 3750 of the Telerate Service (or
on any successor or substitute page of such service, or any successor to or
substitute for such service, providing rate quotations comparable to those
currently provided on such page of the Telerate Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
so available at such time for any reason, the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits approximately equal in principal amount to the Administrative Agent's
portion of such Eurodollar Borrowing and for a maturity comparable to such
Interest Period are offered to the principal London office of the Administrative
Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Loan Documents" shall mean this Agreement, the Letters of Credit, the
Guarantee Agreements, the Security Documents and the Indemnity, Subrogation and
Contribution Agreement.
"Loan Parties" shall mean the Borrower and the Guarantors.
"Loans" shall mean the Revolving Loans and the Term Loans.
"Management Investors" shall mean the officers, directors and employees
of ACP Holdings, ACP Products, Holdings, the Borrower or a Subsidiary of the
Borrower who acquire Voting Stock of ACP Holdings, ACP Products, Holdings or the
Borrower on or after the Closing Date.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
<PAGE> 27
21
"Material Adverse Effect" shall mean (a) a materially adverse effect on
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries, taken as a whole, (b) material
impairment of the ability of the Borrower or any other Loan Party to perform any
of its obligations under any Loan Document to which it is or will be a party or
(c) material impairment of the rights of or benefits available to the Lenders
under any Loan Document.
"Merger" shall have the meaning given such term in the preamble.
"Merger Agreement" shall mean the Agreement and Plan of Reorganization
dated as of November 20, 1996, by and among Holdings, the Borrower and Neenah,
as the same may be amended, restated, modified or supplemented from time to time
prior to the date hereof or in accordance with Section 6.09(a).
"Merger Consideration" shall have the meaning set forth in the
Preamble.
"Mortgaged Properties" shall mean the owned real properties of the Loan
Parties specified on Schedule 3.20(a).
"Mortgages" shall mean the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents delivered pursuant to clause (i) of Section 4.02(j) or pursuant to
Section 5.11, each substantially in the form of Exhibit E.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the
cash proceeds (including cash proceeds subsequently received (as and when
received) in respect of non-cash consideration initially received and including
all insurance settlements and condemnation awards in any fiscal year of the
Borrower in excess of $100,000), net of (i) selling expenses (including
reasonable broker's fees or commissions, legal fees, transfer and similar taxes
and the Borrower's good faith estimate of income taxes paid or payable in
connection with the receipt of such cash proceeds), (ii) amounts provided as a
reserve, in accordance with GAAP, against any liabilities under any
indemnification obligations associated with such Asset Sale (provided that, to
the extent and at the time any such amounts are released from such reserve, such
amounts shall constitute Net Cash Proceeds) and (iii) the principal amount,
premium or penalty, if any, interest and other amounts on any Indebtedness for
borrowed money which is secured by the asset sold in such Asset Sale and which
is repaid with such proceeds (other than any such Indebtedness assumed by the
purchaser of such asset) and (b) with respect to any Equity Issuance or any
other issuance or disposition of Indebtedness, the cash proceeds thereof, net of
all taxes and customary fees, commissions, costs and other expenses incurred in
connection therewith.
"Obligations" shall mean all obligations defined as "Obligations" in
the Guarantee Agreements and the Security Documents.
<PAGE> 28
22
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"Parent Guarantee Agreement" shall mean the Parent Guarantee Agreement,
substantially in the form of Exhibit F, made by Holdings in favor of the
Collateral Agent for the benefit of the Secured Parties.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"Permitted Acquisitions" shall mean acquisitions of not less than 100%
of the outstanding capital stock of any corporation, a division of any
corporation or any similar business unit (or of substantially all the assets and
business of any of the foregoing) engaged in a Related Business (each, an
"Acquisition") so long as (i) in the case of each such Acquisition of capital
stock, such Acquisition was not preceded by an unsolicited tender offer for such
capital stock by Holdings or any of its Affiliates and (ii) in the case of all
Acquisitions, the aggregate principal amount of the Revolving Loans at any time
outstanding used to finance the cash consideration paid in connection with all
such Acquisitions, to refinance Indebtedness in connection with all such
Acquisitions and to pay related fees and expenses, taken as a whole, does not
exceed the excess of (a) $20,000,000 over (b) the aggregate principal amount of
outstanding Revolving Loans used to finance Consolidated Capital Expenditures
pursuant to Section 6.10(d).
"Permitted Holders" shall mean (i) CVC and its Affiliates and Permitted
Transferees and (ii) the Management Investors and their Permitted Transferees.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard &
Poor's Ratings Service or from Moody's Investors Service, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the United States of
America or any
<PAGE> 29
23
State thereof that has a combined capital and surplus and undivided
profits of not less than $250,000,000;
(d) other investment instruments approved in writing by the
Required Lenders and offered by financial institutions which have a
combined capital and surplus and undivided profits of not less than
$250,000,000; and
(e) shares of funds registered under the Investment Company
Act of 1940, as amended, that have assets of at least $100,000,000 and
invest only in obligations described in clauses (a) through (d) above,
to the extent that such shares are rated by Moody's Investors Service,
Inc. or Standard & Poor's Ratings Service in one of the two highest
rating categories assigned by such agency for shares of such nature.
"Permitted Transferee" shall mean (a) with respect to CVC (i) Citicorp,
any direct or indirect wholly owned subsidiary of Citicorp, and any officer,
director or employee of CVC, Citicorp or any wholly owned subsidiary of
Citicorp, (ii) any spouse or lineal descendant (including by adoption and
stepchildren) of the officers, directors and employees referred to in clause
(a)(i) above or (iii) any trust, corporation or partnership 100% in interest of
the beneficiaries, stockholders or partners of which consists of one or more of
the persons described in clause (a)(i) or (ii) above and (b) with respect to any
officer or employee of ACP Products, ACP Holdings, Holdings, the Borrower or a
Subsidiary, (i) any spouse or lineal descendant (including by adoption and
stepchildren) of such officer or employee and (ii) any trust, corporation or
partnership 100% in interest of the beneficiaries, stockholders or partners of
which consists of such officer or employee, any of the persons described in
clause (b)(i) above or any combination thereof.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in
the form of Exhibit G, among the Borrower, Holdings, the Subsidiaries party
thereto and the Collateral Agent for the benefit of the Secured Parties.
"Preferred Stock" as applied to the Capital Stock of any corporation,
shall mean Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
<PAGE> 30
24
"Pro Rata Percentage" of any Revolving Credit Lender at any time shall
mean the percentage of the Total Revolving Credit Commitment represented by such
Lender's Revolving Credit Commitment.
"Register" shall have the meaning given such term in Section 9.04(d).
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Related Business" shall mean any business of the Borrower and its
Subsidiaries as conducted on the Closing Date and any business related,
ancillary or complementary thereto.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority or voluntarily undertaken to: (i)
cleanup, remove, treat, abate or in any other way address any Hazardous Material
in the environment; (ii) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not migrate or endanger
or threaten to endanger public health, welfare or the environment; or (iii)
perform studies and investigations in connection with, or as a precondition to,
(i) or (ii) above.
"Required Lenders" shall mean, at any time, Lenders having Loans, L/C
Exposure and unused Revolving Credit and Term Loan Commitments representing at
least a majority of the sum of all Loans outstanding, L/C Exposure and unused
Revolving Credit and Term Loan Commitments at such time.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Revolving Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Revolving Credit Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to
<PAGE> 31
25
Section 2.09 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender, plus the aggregate amount at such time of such
Lender's L/C Exposure.
"Revolving Credit Lender" shall mean a Lender with a Revolving Credit
Commitment.
"Revolving Credit Maturity Date" shall mean the fifth anniversary of
the Closing Date.
"Revolving Loans" shall mean the revolving loans made by the Lenders to
the Borrower pursuant to clause (c) of Section 2.01. Each Revolving Loan shall
be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit H, between the Borrower, the Subsidiaries party thereto
and the Collateral Agent for the benefit of the Secured Parties.
"Security Documents" shall mean the Mortgages, the Security Agreement,
the Pledge Agreement and each of the security agreements, mortgages and other
instruments and documents executed and delivered pursuant to any of the
foregoing or pursuant to Section 5.12.
"Senior Subordinated Notes" shall mean the 11.125% Senior Subordinated
Notes due 2007 of the Borrower, issued on the Closing Date in an aggregate
principal amount of $150,000,000.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch,
Affiliate, or other fronting office making or holding a Loan) is subject (a)
with respect to the Base CD Rate, for new negotiable nonpersonal time deposits
in dollars of over $100,000 with maturities approximately equal to three months,
and (b) with respect to the Adjusted LIBO Rate, for Eurocurrency Liabilities (as
defined in Regulation D of the Board). Such reserve percentages shall include
those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to
constitute Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"subsidiary" shall mean, with respect to any person (herein referred to
as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary
<PAGE> 32
26
voting power or more than 50% of the general partnership interests are, at the
time any determination is being made, owned, controlled or held, or (b) that is,
at the time any determination is made, otherwise Controlled, by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Subsidiary Guarantee Agreement" shall mean the Subsidiary Guarantee
Agreement, substantially in the form of Exhibit I, made by the Subsidiary
Guarantors in favor of the Collateral Agent for the benefit of the Secured
Parties.
"Subsidiary Guarantor" shall mean each Subsidiary listed on Schedule
1.01(a), and each other Subsidiary that is or becomes a party to a Subsidiary
Guarantee Agreement.
"Taxes" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement,
substantially in the form of Exhibit L, among ACP Holdings, Holdings and ACP
Holdings' other direct and indirect subsidiaries.
"Term Borrowing" shall mean a Borrowing comprised of Tranche A Term
Loans or Tranche B Term Loans.
"Term Loan Commitments" shall mean the Tranche A Commitments and the
Tranche B Commitments.
"Term Loan Repayment Dates" shall mean the Tranche A Term Loan
Repayment Dates and the Tranche B Term Loan Repayment Dates.
"Term Loans" shall mean the Tranche A Term Loans and the Tranche B Term
Loans.
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
<PAGE> 33
27
"Total Debt" shall mean, at any date and without duplication, the
aggregate amount of all Indebtedness of the Borrower and the Subsidiaries on a
consolidated basis at such date (other than any Indebtedness described in clause
(i) or (j) of the definition of the term "Indebtedness").
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such time.
"Tranche A Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche A Term Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Tranche A Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.09 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04.
"Tranche A Maturity Date" shall mean the fifth anniversary of the
Closing Date.
"Tranche A Term Borrowing" shall mean a Borrowing comprised of Tranche
A Term Loans.
"Tranche A Term Loan Repayment Date" shall have the meaning assigned to
such term in Section 2.11(a)(i).
"Tranche A Term Loans" shall mean the term loans made by the Lenders to
the Borrower pursuant to clause (a) of Section 2.01. Each Tranche A Term Loan
shall be either a Eurodollar Term Loan or an ABR Term Loan.
"Tranche B Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche B Term Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Tranche B Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.09 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
9.04.
"Tranche B Maturity Date" shall mean the seventh anniversary of the
Closing Date.
"Tranche B Term Borrowing" shall mean a Borrowing comprised of Tranche
B Term Loans.
"Tranche B Term Loan Repayment Date" shall have the meaning assigned to
such term in Section 2.11(a)(ii).
"Tranche B Term Loans" shall mean the term loans made by the Lenders to
the Borrower pursuant to clause (b) of Section 2.01. Each Tranche B Term Loan
shall be either a Eurodollar Term Loan or an ABR Term Loan.
"Transactions" shall have the meaning assigned to such term in Section
3.02.
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"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "Rate" shall include
the Adjusted LIBO Rate and the Alternate Base Rate.
"Voting Stock" of a corporation shall mean all classes of Capital Stock
of such corporation then outstanding and normally entitled to vote in the
election of directors.
"wholly owned Subsidiary" of any person shall mean a subsidiary of such
person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such person or one or
more wholly owned subsidiaries of such person or by such person and one or more
wholly owned subsidiaries of such person.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that for purposes of determining compliance
with the covenants contained in Article VI, except as otherwise provided herein,
all accounting terms herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP as in effect on
the date of this Agreement and applied on a basis consistent with the
application used in the financial statements referred to in Section 3.05(a)
(except to the extent that such financial statements accounted for inventory on
a last-in-first-out basis).
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, (a) to make a Tranche A Term Loan to the
Borrower on the Closing Date in a principal amount not to exceed its Tranche A
Commitment, (b) to make a Tranche B Term Loan to the Borrower on the
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Closing Date in a principal amount not to exceed its Tranche B Commitment, and
(c) to make Revolving Loans to the Borrower, at any time and from time to time
on or after the date hereof, and until the earlier of the Revolving Credit
Maturity Date and the termination of the Revolving Credit Commitment of such
Lender in accordance with the terms hereof, in an aggregate principal amount at
any time outstanding that will not result in (i) such Lender's Revolving Credit
Exposure exceeding (ii) the lesser of (x) such Lender's Revolving Credit
Commitment and (y) such Lender's Pro Rata Percentage of the Borrowing Base in
effect at such time. Within the limits set forth in clause (c) of the preceding
sentence and subject to the terms, conditions and limitations set forth herein,
the Borrower may borrow, pay or prepay and reborrow Revolving Loans. Amounts
paid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
applicable Commitments; provided, however, that the failure of any Lender to
make any Loan shall not in itself relieve any other Lender of its obligation to
lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). Except for Loans deemed made pursuant to Section
2.02(f), the Loans comprising any Borrowing shall be in an aggregate principal
amount that is (i) an integral multiple of $500,000 and not less than $1,000,000
in the case of Eurodollar Loans, (ii) an integral multiple of $100,000 and not
less than $500,000 in the case of ABR Loans or (iii) in the case of ABR Loans,
equal to the remaining available balance of the applicable Commitments.
(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be outstanding at the same
time; provided, however, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than seven Eurodollar Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Borrowings
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.
(c) Except with respect to Loans made pursuant to Section 2.02(f), each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to such account in New
York City as the Administrative Agent may designate not later than 11:00 a.m.,
New York City time, and the Administrative Agent shall by 12:00 (noon), New York
City time, credit the amounts so received to an account in the name of the
Borrower, maintained with the Administrative Agent and designated by the
Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur
on such date because any condition precedent herein specified shall not have
been met, return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has
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made such portion available to the Administrative Agent on the date of such
Borrowing in accordance with paragraph (c) above and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If the Administrative Agent shall have so made
funds available then, to the extent that such Lender shall not have made such
portion available to the Administrative Agent, such Lender and the Borrower
severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing (in
lieu of interest which would otherwise become due to such Lender pursuant to
Section 2.06) and (ii) in the case of such Lender, a rate determined by the
Administrative Agent to represent its cost of overnight or short-term funds
(which determination shall be conclusive absent manifest error). If such Lender
shall repay to the Administrative Agent such corresponding amount, such amount
shall constitute such Lender's Loan as part of such Borrowing for purposes of
this Agreement.
(e) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request a Borrowing pursuant to which the Interest
Period requested with respect thereto would end after the Revolving Credit
Maturity Date.
(f) If the Issuing Bank shall not have received from the Borrower the
payment required to be made by Section 2.22(e) within the time specified in such
Section, the Issuing Bank will promptly notify the Administrative Agent of the
L/C Disbursement and the Administrative Agent will promptly notify each
Revolving Credit Lender of such L/C Disbursement and its Pro Rata Percentage
thereof. Each Revolving Credit Lender shall pay by wire transfer of immediately
available funds to the Administrative Agent not later than 2:00 p.m., New York
City time, on such date (or, if such Revolving Credit Lender shall have received
such notice later than 12:00 (noon), New York City time, on any day, not later
than 10:00 a.m., New York City time, on the immediately following Business Day),
an amount equal to such Lender's Pro Rata Percentage of such L/C Disbursement
(it being understood that such amount shall be deemed to constitute an ABR
Revolving Loan of such Lender and such payment shall be deemed to have reduced
the L/C Exposure), and the Administrative Agent will promptly pay to the Issuing
Bank amounts so received by it from the Revolving Credit Lenders. The
Administrative Agent will promptly pay to the Issuing Bank any amounts received
by it from the Borrower pursuant to Section 2.22(e) prior to the time that any
Revolving Credit Lender makes any payment pursuant to this paragraph (f); any
such amounts received by the Administrative Agent thereafter will be promptly
remitted by the Administrative Agent to the Revolving Credit Lenders that shall
have made such payments and to the Issuing Bank, as their interests may appear.
If any Revolving Credit Lender shall not have made its Pro Rata Percentage of
such L/C Disbursement available to the Administrative Agent as provided above,
such Lender and the Borrower severally agree to pay interest on such amount, for
each day from and including the date such amount is required to be paid in
accordance with this paragraph to but excluding the date such amount is paid, to
the Administrative Agent for the account of the Issuing Bank at (i) in the case
of the Borrower, a rate per annum equal to the interest rate applicable to
Revolving Loans pursuant to Section 2.06(a) (in lieu of interest which would
otherwise become due to such Lender pursuant to Section 2.06), and (ii) in the
case of such
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Lender, for the first such day, the Federal Funds Effective Rate, and for each
day thereafter, the Alternate Base Rate.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing
(other than a deemed Borrowing pursuant to Section 2.02(f), as to which this
Section 2.03 shall not apply), the Borrower shall hand deliver or telecopy to
the Administrative Agent a duly completed Borrowing Request (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before a proposed Borrowing, and (b) in the case of an ABR
Borrowing, not later than 11:00 a.m., New York City time, on the Business Day of
a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall be
signed by or on behalf of the Borrower and shall specify the following
information: (i) whether the Borrowing then being requested is to be a Term
Borrowing or a Revolving Credit Borrowing, and whether such Borrowing is to be a
Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which
shall be a Business Day), (iii) the number and location of the account to which
funds are to be disbursed (which shall be an account that complies with the
requirements of Section 2.02(c)); (iv) the amount of such Borrowing; and (v) if
such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect
thereto; provided, however, that, notwithstanding any contrary specification in
any Borrowing Request, each requested Borrowing shall comply with the
requirements set forth in Section 2.02. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing
is specified in any such notice, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration. The Administrative Agent
shall promptly advise the applicable Lenders of any notice given pursuant to
this Section 2.03 (and the contents thereof), and of each Lender's portion of
the requested Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the principal amount of each Term Loan of such Lender as
provided in Section 2.11 and the then unpaid principal amount of each Revolving
Loan on the Revolving Credit Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to repay
the Loans in accordance with their terms.
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(e) Notwithstanding any other provision of this Agreement, in the event
any Lender shall request and receive a promissory note payable to such Lender
and its registered assigns, the interests represented by such note shall at all
times (including after any assignment of all or part of such interests pursuant
to Section 9.04) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender,
through the Administrative Agent, on the Closing Date and on the last day of
March, June, September and December in each year and on each date on which any
Commitment of such Lender shall expire or be terminated as provided herein, a
commitment fee (a "Commitment Fee") equal to the Applicable Percentage set forth
under the heading "Fee Percentage" in the definition of the term "Applicable
Percentage" per annum in effect from time to time on the average daily unused
amount of the Commitments of such Lender during the preceding quarter (or other
period commencing with the date of acceptance by the Borrower of the Commitment
of such Lender or ending with the Revolving Credit Maturity Date or the date on
which the Commitments of such Lender shall expire or be terminated). All
Commitment Fees shall be computed on the basis of the actual number of days
elapsed in a year of 360 days. The Commitment Fee due to each Lender shall
commence to accrue on the date of acceptance by the Borrower of the Commitment
of such Lender and shall cease to accrue on the date on which the Commitment of
such Lender shall expire or be terminated as provided herein. For purposes of
this Section 2.05, the unused amount of any Lender's Revolving Credit Commitment
on any date shall equal such Lender's Revolving Credit Commitment on such date
minus such Lender's outstanding Revolving Loans and L/C Exposure on such date.
(b) The Borrower agrees to pay to the Administrative Agent, for its own
account, the administrative fees set forth in the Fee Letter at the times and in
the amounts specified therein (the "Administrative Agent Fees").
(c) The Borrower agrees to pay (i) to each Revolving Credit Lender,
through the Administrative Agent, on the last day of March, June, September and
December of each year and on the date on which the Revolving Credit Commitment
of such Lender shall be terminated as provided herein, a fee (an "L/C
Participation Fee") calculated on such Lender's Pro Rata Percentage of the
average daily aggregate L/C Exposure (excluding the portion thereof attributable
to unreimbursed L/C Disbursements) during the preceding quarter (or shorter
period commencing with the date hereof or ending with the Revolving Credit
Maturity Date or the date on which all Letters of Credit have been canceled or
have expired and the Revolving Credit Commitments of all Lenders shall have been
terminated) at a rate equal to the Applicable Percentage from time to time used
to determine the interest rate on Revolving Credit Borrowings comprised of
Eurodollar Loans pursuant to Section 2.06, and (ii) to the Issuing Bank with
respect to each Letter of Credit the standard fronting, issuance and drawing
fees specified from time to time by the Issuing Bank (the "Issuing Bank Fees").
All L/C Participation Fees and Issuing Bank Fees shall be computed on the basis
of the actual number of days elapsed in a year of 360 days.
(d) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the
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Issuing Bank Fees shall be paid directly to the Issuing Bank. Once paid, none of
the Fees shall be refundable under any circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when the Alternate Base Rate is determined by
reference to the Prime Rate and over a year of 360 days at all other times) at a
rate per annum equal to the Alternate Base Rate plus the Applicable Percentage
in effect from time to time.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Percentage in effect from time to time.
(c) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Administrative Agent, and such determination shall be conclusive absent
manifest error.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Loan Document,
the Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) (a) in the case of overdue principal,
at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus
2.00% per annum and (b) in all other cases, at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 365 or 366 days, as
the case may be, when determined by reference to the Prime Rate and over a year
of 360 days at all other times) equal to the sum of the Alternate Base Rate plus
2.00%.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined in good faith that dollar deposits in the principal amounts of the
Loans comprising such Borrowing are not generally available in the London
interbank market, or that the rates at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to any Lender of making
or maintaining its Eurodollar Loan during such Interest Period, or that
reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the
Administrative Agent shall, as soon as practicable thereafter, but, in any
event, prior to the commencement of any Interest Period, give written or
telecopy notice of such determination to the Borrower and the Lenders. In the
event of any such determination, until the Administrative Agent shall have
advised the Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, any request by the Borrower for a Eurodollar Borrowing
pursuant to Section 2.03 or 2.10 shall be deemed to be a request for an ABR
Borrowing. Each determination by the Administrative Agent hereunder shall be
conclusive absent manifest error.
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SECTION 2.09. Termination and Reduction of Commitments. (a) The Term
Loan Commitments shall automatically terminate at 5:00 p.m., New York City time,
on the Closing Date. The Revolving Credit Commitments and the L/C Commitment
shall automatically terminate on the Revolving Credit Maturity Date.
Notwithstanding the foregoing, all the Commitments shall automatically terminate
at 5:00 p.m., New York City time, on April 30, 1997, if the initial Credit Event
shall not have occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce, in
each case, without premium or penalty, the Term Loan Commitments or the
Revolving Credit Commitments; provided, however, that (i) each partial reduction
of the Term Loan Commitments or the Revolving Credit Commitments shall be in an
integral multiple of $500,000 and in a minimum amount of $1,000,000 and (ii) the
Total Revolving Credit Commitment shall not be reduced to an amount that is less
than the Aggregate Revolving Credit Exposure at the time.
(c) Each reduction in the Term Loan Commitments or the Revolving Credit
Commitments hereunder shall be made ratably among the Lenders in accordance with
their respective applicable Commitments. The Borrower shall pay to the
Administrative Agent for the account of the applicable Lenders, on the date of
each termination or reduction, the unpaid Commitment Fees on the amount of the
Commitments so terminated or reduced accrued to but excluding the date of such
termination or reduction.
SECTION 2.10. Conversion and Continuation of Borrowings. The Borrower
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 11:00 a.m., New York City time, on the
Business Day of conversion, to convert any Eurodollar Borrowing into an ABR
Borrowing, (b) not later than 10:00 a.m., New York City time, three Business
Days prior to conversion or continuation, to convert any ABR Borrowing into a
Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar
Borrowing for an additional Interest Period, and (c) not later than 10:00 a.m.,
New York City time, three Business Days prior to conversion, to convert the
Interest Period with respect to any Eurodollar Borrowing to another permissible
Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the
new Loan of such Lender resulting from such conversion and reducing the
Loan (or portion thereof) of such Lender being converted by an
equivalent principal amount; accrued and unpaid interest on any
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Eurodollar Loan (or portion thereof) being converted shall be paid by
the Borrower at the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.16;
(v) any portion of a Borrowing maturing or required to be repaid
in less than one month may not be converted into or continued as a
Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be
converted into or continued as a Eurodollar Borrowing by reason of the
immediately preceding clause shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR
Borrowing;
(vii) no Interest Period may be selected for any Eurodollar Term
Borrowing that would end later than a Term Loan Repayment Date
occurring on or after the first day of such Interest Period if, after
giving effect to such selection, the aggregate outstanding amount of
the sum of (A) the Eurodollar Term Borrowings with Interest Periods
ending on or prior to such Term Loan Repayment Date and (B) the ABR
Term Borrowings would not be at least equal to the principal amount of
Term Borrowings to be paid on such Term Loan Repayment Date; and
(viii) upon notice to the Borrower from the Administrative Agent
given at the request of the Required Lenders, after the occurrence and
during the continuance of a Default or Event of Default, no outstanding
Loan may be converted into, or continued as, a Eurodollar Loan.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower requests be converted or continued, (ii) whether
such Borrowing is to be converted to or continued as a Eurodollar Borrowing or
an ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Borrowing, the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall advise the Lenders of any notice given
pursuant to this Section 2.10 and of each Lender's portion of any converted or
continued Borrowing. If the Borrower shall not have given notice in accordance
with this Section 2.10 to continue any Borrowing into a subsequent Interest
Period (and shall not otherwise have given notice in accordance with this
Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the
Interest Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued into a new Interest Period as an ABR Borrowing.
SECTION 2.11. Repayment of Term Borrowings. (a) (i) The Borrower shall
pay to the Administrative Agent, for the account of the Lenders, on each March
31, June 30, September 30
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and December 31 and on the Tranche A Maturity Date, or if any such date is not a
Business Day, on the next succeeding Business Day (each such date being a
"Tranche A Term Loan Repayment Date"), commencing September 30, 1997, a
principal amount of the Tranche A Term Loans (as adjusted from time to time
pursuant to Sections 2.11(b), 2.12 and 2.13(h)) equal to $1,000,000, together in
each case with accrued and unpaid interest on the principal amount thereof to be
paid to but excluding the date of such payment.
(ii) The Borrower shall pay to the Administrative Agent, for the
account of the Lenders, on each March 31, June 30, September 30 and December 31
and on the Tranche B Maturity Date or, if any such date is not a Business Day,
on the next succeeding Business Day (each such date being a "Tranche B Term Loan
Repayment Date"), commencing September 30, 1997, a principal amount of the
Tranche B Term Loans (as adjusted from time to time pursuant to Sections
2.11(b), 2.12 and 2.13(h)) equal to (A) $250,000 on each Tranche B Term Loan
Repayment Date on or prior to June 30, 2002 and (B) $2,500,000 on each Tranche B
Term Loan Repayment Date thereafter, together in each case with accrued and
unpaid interest on the principal amount thereof to be paid to but excluding the
date of such payment.
(b) In the event and on each occasion that any Term Loan Commitments
shall be reduced or shall expire or terminate other than as a result of the
making of a Term Loan, the installments payable on each Term Loan Repayment Date
shall be reduced pro rata by an aggregate amount equal to the amount of such
reduction, expiration or termination.
(c) To the extent not previously paid, all Tranche A Term Loans and
Tranche B Term Loans shall be due and payable on the Tranche A Maturity Date and
Tranche B Maturity Date, respectively, together with accrued and unpaid interest
on the principal amount to be paid to but excluding the date of payment.
(d) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.12. Optional Prepayment. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing, in whole or in
part, upon at least three Business Days' prior written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice) in the case
of Eurodollar Loans, or prior written or telecopy notice (or telephone notice
promptly confirmed by written or telecopy notice) on or prior to the date of
prepayment in the case of ABR Loans, to the Administrative Agent before 11:00
a.m., New York City time; provided, however, that each partial prepayment shall
be in an amount that is an integral multiple of $500,000 and not less than
$1,000,000.
(b) Optional prepayments of Term Loans shall be allocated pro rata
between the then-outstanding Tranche A Term Loans and Tranche B Term Loans and
applied pro rata against the remaining scheduled installments of principal due
in respect of the Tranche A Term Loans and Tranche B Term Loans under Sections
2.11(a)(i) and (ii), respectively.
(c) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the
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Borrower to prepay such Borrowing by the amount stated therein on the date
stated therein. All prepayments under this Section 2.12 shall be subject to
Section 2.16 but otherwise without premium or penalty. All prepayments under
this Section 2.12 shall be accompanied by accrued but unpaid interest on the
principal amount being prepaid to the date of payment.
SECTION 2.13. Mandatory Prepayments. (a) In the event of any
termination of all the Revolving Credit Commitments, the Borrower shall repay or
prepay all its outstanding Revolving Credit Borrowings on the date of such
termination. In the event of any partial reduction of the Revolving Credit
Commitments, then (i) at or prior to the effective date of such reduction, the
Administrative Agent shall notify the Borrower and the Revolving Credit Lenders
of the Aggregate Revolving Credit Exposure after giving effect thereto and (ii)
if the Aggregate Revolving Credit Exposure would exceed the Total Revolving
Credit Commitment after giving effect to such reduction or termination, then the
Borrower shall, on the date of such reduction or termination, repay or prepay
Revolving Credit Borrowings in an amount sufficient to eliminate such excess.
(b) If on any date the Aggregate Revolving Credit Exposure shall exceed
the Borrowing Base in effect at such time, the Borrower shall on such date apply
an amount equal to such excess first, to prepay the then outstanding Revolving
Loans (if any) and second, to the extent of any remaining excess (after the
prepayment of Revolving Loans), to replace outstanding Letters of Credit and/or
deposit an amount in cash in a cash collateral account established with the
Collateral Agent for the benefit of the Secured Parties.
(c) Not later than the third Business Day following the completion of
any Asset Sale, the Borrower shall apply 100% of the Net Cash Proceeds received
with respect thereto to prepay outstanding Term Loans in accordance with Section
2.13(h).
(d) In the event and on each occasion that an Equity Issuance occurs,
the Borrower shall, substantially simultaneously with (and in any event not
later than the third Business Day next following) the occurrence of such Equity
Issuance, apply 100% of the Net Cash Proceeds therefrom to prepay outstanding
Term Loans in accordance with Section 2.13(h).
(e) No later than the earlier of (i) 90 days after the end of each
fiscal year of the Borrower, commencing with the fiscal year ending on March 31,
1998, and (ii) the date on which the financial statements with respect to such
period are delivered pursuant to Section 5.04(a), the Borrower shall prepay
outstanding Term Loans in accordance with Section 2.13(h) in an aggregate
principal amount equal to 50% of Excess Cash Flow for the fiscal year then
ended.
(f) In the event that any Loan Party or any subsidiary of a Loan Party
shall receive Net Cash Proceeds from the issuance or other disposition of
Indebtedness for money borrowed of any Loan Party or any subsidiary of a Loan
Party (other than Indebtedness for money borrowed permitted pursuant to Section
6.01), the Borrower shall, substantially simultaneously with (and in any event
not later than the third Business Day next following) the receipt of such Net
Cash Proceeds by such Loan Party or such subsidiary, apply an amount equal to
100% of such Net Cash Proceeds to prepay outstanding Term Loans in accordance
with Section 2.13(h).
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(g) In the event that there shall occur any Casualty or Condemnation
and, pursuant to the applicable Mortgage, the Casualty Proceeds or Condemnation
Proceeds, as the case may be, are required to be used to prepay the Term Loans,
then the Borrower shall apply an amount equal to 100% of such Casualty Proceeds
or Condemnation Proceeds, as the case may be, to prepay outstanding Term Loans
in accordance with Section 2.13(h).
(h) Mandatory prepayments of outstanding Term Loans under this
Agreement shall be allocated pro rata between the then-outstanding Tranche A
Term Loans and Tranche B Term Loans, and, subject to paragraph (k) below,
applied pro rata against the remaining scheduled installments of principal due
in respect of Tranche A Term Loans and Tranche B Term Loans under Sections
2.11(a)(i) and (ii), respectively.
(i) The Borrower shall deliver to the Administrative Agent, at the time
of each prepayment required under this Section 2.13, (i) a certificate signed by
a Financial Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent practicable,
at least three days prior written notice of such prepayment. Each notice of
prepayment shall specify the prepayment date, the Type of each Loan being
prepaid and the principal amount of each Loan (or portion thereof) to be
prepaid. All prepayments of Borrowings under this Section 2.13 shall be subject
to Section 2.16, but shall otherwise be without premium or penalty.
(j) Amounts to be applied pursuant to this Section 2.13 to the
prepayment of Term Loans and Revolving Loans shall be applied, as applicable,
first to reduce outstanding ABR Term Loans and ABR Revolving Loans. Any amounts
remaining after each such application shall, at the option of the Borrower, be
applied to prepay Eurodollar Term Loans or Eurodollar Revolving Loans, as the
case may be, immediately and/or shall be deposited in the Prepayment Account (as
defined below). The Administrative Agent shall apply any cash deposited in the
Prepayment Account (i) allocable to Term Loans to prepay Eurodollar Term Loans
and (ii) allocable to Revolving Loans to prepay Eurodollar Revolving Loans, in
each case on the last day of their respective Interest Periods (or, at the
direction of the Borrower, on any earlier date) until all outstanding Term Loans
or Revolving Loans, as the case may be, have been prepaid or until all the
allocable cash on deposit with respect to such Loans has been exhausted. For
purposes of this Agreement, the term "Prepayment Account" shall mean an account
established by the Borrower with the Administrative Agent and over which the
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal for application in accordance with this paragraph
(j). The Administrative Agent will, at the request of the Borrower, invest
amounts on deposit in the Prepayment Account in Permitted Investments that
mature prior to the last day of the applicable Interest Periods of the
Eurodollar Term Borrowings or Euro dollar Revolving Borrowings to be prepaid, as
the case may be; provided, however, that (i) the Administrative Agent shall not
be required to make any investment that, in its sole judgment, would require or
cause the Administrative Agent to be in, or would result in any, violation of
any law, statute, rule or regulation and (ii) the Administrative Agent shall
have no obligation to invest amounts on deposit in the Prepayment Account if an
Event of Default shall have occurred and be continuing. The Borrower shall
indemnify the Administrative Agent for any losses relating to the investments so
that the amount available to prepay Eurodollar Borrowings on the last day of the
applicable Interest Period is not less than the amount that would have been
available had no investments been made pursuant thereto. Other than any interest
earned on such investments, the Prepayment Account shall not bear interest.
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Interest or profits, if any, on such investments shall be deposited in the
Prepayment Account and reinvested and disbursed as specified above. If the
maturity of the Loans has been accelerated pursuant to Article VII, the
Administrative Agent may, in its sole discretion, apply all amounts on deposit
in the Prepayment Account to satisfy any of the Obligations. The Borrower hereby
grants to the Administrative Agent, for its benefit and the benefit of the
Issuing Bank and the Lenders, a security interest in the Prepayment Account to
secure the Obligations.
(k) Any Tranche B Lender may elect, by notice to the Administrative
Agent in writing (or by telephone or telecopy promptly confirmed in writing) at
least one Business Day prior to any prepayment of Tranche B Term Loans required
to be made by the Borrower for the account of such Lender pursuant to Section
2.13(c), (d), (e), (f) or (g), to cause all or a portion of such prepayment to
be applied instead to prepay Tranche A Term Loans in accordance with paragraph
(h) above.
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or the Issuing
Bank of the principal of or interest on any Eurodollar Loan made by such Lender
or any Fees or other amounts payable hereunder (other than changes in respect of
taxes imposed on the overall net income of such Lender or the Issuing Bank by
the jurisdiction in which such Lender or the Issuing Bank has its principal
office or lending office or by any political subdivision or taxing authority
therein), or shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of or credit extended by any Lender or the Issuing Bank (except any such
reserve requirement which is reflected in the Adjusted LIBO Rate) or shall
impose on such Lender or the Issuing Bank or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by such Lender
or any Letter of Credit or participation therein, and the result of any of the
foregoing shall be to increase the cost to such Lender or the Issuing Bank of
making or maintaining any Eurodollar Loan or increase the cost to any Lender of
issuing or maintaining any Letter of Credit or purchasing or maintaining a
participation therein or to reduce the amount of any sum received or receivable
by such Lender or the Issuing Bank hereunder (whether of principal, interest or
otherwise) by an amount reasonably deemed by such Lender or the Issuing Bank to
be material, then the Borrower will pay to such Lender or the Issuing Bank, as
the case may be, upon demand such additional amount or amounts as will
compensate such Lender or the Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or the Issuing Bank or any Lender's or the
Issuing Bank's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Governmental
<PAGE> 46
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Authority has or would have the effect of reducing the rate of return on such
Lender's or the Issuing Bank's capital or on the capital of such Lender's or the
Issuing Bank's holding company, if any, as a consequence of this Agreement or
the Loans made or participations in Letters of Credit purchased by such Lender
pursuant hereto or the Letters of Credit issued by the Issuing Bank pursuant
hereto to a level below that which such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company could have achieved but for such
applicability, adoption, change or compliance (taking into consideration such
Lender's or the Issuing Bank's policies and the policies of such Lender's or the
Issuing Bank's holding company with respect to capital adequacy) by an amount
reasonably deemed by such Lender or the Issuing Bank to be material, then from
time to time the Borrower shall pay to such Lender or the Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender or
the Issuing Bank or such Lender's or the Issuing Bank's holding company for any
such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts reasonably determined by such Lender or Issuing Bank to be
necessary to compensate such Lender or the Issuing Bank or its holding company,
as applicable, as specified in paragraph (a) or (b) above shall be delivered to
the Borrower and shall be conclusive absent manifest error. The Borrower shall
pay such Lender or the Issuing Bank the amount shown as due on any such
certificate delivered by it within 10 days after its receipt of the same.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation. The
protection of this Section shall be available to each Lender and the Issuing
Bank regardless of any possible contention of the invalidity or inapplicability
of the law, rule, regulation, agreement, guideline or other change or condition
that shall have occurred or been imposed.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods and
ABR Loans will not thereafter (for such duration) be converted into
Eurodollar Loans), whereupon any request for a Eurodollar Borrowing (or
to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing for an additional Interest Period) shall, as to
such Lender only, be deemed a request for an ABR Loan (or a request to
continue an ABR Loan as such for an additional Interest Period or to
convert a Eurodollar Loan into an ABR Loan, as the case may be), unless
such declaration shall be subsequently withdrawn; and
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(ii) such Lender may require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as of
the effective date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the Interest Period with respect to any Eurodollar Loan, in each case other than
on the last day of the Interest Period in effect therefor, or (iii) any
Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be
made pursuant to a conversion or continuation under Section 2.10) not being made
after notice of such Loan shall have been given by the Borrower hereunder (any
of the events referred to in this clause (a) being called a "Breakage Event") or
(b) any default in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrower and shall be conclusive absent manifest error.
SECTION 2.17. Pro Rata Treatment. Except as required under Sections
2.13(j), 2.14, 2.15 or 2.20, each Borrowing, each payment or prepayment of
principal of any Borrowing, each payment of interest on the Loans, each payment
of the Commitment Fees, each reduction of the Term Loan Commitments or the
Revolving Credit Commitments and each conversion of any Borrowing to or
continuation of any Borrowing as a Borrowing of any Type shall be allocated pro
rata among the Lenders in accordance with their respective applicable
Commitments (or, if such Commitments shall have expired or been terminated, in
accordance with the respective principal amounts of their outstanding Loans).
Each Lender agrees that in computing such Lender's portion
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of any Borrowing to be made hereunder, the Administrative Agent may, in its
discretion, round each Lender's percentage of such Borrowing to the next higher
or lower whole dollar amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan or Loans or L/C Disbursement as a result of which the unpaid principal
portion of its Tranche A Term Loans, Tranche B Term Loans, Revolving Loans or
participations in L/C Disbursements shall be proportionately less than the
unpaid principal portion of the Tranche A Term Loans, Tranche B Term Loans,
Revolving Loans or participations in L/C Disbursements of any other Lender, it
shall be deemed simultaneously to have purchased from such other Lender at face
value, and shall promptly pay to such other Lender the purchase price for, a
participation in the Tranche A Term Loans, Tranche B Term Loans, Revolving Loans
or L/C Exposure, as the case may be of such other Lender, so that the aggregate
unpaid principal amount of the Tranche A Term Loans, Tranche B Term Loans,
Revolving Loans and L/C Exposure and participations in Tranche A Term Loans,
Tranche B Term Loans, Revolving Loans and L/C Exposure held by each Lender shall
be in the same proportion to the aggregate unpaid principal amount of all
Tranche A Term Loans, Tranche B Term Loans, Revolving Loans and L/C Exposure
then outstanding as the principal amount of its Tranche A Term Loans, Tranche B
Term Loans, Revolving Loans and L/C Exposure prior to such exercise of banker's
lien, setoff or counterclaim or other event was to the principal amount of all
Tranche A Term Loans, Tranche B Term Loans, Revolving Loans and L/C Exposure
outstanding prior to such exercise of banker's lien, setoff or counterclaim or
other event; provided, however, that if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.18 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustment restored without interest. The Borrower and
Holdings expressly consent to the foregoing arrangements and agree that any
Lender holding a participation in a Term Loan, Revolving Loan or L/C
Disbursement deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrower and Holdings to such Lender by reason thereof as fully as if
such Lender had made a Loan directly to the Borrower in the amount of such
participation.
SECTION 2.19. Payments. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any L/C Disbursement or
any Fees or other amounts) hereunder and under any other Loan Document not later
than 1:00 p.m., New York City time, on the date when due in immediately
available dollars, without setoff, defense or counterclaim. Each such payment
(other than Issuing Bank Fees, which shall be paid directly to the Issuing Bank)
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York by wire transfer.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the
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next succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that, if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender
and the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or the Issuing Bank,
or by the Administrative Agent on its own behalf or on behalf of a Lender or the
Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the Code and the law of the jurisdiction in
which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times
prescribed by applicable law, such properly completed and executed documentation
prescribed by applicable law or reasonably requested by the Borrower as will
permit such payments to be made without withholding or at a reduced rate.
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate. (a) In the event (i) any Lender or the Issuing Bank delivers a
certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or
the Issuing Bank delivers a notice described in Section 2.15 or (iii) the
Borrower is required to pay any additional amount to any
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Lender or the Issuing Bank or any Governmental Authority on account of any
Lender or the Issuing Bank pursuant to Section 2.20, the Borrower may, at its
sole expense and effort (including with respect to the processing and
recordation fee referred to in Section 9.04(b)), upon notice to such Lender or
the Issuing Bank and the Administrative Agent, require such Lender or the
Issuing Bank to transfer and assign, without recourse (in accordance with and
subject to the restrictions contained in Section 9.04), all of its interests,
rights and obligations under this Agreement to an assignee that shall assume
such assigned obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (x) such assignment shall not conflict
with any law, rule or regulation or order of any court or other Governmental
Authority having jurisdiction, (y) the Borrower shall have received the prior
written consent of the Administrative Agent (and, if a Revolving Credit
Commitment is being assigned, of the Issuing Bank), which consent shall not
unreasonably be withheld, and (z) the Borrower or such assignee shall have paid
to the affected Lender or the Issuing Bank in immediately available funds an
amount equal to the sum of the principal of and interest accrued to the date of
such payment on the outstanding Loans or L/C Disbursements of such Lender or the
Issuing Bank, respectively, plus all Fees and other amounts accrued for the
account of such Lender or the Issuing Bank hereunder (including any amounts
under Section 2.14 and Section 2.16); provided further that, if prior to any
such transfer and assignment the circumstances or event that resulted in such
Lender's or the Issuing Bank's claim for compensation under Section 2.14 or
notice under Section 2.15 or the amounts paid pursuant to Section 2.20, as the
case may be, cease to cause such Lender or the Issuing Bank to suffer increased
costs or reductions in amounts received or receivable or reduction in return on
capital, or cease to have the consequences specified in Section 2.15, or cease
to result in amounts being payable under Section 2.20, as the case may be
(including as a result of any action taken by such Lender or the Issuing Bank
pursuant to paragraph (b) below), or if such Lender or the Issuing Bank shall
waive its right to claim further compensation under Section 2.14 in respect of
such circumstances or event or shall withdraw its notice under Section 2.15 or
shall waive its right to further payments under Section 2.20 in respect of such
circumstances or event, as the case may be, then such Lender or the Issuing Bank
shall not thereafter be required to make any such transfer and assignment
hereunder.
(b) If (i) any Lender or the Issuing Bank shall request compensation
under Section 2.14, (ii) any Lender or the Issuing Bank delivers a notice
described in Section 2.15 or (iii) the Borrower is required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank, pursuant to Section
2.20, then such Lender or the Issuing Bank shall use reasonable efforts (which
shall not require such Lender or the Issuing Bank to incur an unreimbursed loss
or unreimbursed cost or expense or otherwise take any action inconsistent with
its internal policies or legal or regulatory restrictions or suffer any
disadvantage or burden deemed by it to be significant) (x) to file any
certificate or document reasonably requested in writing by the Borrower or (y)
to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.14 or enable it to
withdraw its notice pursuant to Section 2.15 or would reduce amounts payable
pursuant to Section 2.20, as the case may be, in the future. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender or the
Issuing Bank in connection with any such filing or assignment, delegation and
transfer.
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SECTION 2.22. Letters of Credit. (a) General. The Borrower may request
the issuance of a Letter of Credit for its own account or the account of any
Subsidiary Guarantor, in a form reasonably acceptable to the Administrative
Agent and the Issuing Bank, at any time and from time to time while the
Revolving Credit Commitments remain in effect. This Section shall not be
construed to impose an obligation upon the Issuing Bank to issue any Letter of
Credit that is inconsistent with the terms and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to amend,
renew or extend an existing Letter of Credit), the Borrower shall hand deliver
or telecopy to the Issuing Bank and the Administrative Agent (reasonably in
advance of the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit, or identifying the Letter
of Credit to be amended, renewed or extended, the date of issuance, amendment,
renewal or extension, the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) below), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare such Letter of Credit. A Letter of
Credit shall be issued, amended, renewed or extended only if, and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that, after giving effect to such issuance,
amendment, renewal or extension (A) the L/C Exposure shall not exceed
$15,000,000 and (B) the Aggregate Revolving Credit Exposure shall not exceed the
lesser of (x) the Total Revolving Credit Commitment and (y) the Borrowing Base
in effect at such time.
(c) Expiration Date. Each Letter of Credit shall expire at the close of
business on the earlier of the date one year after the date of the issuance of
such Letter of Credit and the date that is five Business Days prior to the
Revolving Credit Maturity Date, unless such Letter of Credit expires by its
terms on an earlier date.
(d) Participations. By the issuance of a Letter of Credit and without
any further action on the part of the Issuing Bank or the Lenders, the Issuing
Bank hereby grants to each Revolving Credit Lender, and each such Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Pro Rata Percentage of the aggregate amount available to be
drawn under such Letter of Credit, effective upon the issuance of such Letter of
Credit. In consideration and in furtherance of the foregoing, each Revolving
Credit Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of the Issuing Bank, such Lender's Pro
Rata Percentage of each L/C Disbursement made by the Issuing Bank and not
reimbursed by the Borrower (or, if applicable, another party pursuant to its
obligations under any other Loan Document) forthwith on the date due as provided
in Section 2.02(f). Each Revolving Credit Lender acknowledges and agrees that
its obligation to acquire participations pursuant to this paragraph in respect
of Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including the occurrence and continuance of a
Default or an Event of Default, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any L/C Disbursement
in respect of a Letter of Credit, the Borrower shall pay or cause to be paid to
the Administrative Agent an
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46
amount equal to such L/C Disbursement not later than 2:00 p.m. on the Business
Day the Borrower shall have received notice from the Issuing Bank that payment
of such draft will be made, or, if the Borrower shall have received such notice
later than 10:00 a.m., New York City time, on any Business Day, not later than
10:00 a.m., New York City time, on the immediately following Business Day.
(f) Obligations Absolute. The Borrower's obligations to reimburse L/C
Disbursements as provided in paragraph (e) above shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, under any and all circumstances whatsoever,
and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan
Document;
(iii) the existence of any claim, setoff, defense or other
right that the Borrower, any other party guaranteeing, or otherwise
obligated with, the Borrower, any Subsidiary or other Affiliate thereof
or any other person may at any time have against the beneficiary under
any Letter of Credit, the Issuing Bank, the Administrative Agent or any
Lender or any other person, whether in connection with this Agreement,
any other Loan Document or any other related or unrelated agreement or
transaction;
(iv) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of
the Issuing Bank, the Lenders, the Administrative Agent or any other
person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of the
Borrower's obligations hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Borrower hereunder to reimburse L/C Disbursements will not be excused by the
gross negligence or wilful misconduct of the Issuing Bank. However, the
foregoing shall not be construed to excuse the Issuing Bank from liability to
the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
the Issuing Bank's gross negligence or wilful misconduct in determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof; it is understood that the Issuing Bank may accept documents that
<PAGE> 53
47
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary and, in
making any payment under any Letter of Credit (i) the Issuing Bank's exclusive
reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be insufficient
in any respect, if such document on its face appears to be in order, and whether
or not any other statement or any other document presented pursuant to such
Letter of Credit proves to be forged or invalid or any statement therein proves
to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance
in any immaterial respect of the documents presented under such Letter of Credit
with the terms thereof shall, in each case, be deemed not to constitute wilful
misconduct or gross negligence of the Issuing Bank.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall as promptly as possible
give telephonic notification, confirmed by telecopy, to the Administrative Agent
and the Borrower of such demand for payment and whether the Issuing Bank has
made or will make an L/C Disbursement thereunder; provided that any failure to
give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse the Issuing Bank and the Revolving Credit Lenders with
respect to any such L/C Disbursement. The Administrative Agent shall promptly
give each Revolving Credit Lender notice thereof.
(h) Interim Interest. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of the Issuing Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of the
date of payment by the Borrower or the date on which interest shall commence to
accrue thereon as provided in Section 2.02(f), at the rate per annum that would
apply to such amount if such amount were an ABR Loan.
(i) Resignation or Removal of the Issuing Bank. The Issuing Bank may
resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to the Issuing Bank, the Administrative Agent and
the Lenders. Subject to the next succeeding paragraph, upon the acceptance of
any appointment as the Issuing Bank hereunder by a Lender that shall agree to
serve as successor Issuing Bank, such successor shall succeed to and become
vested with all the interests, rights and obligations of the retiring Issuing
Bank and the retiring Issuing Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder, without affecting its rights and
obligations with respect to Letters of Credit previously issued by it. At the
time such removal or resignation shall become effective, the Borrower shall pay
all accrued and unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of
any appointment as the Issuing Bank hereunder by a successor Lender shall be
evidenced by an agreement entered into by such successor, in a form satisfactory
to the Borrower and the Administrative Agent, and, from and after the effective
date of such agreement, (i) such successor Lender shall have all the rights and
obligations of the previous Issuing Bank under this Agreement and the other Loan
Documents and (ii) references herein and in the other Loan Documents to the term
"Issuing Bank" shall be deemed to refer to
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48
such successor or to any previous Issuing Bank, or to such successor and all
previous Issuing Banks, as the context shall require. After the resignation or
removal of the Issuing Bank hereunder, the retiring Issuing Bank shall remain a
party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement and the other Loan Documents with respect to
Letters of Credit issued by it prior to such resignation or removal, but shall
not be required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, the Borrower shall, on the Business Day it receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Credit Lenders holding participations in
outstanding Letters of Credit representing greater than 50% of the aggregate
undrawn amount of all outstanding Letters of Credit) thereof and of the amount
to be deposited, deposit in an account with the Collateral Agent, for the
benefit of the Revolving Credit Lenders, an amount in cash equal to the L/C
Exposure as of such date. Such deposit shall be held by the Collateral Agent as
collateral for the payment and performance of the Obligations. The Collateral
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits in Permitted Investments, which investments shall be
made at the option and sole discretion of the Collateral Agent, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall (i) automatically be
applied by the Administrative Agent to reimburse the Issuing Bank for L/C
Disbursements for which it has not been reimbursed, (ii) be held for the
satisfaction of the reimbursement obligations of the Borrower for the L/C
Exposure at such time and (iii) if the maturity of the Loans has been
accelerated (but subject to the consent of Revolving Credit Lenders holding
participations in outstanding Letters of Credit representing greater than 50% of
the aggregate undrawn amount of all outstanding Letters of Credit), be applied
to satisfy the Obligations. If the Borrower is required to provide an amount of
cash collateral hereunder as a result of the occurrence of an Event of Default,
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrower within three Business Days after all Events of Default have been cured
or waived.
ARTICLE III
Representations and Warranties
Each of Holdings and the Borrower represents and warrants to the
Administrative Agent, the Collateral Agent, the Issuing Bank and each of the
Lenders that:
SECTION 3.01. Organization; Powers. Each of Holdings, the Borrower and
each of the Subsidiaries (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (c) is
qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required, except where the failure so to qualify
could not reasonably be expected to result in a Material Adverse Effect, and (d)
has the corporate power and authority to execute,
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49
deliver and perform its obligations under each of the Loan Documents and each
other agreement or instrument contemplated hereby to which it is or will be a
party and, in the case of the Borrower, to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance by
each Loan Party of each of the Loan Documents and the borrowings hereunder and
the consummation of the Merger, the financing therefor, the payment by the
Borrower to former shareholders of Neenah of an aggregate amount not exceeding
$11,400,000 and the other transactions contemplated hereby and by the Merger
Agreement (collectively, the "Transactions") (a) have been duly authorized by
all requisite corporate and, if required, stockholder action and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of Holdings, the Borrower or any Subsidiary, (B) any order of any
Governmental Authority or (C) any provision of any material indenture, agreement
or other instrument to which Holdings, the Borrower or any Subsidiary is a party
or by which any of them or any of their property is or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under
any such indenture, agreement or other instrument or (iii) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by Holdings, the Borrower or any
Subsidiary (other than any Lien created hereunder or under the Security
Documents).
SECTION 3.03. Enforceability. This Agreement has been duly executed and
delivered by Holdings and the Borrower and constitutes, and each other Loan
Document when executed and delivered by the each Loan party thereto will
constitute, a legal, valid and binding obligation of such Loan Party enforceable
against such Loan Party in accordance with its terms, subject to the effects of
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and equitable principles of general
applicability (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
SECTION 3.04. Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(a) the filing of Uniform Commercial Code financing statements and filings with
the United States Patent and Trademark Office and the United States Copyright
Office, (b) recordation of the Mortgages and (c) such as have been made or
obtained and are in full force and effect.
SECTION 3.05. Financial Statements. (a) The Borrower has heretofore
furnished to the Lenders the consolidated balance sheets and statements of
income and cash flows of Neenah (i) as of and for the fiscal year ended March
31, 1996, audited by and accompanied by the opinion of Ernst & Young LLP,
independent public accountants, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended December 31, 1996, certified by its chief
financial officer. Such financial statements present fairly the financial
condition and results of operations and cash flows of Neenah and its
consolidated Subsidiaries as of such dates and for such periods. Such balance
sheets and the notes thereto disclose all material liabilities, direct or
contingent, of Neenah
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50
and its consolidated Subsidiaries as of the dates thereof. Such financial
statements were prepared in accordance with GAAP applied on a consistent basis.
(b) The Borrower has heretofore delivered to the Lenders its unaudited
pro forma consolidated balance sheet and statements of income and changes in
financial condition as of March 31, 1997, prepared giving effect to the
Transactions as if they had occurred on such date. Such pro forma balance sheet
and other financial statements have been prepared in good faith by the Borrower,
based on the assumptions used to prepare the pro forma financial information
contained in the Confidential Information Memorandum (which assumptions are
believed by the Borrower on the date hereof and on the Closing Date to be
reasonable), is based on the best information available to the Borrower as of
the date of delivery thereof, accurately reflects all adjustments required to be
made to give effect to the Transactions and presents fairly on a pro forma basis
the estimated consolidated financial position of the Borrower and its
consolidated Subsidiaries as of such date, assuming that the Transactions had
actually occurred at such date.
SECTION 3.06. No Material Adverse Change. There has been no material
adverse change in the business, assets, operations, prospects, condition,
financial or otherwise, or material agreements of the Borrower and the
Subsidiaries, taken as a whole, since March 31, 1996.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each of
Holdings, the Borrower and the Subsidiaries has good and marketable title to, or
valid leasehold interests in, all its material properties and assets (including
all Mortgaged Property), except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties and assets for their intended purposes. All such material
properties and assets are free and clear of Liens, other than Liens expressly
permitted by Section 6.02.
(b) Each of Holdings, the Borrower and the Subsidiaries has complied
with all obligations under all material leases to which it is a party and all
such leases are in full force and effect. Each of Holdings, the Borrower and the
Subsidiaries enjoys peaceful and undisturbed possession under all such material
leases.
(c) Neither Holdings nor the Borrower has received any notice of, nor
has any knowledge of, any pending or contemplated condemnation proceeding
materially and adversely affecting the Mortgaged Properties or any sale or
disposition thereof in lieu of condemnation.
(d) Except as set forth on Schedule 3.07(d), none of Holdings, the
Borrower or any of the Subsidiaries is obligated under any right of first
refusal, option or other contractual right to sell, assign or otherwise dispose
of any Mortgaged Property or any interest therein.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing
Date a list of all Subsidiaries and the percentage ownership interest of the
Borrower therein. The shares of capital stock or other ownership interests so
indicated on Schedule 3.08 are fully paid and non-assessable and are owned by
the Borrower, directly or indirectly, free and clear of all Liens (other than
Liens in favor of the Collateral Agent, created under the Security Documents).
Holdings owns 100% of the issued and outstanding capital stock of the Borrower,
free and clear of all Liens (other than Liens in favor of the Collateral Agent,
created under the Security Documents).
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SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set forth
on Schedule 3.09, there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of Holdings or the Borrower, threatened against or affecting Holdings
or the Borrower or any Subsidiary or any business, property or rights of any
such person (i) that involve any Loan Document or the Transactions or (ii) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
(b) None of Holdings, the Borrower or any of the Subsidiaries or any of
their respective material properties or assets is in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation (including any zoning, building,
Environmental Law, ordinance, code or approval or any building permits) or any
restrictions of record or agreements affecting the Mortgaged Property, or is in
default with respect to any judgment, writ, injunction, decree or order of any
Governmental Authority, where such violation or default could reasonably be
expected to result in a Material Adverse Effect.
(c) Except as set forth on Schedule 3.09(c), certificates of occupancy
and permits to the extent required by law are in effect for each Mortgaged
Property as currently constructed, and true and complete copies of such
certificates of occupancy have been delivered to the Collateral Agent as
mortgagee with respect to each Mortgaged Property.
SECTION 3.10. Agreements. (a) Except as set forth on Schedule 3.10,
none of Holdings, the Borrower or any of the Subsidiaries is a party to any
agreement or instrument or subject to any corporate restriction that has
resulted or could reasonably be expected to result in a Material Adverse Effect.
(b) None of Holdings, the Borrower or any of the Subsidiaries is in
default in any manner under any provision of any indenture or other agreement or
instrument evidencing Indebtedness, or any other material agreement or
instrument to which it is a party or by which it or any of its properties or
assets are or may be bound, where such default could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) None of Holdings, the
Borrower or any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the Regulations of the Board, including Regulation G, U
or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act. None of Holdings, the Borrower or any Subsidiary is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
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SECTION 3.13. Use of Proceeds. The Borrower will use the proceeds of
the Loans and will request the issuance of Letters of Credit only for the
purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of the Holdings, the Borrower and the
Subsidiaries has filed or caused to be filed all Federal, material state,
material local and material foreign tax returns or materials required to have
been filed by it and has paid or caused to be paid all taxes shown on such
returns to be due and payable by it and all assessments received by it, except
taxes that are being contested in good faith by appropriate proceedings and for
which Holdings, the Borrower or such Subsidiary, as applicable, shall have set
aside on its books adequate reserves.
SECTION 3.15. No Material Misstatements. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit or schedule furnished by or on behalf of Holdings or the
Borrower to the Administrative Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain any material misstatement of fact or
omitted, omits or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were, are
or will be made, not misleading; provided that to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast or projection, each of Holdings and the Borrower
represents only that it acted in good faith and utilized reasonable assumptions
and due care in the preparation of such information, report, financial
statement, exhibit or schedule.
SECTION 3.16. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under all Plans in the aggregate (based on the assumptions
used for purposes of Statement of Financial Accounting Standards No. 87) did
not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $2,000,000 the fair market value of the assets of
such Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than
$4,000,000 the fair market value of the assets of all such underfunded Plans.
SECTION 3.17. Environmental Matters. Except as set forth in Schedule
3.17:
(a) The properties owned or operated by Holdings, the Borrower and the
Subsidiaries (the "Properties") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute, or constituted a violation of,
(ii) require Remedial Action under, or (iii) could give rise to liability under,
Environmental Laws, which violations, Remedial Actions and liabilities, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect;
(b) The Properties and all operations of the Borrower and the
Subsidiaries are in compliance, and in the last seven years have been in
compliance, with all Environmental Laws and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that
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such non-compliance or failure to obtain any necessary permits, in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect;
(c) There have been no Releases or threatened Releases at, from, under
or proximate to the Properties or otherwise in connection with the operations of
the Borrower or the Subsidiaries, which Releases or threatened Releases, in the
aggregate, could reasonably be expected to result in a Material Adverse Effect;
(d) None of Holdings, the Borrower or any of the Subsidiaries has
received any notice of an Environmental Claim in connection with the Properties
or the operations of the Borrower or the Subsidiaries or with regard to any
person whose liabilities for environmental matters Holdings, the Borrower or the
Subsidiaries has retained or assumed, in whole or in part, contractually, by
operation of law or otherwise, which, in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, nor do Holdings, the Borrower
or the Subsidiaries have reason to believe that any such notice will be received
or is being threatened; and
(e) Hazardous Materials have not been transported from the Properties,
nor have Hazardous Materials been generated, treated, stored or disposed of at,
on or under any of the Properties in a manner that could reasonably be expected
to give rise to liability under any Environmental Law, nor have the Borrower or
the Subsidiaries retained or assumed any liability, contractually, by operation
of law or otherwise, with respect to the generation, treatment, storage or
disposal of Hazardous Materials, which transportation, generation, treatment,
storage or disposal, or retained or assumed liabilities, in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and
correct description of all insurance maintained by the Borrower or by the
Borrower for its Subsidiaries as of the date hereof and the Closing Date. As of
each such date, such insurance is in full force and effect and all premiums have
been duly paid. The Borrower and its Subsidiaries have insurance in such amounts
and covering such risks and liabilities as are in accordance with normal
industry practice.
SECTION 3.19. Security Documents. (a) The Pledge Agreement is effective
to create in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the Collateral is
delivered to the Collateral Agent and for so long as the Collateral Agent
continues to hold such Collateral, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all right, title and
interest of the pledgors thereunder in such Collateral, in each case prior and
superior in right to any other person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified on Schedule 6 to the Perfection Certificate, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in such Collateral
(other than the Intellectual Property, as
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defined in the Security Agreement), in each case prior and superior in right to
any other person, other than with respect to Liens expressly permitted by
Section 6.02.
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in the Intellectual
Property (as defined in the Security Agreement), in each case prior and superior
in right to any other person (it being understood that subsequent recordings in
the United States Patent and Trademark Office and the United States Copyright
Office may be necessary to perfect a lien on registered trademarks, trademark
applications and copyrights acquired by the grantors after the date hereof).
(d) The Mortgages are effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable Lien on all of the Loan Parties' right, title and interest in and to
the Mortgaged Property thereunder and the proceeds thereof, and when the
Mortgages are filed in the offices specified on Schedule 3.19(d), the Mortgages
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Mortgaged Property and the
proceeds thereof, in each case prior and superior in right to any other person,
other than with respect to the rights of persons pursuant to Liens expressly
permitted by Section 6.02.
SECTION 3.20. Location of Real Property and Leased Premises. (a)
Schedule 3.20(a) lists completely and correctly as of the Closing Date all real
property owned by the Borrower and the Subsidiaries and the addresses thereof.
The Borrower and the Subsidiaries own in fee all the real property set forth on
Schedule 3.20(a).
(b) Schedule 3.20(b) lists completely and correctly as of the Closing
Date all real property leased by the Borrower and the Subsidiaries and the
addresses thereof. The Borrower and such Subsidiaries have valid leasehold
interests in all the real property set forth on Schedule 3.20(b)
SECTION 3.21. Labor Matters. As of the date hereof and the Closing
Date, there are no strikes, lockouts or slowdowns against Holdings, the Borrower
or any Subsidiary pending or, to the knowledge of Holdings or the Borrower,
threatened. The hours worked by and payments made to employees of Holdings, the
Borrower and the Subsidiaries have not been in material violation of the Fair
Labor Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters. All payments due from Holdings, the Borrower or any
Subsidiary, or for which any claim may be made against Holdings, the Borrower or
any Subsidiary, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books of
Holdings, the Borrower or such Subsidiary. The consummation of the Transactions
will not give rise to any right of termination or right of renegotiation on the
part of any union under any collective bargaining agreement to which Holdings,
the Borrower or any Subsidiary is bound.
SECTION 3.22. Solvency. (a) Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan made on the Closing Date and after giving effect to the application
of the proceeds of such Loans, (i) the fair
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value of the assets of each Loan Party, at a fair valuation, will exceed its
debts and liabilities, subordinated, contingent or otherwise; (ii) the present
fair saleable value of the property of each Loan Party will be greater than the
amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) each Loan Party will be
able to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (iv) each Loan Party
will not have unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed to be
conducted following the Closing Date.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit hereunder are subject to the satisfaction of the
following conditions:
SECTION 4.01. All Credit Events. On the date of each Borrowing,
including on the date of each issuance of a Letter of Credit (each such event
being called a "Credit Event"):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 (or such notice shall have been deemed
given in accordance with Section 2.03) or, in the case of the issuance of a
Letter of Credit, the Issuing Bank and the Administrative Agent shall have
received a notice requesting the issuance of such Letter of Credit as required
by Section 2.22(b).
(b) Except in the case of a Borrowing that does not increase the
aggregate principal amount of Loans outstanding of any Lender, the
representations and warranties set forth in Article III hereof shall be true and
correct in all material respects on and as of the date of such Credit Event with
the same effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.
(c) No Event of Default or Default shall have occurred and be
continuing.
Each Credit Event shall be deemed to constitute a representation and warranty by
the Borrower and Holdings on the date of such Credit Event as to the matters
specified in paragraphs (b) (except as aforesaid) and (c) of this Section 4.01.
SECTION 4.02. First Credit Event. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of
itself, the Lenders and the Issuing Bank, a favorable written opinion
of (i) Kirkland & Ellis, counsel for Holdings and the Borrower,
substantially to the effect set forth in Exhibit J-1, and (ii) each
local counsel listed on Schedule 4.02(a), substantially to the effect
set forth in Exhibit J-2,
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in each case (A) dated the Closing Date, (B) addressed to the Issuing
Bank, the Administrative Agent and the Lenders, and (C) covering such
other matters relating to the Loan Documents and the Transactions as
the Administrative Agent shall reasonably request, and Holdings and the
Borrower hereby request such counsel to deliver such opinions.
(b) All legal matters incident to this Agreement, the
Borrowings and extensions of credit hereunder and the other Loan
Documents shall be satisfactory to the Lenders, to the Issuing Bank and
to Cravath, Swaine & Moore, counsel for the Administrative Agent.
(c) The Administrative Agent shall have received (i) a copy of
the certificate or articles of incorporation, including all amendments
thereto, of each Loan Party, certified as of a recent date by the
Secretary of State of the state of its organization, and a certificate
as to the good standing of each Loan Party as of a recent date, from
such Secretary of State (or, in lieu of such certificate as to good
standing for each Loan Party incorporated in the State of Wisconsin, a
certificate of status from the Wisconsin Department of Financial
Institutions as to such Loan Party's existence); (ii) a certificate of
the Secretary or Assistant Secretary of each Loan Party dated the
Closing Date and certifying (A) that attached thereto is a true and
complete copy of the by-laws of such Loan Party as in effect on the
Closing Date and at all times since a date prior to the date of the
resolutions described in clause (B) below, (B) that attached thereto is
a true and complete copy of resolutions duly adopted by the Board of
Directors of such Loan Party authorizing the execution, delivery and
performance of the Loan Documents to which such person is a party and,
in the case of the Borrower, the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in
full force and effect, (C) that the certificate or articles of
incorporation of such Loan Party have not been amended since the date
of the last amendment thereto shown on the certificate of good standing
furnished pursuant to clause (i) above, and (D) as to the incumbency
and specimen signature of each officer executing any Loan Document or
any other document delivered in connection herewith on behalf of such
Loan Party; (iii) a certificate of another officer as to the incumbency
and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to (ii) above; and (iv) such other
documents as the Lenders, the Issuing Bank or Cravath, Swaine & Moore,
counsel for the Administrative Agent, may reasonably request.
(d) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a Financial Officer
of the Borrower, confirming compliance with the conditions precedent
set forth in paragraphs (b) and (c) of Section 4.01.
(e) The Administrative Agent shall have received all Fees and
other amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Loan Document.
(f) The Pledge Agreement shall have been duly executed by the
parties thereto and delivered to the Collateral Agent and shall be in
full force and effect, and all the
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outstanding Capital Stock of the Borrower and the Subsidiaries shall
have been duly and validly pledged thereunder to the Collateral Agent
for the ratable benefit of the Secured Parties and certificates
representing such shares, accompanied by instruments of transfer and
stock powers endorsed in blank, shall be in the actual possession of
the Collateral Agent; provided that, to the extent to do so would cause
adverse tax consequence to the Borrower, (i) neither the Borrower nor
any Domestic Subsidiary shall be required to pledge more than 65% of
the capital stock of any Foreign Subsidiary and (ii) no Foreign
Subsidiary shall be required to pledge the capital stock of any of its
Foreign Subsidiaries.
(g) The Security Agreement shall have been duly executed by
the Loan Parties party thereto and shall have been delivered to the
Collateral Agent and shall be in full force and effect on such date and
each document (including each Uniform Commercial Code financing
statement) required by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to
create in favor of the Collateral Agent for the benefit of the Secured
Parties a valid, legal and perfected first-priority security interest
in and lien on the Collateral (subject to any Lien expressly permitted
by Section 6.02) described in such agreement shall have been delivered
to the Collateral Agent.
(h) The Collateral Agent shall have received the results of a
search of the Uniform Commercial Code (or equivalent filings) filings
made with respect to the Loan Parties in the states (or other
jurisdictions) in which the chief executive office of each such person
is located, any offices of such persons in which records have been kept
relating to Accounts and the other jurisdictions in which Uniform
Commercial Code filings (or equivalent filings) are to be made pursuant
to the preceding paragraph, together with copies of the financing
statements (or similar documents) disclosed by such search, and
accompanied by evidence satisfactory to the Collateral Agent that the
Liens indicated in any such financing statement (or similar document)
would be permitted under Section 6.02 or have been released.
(i) The Collateral Agent shall have received a Perfection
Certificate with respect to the Loan Parties dated the Closing Date and
duly executed by a Responsible Officer of the Borrower.
(j) Each of the Security Documents, in form and substance
satisfactory to the Lenders, relating to each of the Mortgaged
Properties shall have been duly executed by the parties thereto and
delivered to the Collateral Agent and shall be in full force and
effect, (ii) each of such Mortgaged Properties shall not be subject to
any Lien other than those permitted under Section 6.02, (iii) each of
such Security Documents shall have been filed and recorded in the
recording office as specified on Schedule 3.19(d) (or a lender's marked
and redated title commitment for title insurance, in form and substance
acceptable to the Collateral Agent, insuring such Security Document as
a first lien on such Mortgaged Property (subject to any Lien permitted
by Section 6.02) shall have been received by the Collateral Agent) and,
in connection therewith, the Collateral Agent shall have received
evidence satisfactory to it of the title company's agreement to record
or file such Security Documents, as applicable, and (iv) the Collateral
Agent shall have received such other
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documents, including a policy or policies of title insurance issued by
a nationally recognized title insurance company, together with such
endorsements, coinsurance and reinsurance as may be requested by the
Collateral Agent and the Lenders, insuring the Mortgages as valid first
liens on the Mortgaged Properties, free of Liens other than those
permitted under Section 6.02, together with such surveys, abstracts,
appraisals and legal opinions required to be furnished pursuant to the
terms of the Mortgages or as reasonably requested by the Collateral
Agent or the Lenders.
(k) Each of the Parent Guarantee Agreement, the Subsidiary
Guarantee Agreement, the Indemnity, Subrogation and Contribution
Agreement and the Tax Sharing Agreement shall have been duly executed
by the parties thereto, shall have been delivered to the Collateral
Agent and shall be in full force and effect.
(l) The Administrative Agent shall have received a Borrowing
Base Certificate dated the Closing Date and executed by a Financial
Officer of the Borrower.
(m) The Administrative Agent shall have received a copy of, or
a certificate as to coverage under, the insurance policies required by
Section 5.02 and the applicable provisions of the Security Documents,
each of which shall be endorsed or otherwise amended to include a
"standard" or "New York" lender's loss payable endorsement and to name
the Collateral Agent as additional insured, in form and substance
satisfactory to the Administrative Agent.
(n) The Lenders shall be reasonably satisfied as to the amount
and nature of any environmental and employee health and safety
exposures to which the Borrower and the Subsidiaries may be subject and
the plans of the Borrower with respect thereto, after giving effect to
the Transactions and the consummation of the other transactions
contemplated hereby.
(o) The Lenders shall have received (i) appraisals,
satisfactory in form and substance to the Lenders, from MB Valuation
Services, Inc. or another firm acceptable to the Lenders, of the real
property, personal property and other assets of the Borrower, and (ii)
an audit, reasonably satisfactory in form and substance to the Lenders,
of the Accounts and inventory of the Borrower and the Subsidiaries, in
each case after giving effect to the Transactions and the consummation
of the other transactions contemplated hereby.
(p) The Administrative Agent shall have received an
environmental assessment report in form, scope and substance reasonably
satisfactory to the Lenders, from Strata Environmental, as to any
environmental hazards, liabilities or Remedial Action to which the
Borrower or any of the Subsidiaries may be subject and the Lenders
shall be reasonably satisfied with the nature and cost of any such
hazards, liabilities or Remedial Action and with the Borrower's plans
with respect thereto.
(q) The Equity Contribution shall have been made or shall be
made simultaneously with the making of the initial Credit Event, and
the Administrative Agent
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shall be satisfied with the portion of the Equity Contribution
contributed by each of the Investors.
(r) The Borrower shall have received gross proceeds from the
issuance of the Senior Subordinated Notes in the aggregate amount of
not less than $150,000,000, and the terms and conditions of the Senior
Subordinated Notes (including, without limitation, the interest rate,
maturity, covenants, subordination provisions and events of default)
shall be satisfactory in all respects to the Lenders.
(s) (i) The Merger shall have been consummated, or shall be
consummated simultaneously with the initial Credit Event, in accordance
with applicable law and the Merger Agreement, without giving effect to
any material waiver or amendment of the Merger Agreement not approved
in writing by the Lenders, and (ii) the Lenders shall (A) be reasonably
satisfied with the capitalization, structure and equity ownership of
the Borrower and its Subsidiaries and (B) be reasonably satisfied that
the aggregate level of fees and expenses to be paid in connection with
the Merger, the financing therefor and the other transactions
contemplated hereby shall not exceed $10,000,000.
(t) (i) After giving effect to the Merger and the other
transactions contemplated hereby, the Borrower and its Subsidiaries
shall have outstanding no Indebtedness or preferred stock other than
(A) the extensions of credit under this Agreement, (B) the Senior
Subordinated Notes and (C) the Indebtedness listed on Schedule 6.01 and
(ii) the Administrative Agent shall have received evidence satisfactory
to it that all Indebtedness pursuant to (A) the Credit Agreement dated
as of December 31, 1994, as amended, between Bank One, Milwaukee, N.A.
and Neenah, Neenah Foundry Company, Hartley Controls Corporation and
Neenah Transport, Inc. shall have been repaid in full, any commitments
thereunder shall have been terminated and all Liens with respect
thereto shall have been released, (B) the outstanding letters of credit
in an aggregate amount of $1,000,000 to secure worker's compensation
and other obligations shall have been replaced with Letters of Credit
and (C) the outstanding standby letter of credit dated October 1, 1995
issued by Bank One Appleton, NA for the benefit of ANR Pipeline and/or
affiliated companies and/or subsidiaries and shall have been replaced
with Letters of Credit.
(u) The Lenders shall have received the pro forma consolidated
financial statements described in Section 3.05(b), which shall be
reasonably satisfactory to the Lenders and shall not be materially
inconsistent with the forecasts previously provided to the Lenders.
(v) The Lenders shall have received a solvency letter from
Gordian Group, L.P. in form and substance reasonably satisfactory to
the Lenders, as to the solvency of the Borrower and its Subsidiaries on
a consolidated basis after giving effect to the Merger, the initial
Credit Event and the consummation of the other Transactions.
(w) All requisite material Governmental Authorities and third
parties shall have approved or consented to the Merger and the other
transactions contemplated hereby to
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the extent required, all applicable appeal periods shall have expired
and there shall be no governmental or judicial action, actual or
threatened, that has or could have a reasonable likelihood of
restraining, preventing or imposing burdensome conditions on the Merger
or the other transactions contemplated hereby, including, without
limitation, the consent of Bank One Leasing Corporation pursuant to the
Master Lease Agreement between Neenah Foundry Co. and Bank One Leasing
Corporation dated December 14, 1992.
(x) The Administrative Agent shall have received the financial
statements of the Borrower and its Subsidiaries described in Section
3.05(a)(ii), which financial statements shall not be materially
inconsistent with the forecasts for such period previously provided to
the Lenders.
(y) The Administrative Agent shall be reasonably satisfied
with all of the Borrower's material agreements with its customers.
(z) The Lenders shall be reasonably satisfied with the
sufficiency of amounts available hereunder to meet the ongoing working
capital requirements of the Borrower and its Subsidiaries following the
Merger and the consummation of the other transactions contemplated
hereby.
(aa) The Administrative Agent shall have received the
landlord's waivers described in the proviso of the definition of the
term "Eligible Inventory".
(bb) Upon the effectiveness of the Merger, Neenah Transport,
Inc. shall have notified Ryder Truck Rental, Inc. of the Merger
pursuant to the Truck Lease and Services Agreement between Ryder Truck
Rental, Inc. and Neenah Transport, Inc. dated March 12, 1992.
ARTICLE V
Affirmative Covenants
Each of Holdings and the Borrower covenants and agrees with each Lender
that until the Commitments have been terminated and the principal of and
interest on each Loan, all Fees and all other expenses or amounts payable under
any Loan Document (other than wholly contingent indemnification obligations)
shall have been paid in full and all Letters of Credit have been canceled or
have expired and all amounts drawn thereunder have been reimbursed in full or
cash collateralized to the satisfaction of the Administrative Agent and the
Issuing Bank, unless the Required Lenders shall otherwise consent in writing,
each of Holdings and the Borrower will, and will cause each of the Subsidiaries
to:
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SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect in all material respects the
rights, licenses, permits, franchises, authorizations, patents, copyrights,
trademarks and trade names material to the conduct of its business; maintain and
operate such business in substantially the manner in which it is presently
conducted and operated; comply in all material respects with all applicable
laws, rules, regulations (including any zoning, building, Environmental Law,
ordinance, code or approval or any building permits or any restrictions of
record or agreements affecting the Mortgaged Properties) and decrees and orders
of any Governmental Authority, whether now in effect or hereafter enacted,
except where such non-compliance could not reasonably be expected to result in a
Material Adverse Effect; and, except in the case of sales of assets permitted
pursuant to Section 6.05, at all times maintain and preserve all property
material to the conduct of such business and keep, in all material respects,
such property in good repair, working order and condition, normal wear and tear
excepted, and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 5.02. Insurance. In the case of the Borrower and each
Subsidiary:
(a) Keep its insurable properties adequately insured at all
times by financially sound and reputable insurers; and maintain such
other insurance, to such extent and against such risks, including fire
and other risks insured against by extended coverage, in each case as
is customary with companies in the same or similar businesses operating
in the same or similar locations, including public liability insurance
against claims for personal injury or death or property damage
occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.
(b) Cause all such policies to be endorsed or otherwise
amended to include a "standard" or "New York" lender's loss payable
endorsement, in form and substance satisfactory to the Administrative
Agent and the Collateral Agent, which endorsement shall provide that,
from and after the Closing Date, if the insurance carrier shall have
received written notice from the Administrative Agent or the Collateral
Agent of the occurrence of an Event of Default, the insurance carrier
shall, during the continuance of such Event of Default, pay all
proceeds otherwise payable to the Borrower or the Loan Parties under
such policies directly to the Collateral Agent; cause all such policies
to provide that neither the Borrower, the Administrative Agent, the
Collateral Agent nor any other party shall be a coinsurer thereunder
and to contain a "Replacement Cost Endorsement", without any deduction
for depreciation, and such other provisions as the Administrative Agent
or the Collateral Agent may reasonably require from time to time to
protect their interests; deliver original or certified copies of all
such policies to the Collateral Agent; cause each such policy to
provide that it shall not be canceled, modified or not renewed (i) by
reason of nonpayment of premium upon not less than 10 days' prior
written notice thereof by the
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insurer to the Administrative Agent and the Collateral Agent (giving the
Administrative Agent and the Collateral Agent the right to cure defaults
in the payment of premiums) or (ii) for any other reason upon not less
than 30 days' prior written notice thereof by the insurer to the
Administrative Agent and the Collateral Agent; deliver to the
Administrative Agent and the Collateral Agent, prior to the cancellation,
modification or nonrenewal of any such policy of insurance, a copy of a
renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Administrative Agent and the Collateral Agent)
together with evidence satisfactory to the Administrative Agent and the
Collateral Agent of payment of the premium therefor.
(c) If at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a "flood hazard area" in any
Flood Insurance Rate Map published by the Federal Emergency Management
Agency (or any successor agency), obtain flood insurance in such total
amount as the Administrative Agent, the Collateral Agent or the Required
Lenders may from time to time require, and otherwise comply with the
National Flood Insurance Program as set forth in the Flood Disaster
Protection Act of 1973, as it may be amended from time to time, or (ii) a
"Zone 1" area, obtain earthquake insurance in such total amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may
from time to time require.
(d) With respect to any Mortgaged Property, carry and maintain
comprehensive general liability insurance including the "broad form CGL
endorsement" and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
umbrella liability insurance against any and all claims, in no event for a
combined single limit of less than $25,000,000, naming the Collateral
Agent as an additional insured, on forms satisfactory to the Collateral
Agent.
(e) Notify the Administrative Agent and the Collateral Agent
immediately whenever any separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained
under this Section 5.02 is taken out by the Borrower; and promptly deliver
to the Administrative Agent and the Collateral Agent a duplicate original
copy of such policy or policies.
SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien upon such properties or any part thereof; provided, however,
that such payment and discharge shall not be required with respect to any such
tax, assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and the Borrower
shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP and such contest operates to suspend collection of the
contested obligation, tax, assessment or charge and enforcement of a Lien and,
in the case of a Mortgaged Property, there is no risk of forfeiture of such
property.
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SECTION 5.04. Financial Statements, Reports, etc. In the case of the
Borrower, furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, its
consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows showing the financial condition of the
Borrower and its consolidated Subsidiaries as of the close of such fiscal
year and the results of its operations and the operations of such
Subsidiaries during such year, all audited by Ernst & Young LLP or other
independent public accountants of recognized national standing acceptable
to the Required Lenders and accompanied by an opinion of such accountants
(which shall not be qualified in any material respect) to the effect that
such consolidated financial statements fairly present the financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, its consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows showing the
financial condition of the Borrower and its consolidated Subsidiaries as
of the close of such fiscal quarter and the results of its operations and
the operations of such Subsidiaries during such fiscal quarter and the
then elapsed portion of the fiscal year, all certified by one of its
Financial Officers as fairly presenting in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements under
sub-paragraph (a) or (b) above, a letter of the accounting firm or
certificate of the Financial Officer reporting on or certifying such
statements (which letter, when furnished by an accounting firm, may be
limited to accounting matters and disclaim responsibility for legal
interpretations) reporting that they are unaware that any Event of Default
has occurred, in the case of the accounting firm, or certifying that no
Event of Default or Default has occurred, in the case of the Financial
Officer, or, if such an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action taken
or proposed to be taken with respect thereto;
(d) within 20 days after the end of each calendar month a
certificate in the form of Exhibit K (a "Borrowing Base Certificate")
showing the Borrowing Base as of the close of business on the last day of
such calendar month, each such Certificate to be certified as complete and
correct on behalf of the Borrower by a Financial Officer of the Borrower;
(e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Borrower or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
distributed to its shareholders, as the case may be; and
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(f) prior to the beginning of each fiscal year, a copy of the budget
for its consolidated balance sheet and related statements of income and
cash flows for each quarter of such fiscal year; and
(g) promptly, from time to time, such other information regarding
the operations, business affairs and financial condition of the Borrower
or any Subsidiary, or compliance with the terms of any Loan Document, as
the Administrative Agent or any Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the Administrative
Agent, the Issuing Bank and each Lender prompt written notice of the following:
(a) the occurrence of any Event of Default or Default, specifying
the nature and extent thereof and the corrective action (if any) taken or
proposed to be taken with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against the Borrower or any Affiliate thereof that could
reasonably be expected to result in a Material Adverse Effect; and
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate
amount exceeding $1,000,000; and
(d) any development that has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
SECTION 5.06. Maintaining Records; Access to Properties and Inspections.
Keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all requirements of law are made of all dealings and
transactions in relation to its business and activities. Each Loan Party will,
and will cause each of its Subsidiaries to, permit any representatives
designated by the Administrative Agent or any Lender to visit and inspect the
financial records and the properties of Holdings, the Borrower or any Subsidiary
at reasonable times and upon reasonable notice and as often as reasonably
requested and to make extracts from and copies of such financial records, and
permit any representatives designated by the Administrative Agent or any Lender
to discuss the affairs, finances and condition of Holdings, the Borrower or any
Subsidiary with the officers thereof and independent accountants therefor;
provided, however, that, unless a Default or Event of Default shall have
occurred and be continuing, in no event shall the Administrative Agent or any
Lender or any of their respective designees contact any customer or supplier of
the Borrower or any Subsidiary regarding this Agreement and the Indebtedness
hereunder without the prior consent of the Borrower.
SECTION 5.07. Use of Proceeds. Use the proceeds of the Loans and request
the issuance of Letters of Credit only for the purposes set forth in the
preamble to this Agreement.
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SECTION 5.08. Compliance with Environmental Laws. Except for any
non-compliance that could not reasonably be expected to result in a Material
Adverse Effect, comply, and cause all lessees and other persons occupying its
Properties to comply, with all Environmental Laws and Environmental Permits
applicable to its operations and Properties; obtain and renew all Environmental
Permits necessary for its operations and Properties; and conduct any Remedial
Action in accordance with Environmental Laws; provided, however, that none of
Holdings, the Borrower or any of the Subsidiaries shall be required to undertake
any Remedial Action to the extent that its obligation to do so is being
contested in good faith and by proper proceedings and appropriate reserves are
being maintained with respect to such circumstances.
SECTION 5.09. Preparation of Environmental Reports. If a Default caused by
reason of a breach of Section 3.17 or 5.08 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 45 days after such request, at the expense
of the Borrower, an environmental site assessment report for the Properties
which are the subject of such default prepared by an environmental consulting
firm acceptable to the Administrative Agent and indicating the presence or
absence of Hazardous Materials and the estimated cost of any compliance or
Remedial Action in connection with such Properties.
SECTION 5.10. Audits. From time to time (but not more than once per fiscal
year of the Borrower unless a Default or Event of Default shall have occurred
and be continuing) during normal business hours upon reasonable notice from the
Collateral Agent or the Required Lenders through the Administrative Agent,
permit the Collateral Agent or the Lenders or professionals (including
investment bankers, consultants, accountants, lawyers and appraisers) retained
by the Collateral Agent or the Lenders to conduct evaluations and appraisals of
(a) the Borrower's practices in the computation of the Borrowing Base and (b)
the assets included in the Borrowing Base, and pay the reasonable fees and
expenses of such professionals.
SECTION 5.11. Further Assurances. Execute any and all further documents,
financing statements, agreements and instruments, and take all further action
(including filing Uniform Commercial Code and other financing statements,
mortgages and deeds of trust) that may be required under applicable law, or that
the Required Lenders, the Administrative Agent or the Collateral Agent may
reasonably request, in order to effectuate the transactions contemplated by the
Loan Documents and in order to grant, preserve, protect and perfect the validity
and first priority of the security interests created or intended to be created
by the Security Documents. The Borrower will cause any subsequently acquired or
organized Domestic Subsidiary to execute a Subsidiary Guarantee Agreement,
Indemnity Subrogation and Contribution Agreement and each applicable Security
Document in favor of the Collateral Agent. In addition, from time to time, the
Borrower will, at its cost and expense, promptly secure the Obligations by
pledging or creating, or causing to be pledged or created, perfected security
interests with respect to such of its assets and properties as the
Administrative Agent or the Required Lenders shall designate (it being
understood that it is the intent of the parties that the Obligations shall be
secured by, among other things, substantially all the assets of the Borrower
(including real and other properties acquired subsequent to the Closing Date)).
Such security interests and Liens will be created under the Security Documents
and other security agreements, mortgages, deeds of trust and other instruments
and documents in form and substance satisfactory to the Collateral Agent, and
the Borrower shall
<PAGE> 72
66
deliver or cause to be delivered to the Lenders all such instruments and
documents (including legal opinions, title insurance policies and lien searches)
as the Collateral Agent shall reasonably request to evidence compliance with
this Section. The Borrower agrees to provide such evidence as the Collateral
Agent shall reasonably request as to the perfection and priority status of each
such security interest and Lien.
ARTICLE VI
Negative Covenants
Each of Holdings and the Borrower covenants and agrees with each Lender
that, until the Commitments have been terminated and the principal of and
interest on each Loan, all Fees and all other expenses or amounts payable under
any Loan Document (other than wholly contingent indemnification obligations)
have been paid in full and all Letters of Credit have been canceled or have
expired and all amounts drawn thereunder have been reimbursed in full or cash
collateralized to the satisfaction of the Administrative Agent and the Issuing
Bank, unless the Required Lenders shall otherwise consent in writing, neither
Holdings nor the Borrower will, nor will they cause or permit any of the
Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness for borrowed money existing on the date hereof and
set forth in Schedule 6.01;
(b) Indebtedness created hereunder and under the other Loan
Documents;
(c) the Senior Subordinated Notes;
(d) Indebtedness consisting of purchase money Indebtedness or
Capital Lease Obligations incurred in the ordinary course of business
after the Closing Date to finance Consolidated Capital Expenditures,
provided that (i) a description of the assets financed thereby shall have
been furnished to the Administrative Agent for any assets for which the
purchase price is greater than $1,000,000 and (ii) the aggregate principal
amount of any Indebtedness or Capital Lease Obligations incurred pursuant
to this paragraph (d) outstanding at any time shall not exceed $5,000,000;
(e) intercompany loans and advances permitted by Section 6.04(c);
(f) Indebtedness of the Borrower or any Subsidiary to Holdings,
provided that such Indebtedness (i) is subordinated to the prior payment
in full of the Obligations on terms satisfactory to the Administrative
Agent and (ii) is evidenced by an intercompany note pledged by Holdings to
the Collateral Agent pursuant to the Pledge Agreement for the benefit of
the Secured Parties;
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(g) ordinary course Interest Rate Protection Agreements and ordinary
course, non-speculative foreign exchange and commodity protection
agreements;
(h) Indebtedness arising out of judgments or awards (other than any
judgment that is described in clause (i) of Article VII and constitutes a
Default or Event of Default thereunder) in respect of which the Borrower
shall in good faith be prosecuting an appeal or proceedings for review and
in respect of which it shall have secured a subsisting stay of execution
pending such appeal or proceedings for review, provided the Borrower shall
have set aside on its books adequate reserves, in accordance with GAAP,
with respect to such judgment or award;
(i) Indebtedness under performance bonds in an aggregate principal
amount at any time outstanding not exceeding $2,000,000; and
(j) additional unsecured Indebtedness in an aggregate amount at any
time outstanding not exceeding $15,000,000.
SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien on
any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any income
or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower and its Subsidiaries
existing on the date hereof and set forth in Schedule 6.02; provided that
such Liens shall secure only those obligations which they secure on the
date hereof;
(b) any Lien created under the Loan Documents;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary; provided that (i)
such Lien is not created in contemplation of or in connection with such
acquisition (except as permitted pursuant to Section 6.02(i)), (ii) such
Lien does not apply to any other property or assets of the Borrower or any
Subsidiary and (iii) such Lien does not (A) materially interfere with the
use, occupancy and operation of any Mortgaged Property, (B) materially
reduce the fair market value of such Mortgaged Property but for such Lien
or (C) result in any material increase in the cost of operating, occupying
or owning or leasing such Mortgaged Property;
(d) Liens for taxes not yet due or which are being contested in
compliance with Section 5.03;
(e) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising, in the case of such other like
Liens, in the ordinary course of business and securing obligations that
are not due and payable or which are being contested in compliance with
Section 5.03;
<PAGE> 74
68
(f) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other
social security laws or regulations;
(g) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases (other than Capital Lease
Obligations), statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;
(h) zoning restrictions, easements, rights-of-way, restrictions on
use of real property and other similar encumbrances incurred, in the case
of such other similar encumbrances, in the ordinary course of business
which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Borrower or any
of its Subsidiaries;
(i) purchase money security interests in real property, improvements
thereto or equipment hereafter acquired (or, in the case of improvements,
constructed) by the Borrower or any Subsidiary; provided that (i) such
security interests secure Indebtedness permitted by Section 6.01(d), (ii)
such security interests are incurred, and the Indebtedness secured thereby
is created, within 90 days after such acquisition (or construction), (iii)
the Indebtedness secured thereby does not exceed 85% of the lesser of the
cost or the fair market value of such real property, improvements or
equipment at the time of such acquisition (or construction) (or if such
Indebtedness exceeds such 85% limit, such Indebtedness is non-recourse to
Holdings, the Borrower and the Subsidiaries) and (iv) such security
interests do not apply to any other property or assets of the Borrower or
any Subsidiary;
(j) any Lien disclosed on the marked and redated title insurance
commitments delivered to the Collateral Agent on the Closing Date;
(k) Liens arising out of judgments or awards (other than any
judgment that is described in clause (i) of Article VII and constitutes a
Default or Event of Default thereunder) in respect of which the Borrower
shall in good faith be prosecuting an appeal or proceedings for review and
in respect of which it shall have secured a subsisting stay of execution
pending such appeal or proceedings for review, provided the Borrower shall
have set aside on its books adequate reserves, in accordance with GAAP,
with respect to such judgment or award; and
(l) additional Liens on property or assets securing obligations
(other than Indebtedness for borrowed money) not exceeding $250,000 at any
time, provided that, to the extent any such Lien applies to any Collateral
(as defined in any such Security Document), such Lien does not have
priority over the Liens created under the Security Documents.
<PAGE> 75
69
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred.
SECTION 6.04. Investments, Loans and Advances. Purchase, hold or acquire
any capital stock, evidences of indebtedness or other securities of, make or
permit to exist any loans or advances to, or make or permit to exist any
investment or any other interest in, any other person, except:
(a) investments by the Borrower existing on the date hereof in the
capital stock of the Subsidiaries and additional investments by Holdings
in the Capital Stock of the Borrower or by the Borrower in the Capital
Stock of the Subsidiary Guarantors;
(b) Permitted Investments;
(c) investments, loans or advances made by any Loan Party to the
Borrower or any Subsidiary, provided that any such loans or advances are
evidenced by an intercompany note pledged to the Collateral Agent pursuant
to the Pledge Agreement for the benefit of the Secured Parties;
(d) investments consisting of non-cash consideration received in
connection with a sale of assets permitted by Section 6.05(b);
(e) loans and advances to employees and officers of the Borrower or
any of the Subsidiaries for travel, entertainment and relocation expenses
in the ordinary course of business in an aggregate principal amount
outstanding at any one time not to exceed $250,000;
(f) loans and advances in an aggregate principal amount outstanding
at any one time not to exceed $250,000 to management and other employees
of the Borrower, the proceeds of which are used in their entirety to
purchase capital stock of Holdings and other investments pursuant to
retirement savings programs;
(g) the Borrower may make any Permitted Acquisition; provided that
(i) the aggregate purchase price of all such Permitted Acquisitions does
not exceed $50,000,000 and (ii) the Borrower shall have delivered to the
Administrative Agent a certificate certifying that at the time of and
immediately after giving effect to such Permitted Acquisition, (A) no
Event of Default or Default shall have occurred and be continuing, (B) the
Consolidated Leverage Ratio on a pro forma basis (including
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70
as adjusted to reduce or exclude any identified costs that will be reduced
or will cease to be incurred after such Permitted Acquisition) as of the
last day of the most recent fiscal quarter adjusted to give effect (as if
such event had occurred on the first day of the four fiscal quarter period
ended on such last day) to such Permitted Acquisition and the financing
therefor shall be less than 5.00 to 1.00 and (C) the Borrower shall be in
compliance on a pro forma basis (including as adjusted to reduce or
exclude any identified costs that will be reduced or will cease to be
incurred after such Permitted Acquisition) with the covenants set forth in
Sections 6.11, 6.12 and 6.13, in each case as of the last day of the most
recent fiscal quarter adjusted to give effect (as if such event had
occurred on the first day of the four fiscal quarter period ended on such
last day) to such Permitted Acquisition and the financing therefor, and
the adjustments and calculations set forth in such certificate shall be
based on assumptions and otherwise in form and substance satisfactory to
the Administrative Agent;
(h) Consolidated Capital Expenditures permitted pursuant to Section
6.10;
(i) Accounts; and
(j) ordinary course Interest Rate Protection Agreements and ordinary
course, non-speculative foreign exchange and commodity protection
agreements.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions.
(a) Merge into or consolidate with any other person, or permit any other person
to merge into or consolidate with it, or sell, transfer, lease or otherwise
dispose of (in one transaction or in a series of transactions) all or any
substantial part of its assets (whether now owned or hereafter acquired) or any
capital stock of any Subsidiary, or purchase, lease or otherwise acquire (in one
transaction or a series of transactions) all or any substantial part of the
assets of any other person, except that (i) the Borrower may consummate the
Merger, (ii) the Borrower and any Subsidiary may purchase and sell inventory and
scrap, obsolete, excess and worn out assets in the ordinary course of business,
(iii) if at the time thereof and immediately after giving effect thereto no
Event of Default or Default shall have occurred and be continuing (w) any wholly
owned Subsidiary may merge into the Borrower in a transaction in which the
Borrower is the surviving corporation, (x) any wholly owned Subsidiary may merge
into or consolidate with any other wholly owned Domestic Subsidiary in a
transaction in which the surviving entity is a wholly owned Domestic Subsidiary
and no person other than the Borrower or a wholly owned Domestic Subsidiary
receives any consideration, (y) Holdings may merge into ACP Holdings or the
Borrower in a transaction in which the Borrower is the surviving corporation (in
the case of any such merger of Holdings into the Borrower) so long as
concurrently with any merger of Holdings with and into the Borrower, or any
merger of Holdings with and into ACP Holdings in which Holdings is not the
surviving corporation, ACP Holdings assumes all the obligations of Holdings
under this Agreement and the other Loan Documents (including entering into a
supplement to the Pledge Agreement to pledge 100% of the Capital Stock of the
Borrower to the Collateral Agent for the benefit of the Secured Parties) and (z)
following any merger described in clause (y), ACP Holdings may merge into ACP
Products or the Borrower in a transaction in which the Borrower is the surviving
corporation (in the case of any such merger of ACP Holdings into the Borrower)
so long as concurrently with any merger of ACP Holdings with and into the
Borrower, or any merger of ACP Holdings with and into ACP Products in which ACP
Holdings is not the surviving corporation, ACP Products assumes all the
obligations of ACP Holdings under this Agreement and the other Loan Documents
(including entering into a supplement to the Pledge Agreement to pledge 100% of
the Capital Stock of the Borrower to the Collateral Agent for the benefit of the
Secured Parties), (iv) the Borrower and any Subsidiary may make Permitted
Acquisitions permitted by Section 6.04(g) and (v) the
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71
Borrower and any Subsidiary may make Consolidated Capital Expenditures permitted
by Section 6.10.
(b) Neither the Borrower nor any Subsidiary shall engage in any Asset Sale
otherwise permitted under paragraph (a) above unless (i) such Asset Sale is for
consideration at least 85% of which is cash, (ii) such consideration is at least
equal to the fair market value (as determined in good faith by the Borrower's
board of directors) of the assets being sold, transferred, leased or disposed of
and (iii) the fair market value (as determined in good faith by the Borrower's
board of directors) of all assets sold, transferred, leased or disposed of
pursuant to this paragraph (b) shall not exceed (i) $1,000,000 in any fiscal
year or (ii) $5,000,000 in the aggregate.
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends. (a) Declare or pay, directly or indirectly, any
dividend or make any other distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, with respect to
any shares of its Capital Stock or directly or indirectly redeem, purchase,
retire or otherwise acquire for value (or permit any Subsidiary to purchase or
acquire) any shares of any class of its Capital Stock or set aside any amount
for any such purpose; provided, however, that
(i) any Subsidiary may declare and pay dividends or make other
distributions to the Borrower;
(ii) the Borrower may declare and pay dividends or make other
distributions to Holdings (A) to pay the Borrower Tax Amount required to
be paid by Holdings and (B) to fund payments to be made by Holdings as
permitted by clause (iv) below in an aggregate amount not to exceed the
amounts of such payments;
(iii) so long as no Default or Event of Default shall have occurred
and be continuing, the Borrower may declare and pay dividends or make
other distributions to Holdings to pay the actual operating costs of
Holdings and ACP Holdings in an aggregate amount not exceeding $250,000 in
any fiscal year of the Borrower;
(iv) Holdings may, or Holdings may declare and pay dividends or make
other distributions to ACP Holdings to permit ACP Holdings or ACP Products
to, purchase, redeem, retire or otherwise acquire (A) shares of its
Capital Stock, or options or warrants to purchase shares of its Capital
Stock, held by officers, directors or employees of Holdings, the Borrower
or any Subsidiary pursuant to a compensation plan or arrangement in
connection with the death, disability or termination of employment of any
such officer, director or employee or (B) shares of its capital stock
owned by any officer, director or employee of Holdings, the Borrower or
any Subsidiary pursuant to the exercise of options or warrants to purchase
such Capital Stock by such officer, director or employee or to pay taxes
incurred in connection with such exercise of options or warrants in an
aggregate amount for all such transactions described in clauses (A) and
(B) not exceeding the sum of (x) $2,000,000 plus (y) the proceeds of any
substantially concurrent issuance of Capital Stock of ACP Products, ACP
Holdings or Holdings to any officer, director or employee of Holdings, the
Borrower or any Subsidiary;
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(v) Holdings may declare and pay dividends or make other
distributions to ACP Holdings to pay the Borrower Tax Amount required to
be paid by ACP Holdings; and
(vi) so long as no Default or Event of Default shall have occurred
and be continuing, Holdings may declare and pay dividends or make other
distributions to ACP Holdings, out of the proceeds of dividends or
distributions received by Holdings pursuant to clause (iii) above, to pay
ACP Holdings' actual operating costs.
(b) Permit its subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such subsidiary to (i) pay any dividends or
make any other distributions on its capital stock or any other interest or (ii)
make or repay any loans or advances to the Borrower or the parent of such
subsidiary.
SECTION 6.07. Transactions with Affiliates. Except as set forth on
Schedule 6.07, sell or transfer any property or assets to, or purchase or
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except that the Borrower or any
Subsidiary may engage in (a) any of the foregoing transactions in the ordinary
course of business at prices and on terms and conditions not less favorable to
the Borrower or such Subsidiary than could be obtained on an arm's-length basis
from unrelated third parties, (b) the transactions permitted pursuant to
Sections 6.05 and 6.06, and (c) the Transactions.
SECTION 6.08. Business of Borrower and Subsidiaries. Engage at any time in
any business or business activity other than Related Businesses.
SECTION 6.09. Other Indebtedness and Agreements. (a) Permit any waiver,
supplement, modification, amendment, termination or release of (i) the Merger
Agreement or the Tax Sharing Agreement or (ii) any indenture, instrument or
agreement pursuant to which any Indebtedness or preferred stock of the Borrower
or any Subsidiary is outstanding in an aggregate outstanding principal amount in
excess of $1,000,000, or modify its charter or by-laws, in each case to the
extent that any such waiver, supplement, modification, amendment, termination or
release would be adverse to the Lenders in any material respect.
(b) (i) Make any distribution, whether in cash, property, securities or a
combination thereof, other than regular scheduled payments of principal and
interest as and when due (to the extent not prohibited by applicable
subordination provisions), in respect of, or pay, or offer or commit to pay, or
directly or indirectly redeem, repurchase, retire or otherwise acquire for
consideration, or set apart any sum for the aforesaid purposes, any Indebtedness
for borrowed money of the Borrower or any Subsidiary in an outstanding principal
amount exceeding $1,000,000 or (ii) pay in cash any amount in respect of such
Indebtedness that may at the obligor's option be paid in kind or in other
securities.
(c) Notwithstanding anything contained in this Section 6.09 to the
contrary, (i) the Borrower shall be permitted to exchange the Senior
Subordinated Notes for substantially identical notes in accordance with the
Exchange and Registration Rights Agreement dated as of April 30, 1997, relating
to the Senior Subordinated Notes.
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SECTION 6.10. Capital Expenditures. Permit the aggregate amount of
Consolidated Capital Expenditures (other than Consolidated Capital Expenditures
for patterns and Permitted Acquisitions permitted by Section 6.04(g)) made by
the Borrower and the Subsidiaries, taken as a whole, in any fiscal year to
exceed the sum of (a) $7,000,000, (b) the proceeds of any Equity Issuance made
during such fiscal year and substantially concurrently used to fund Consolidated
Capital Expenditures, (c) following a prepayment of Term Loans pursuant to
Section 2.13(e) during such fiscal year, the amount of Excess Cash Flow for the
previous fiscal year of the Borrower not required to be used to prepay Term
Loans pursuant to Section 2.13(e) and (d) other Consolidated Capital
Expenditures not covered by clauses (a) through (c) above financed by Revolving
Loans, so long as the aggregate principal amount of such Revolving Loans at any
time outstanding used to finance all such Consolidated Capital Expenditures
pursuant to this clause (d) does not exceed the excess of (A) $20,000,000 over
(B) the aggregate principal amount of outstanding Revolving Loans used to
finance Permitted Acquisitions pursuant to Section 6.04(g); provided, however,
that the amount of Consolidated Capital Expenditures in any fiscal year of the
Borrower permitted to be incurred pursuant to clause (a) above shall be
increased by an amount equal to the amount of unused Consolidated Capital
Expenditures permitted to be incurred pursuant to clause (a) above for the
immediately preceding fiscal year of the Borrower (without giving effect to this
proviso).
SECTION 6.11. Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio as of the end of any fiscal quarter falling in any period set
forth below to be in excess of the ratio set forth below for such period.
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
July 1, 1997 through March 31, 1998 6.00 to 1.00
April 1, 1998 through March 31, 1999 5.75 to 1.00
April 1, 1999 through March 31, 2000 5.50 to 1.00
April 1, 2000 through March 31, 2001 5.25 to 1.00
Thereafter 5.00 to 1.00
</TABLE>
SECTION 6.12. Consolidated Net Worth. Permit Consolidated Net Worth (a) on
the Closing Date, to be less than $35,000,000 or (b) on the last day of any
fiscal quarter, to be less than the sum of (i) $35,000,000 plus (ii) 50% of the
cumulative amount of positive Consolidated Net Income for each fiscal year
ending after the Closing Date.
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SECTION 6.13. Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio as of the end of any fiscal quarter falling
in any period set forth below to be less than the ratio set forth below for such
period.
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
July 1, 1997 through March 31, 1998 1.55 to 1.00
April 1, 1998 through March 31, 1999 1.65 to 1.00
April 1, 1999 through March 31, 2000 1.75 to 1.00
April 1, 2000 through March 31, 2001 1.85 to 1.00
April 1, 2001 through March 31, 2002 1.95 to 1.00
Thereafter 2.00 to 1.00
</TABLE>
SECTION 6.14. Fiscal Year. Permit the fiscal year of the Borrower to
end on a day other than March 31; provided, however, that the Borrower may, upon
written notice to the Administrative Agent, change the fiscal year specified
above to any other fiscal year reasonably acceptable to the Administrative
Agent, in which case the Borrower and the Administrative Agent will, and are
hereby authorized by the Lenders to, make any adjustments to this Agreement that
are necessary in order to reflect such change in fiscal year.
ARTICLE VII
Events of Default
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in or in
connection with any Loan Document or the borrowings or issuances of
Letters of Credit hereunder, or any representation, warranty, statement or
information contained in any report, certificate, financial statement or
other instrument furnished in connection with or pursuant to any Loan
Document, shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any
Loan or the reimbursement with respect to any L/C Disbursement when and as
the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any interest on any Loan
or any Fee or L/C Disbursement or any other amount (other than an amount
referred to in (b) above) due under any Loan Document, when and as the
same shall become due and payable, and such default shall continue
unremedied for a period of five Business Days;
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(d) default shall be made in the due observance or performance by
Holdings, the Borrower or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a), 5.05 or 5.07 or in Article VI;
(e) default shall be made in the due observance or performance by
Holdings, the Borrower or any Subsidiary of any covenant, condition or
agreement contained in any Loan Document (other than those specified in
(b), (c) or (d) above) and such default shall continue unremedied for a
period of 30 days after notice thereof from the Administrative Agent or
any Lender to the Borrower;
(f) Holdings, the Borrower or any Subsidiary shall (i) fail to pay
any principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $1,750,000, when and as
the same shall become due and payable, or (ii) fail to observe or perform
any other term, covenant, condition or agreement contained in any
agreement or instrument evidencing or governing any such Indebtedness if
the effect of any failure referred to in this clause (ii) is to cause, or
to permit the holder or holders of such Indebtedness or a trustee on its
or their behalf (with or without the giving of notice, the lapse of time
or both) to cause, such Indebtedness to become due prior to its stated
maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of Holdings, the Borrower or any Subsidiary, or of a
substantial part of the property or assets of Holdings, the Borrower or a
Subsidiary, under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for Holdings, the Borrower or any Subsidiary or for a substantial
part of the property or assets of Holdings, the Borrower or a Subsidiary
or (iii) the winding-up or liquidation of Holdings, the Borrower or any
Subsidiary; and such proceeding or petition shall continue undismissed for
60 days or an order or decree approving or ordering any of the foregoing
shall be entered;
(h) Holdings, the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or the filing of any
petition described in (g) above, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for Holdings, the Borrower or any Subsidiary or for a
substantial part of the property or assets of Holdings, the Borrower or
any Subsidiary, (iv) file an answer admitting the material allegations of
a petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become
due or (vii) take any action for the purpose of effecting any of the
foregoing;
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(i) one or more judgments for the payment of money in an aggregate
amount in excess of $1,750,000, which amount is not covered by insurance
(provided that in the event such a judgment is covered by insurance, the
Administrative Agent is provided with satisfactory evidence that the
insurance provider will provide the coverage relating thereto) shall be
rendered against Holdings, the Borrower, any Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to levy upon
assets or properties of Holdings, the Borrower or any Subsidiary to
enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in liability of the
Borrower and its Subsidiaries in an aggregate amount exceeding (i)
$1,000,000 in any year or (ii) $5,000,000 for all periods; or
(k) any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by the Borrower or any
other Loan Party not to be, a valid, perfected, first priority (except as
otherwise expressly provided in this Agreement or such Security Document)
security interest in the securities, assets or properties covered thereby,
except to the extent that any such loss of perfection or priority results
from the failure of the Collateral Agent to maintain possession of
certificates representing securities pledged under the Pledge Agreement or
to continue previously filed financing statements prior to the expiration
thereof and except to the extent that such loss is covered by a lender's
title insurance policy and the related insurer promptly after such loss
shall have acknowledged in writing that such loss is covered by such title
insurance policy; or
(l) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrower, take either or both of
the following actions, at the same or different times: (i) terminate forthwith
the Commitments and (ii) declare the Loans then outstanding to be forthwith due
and payable in whole or in part, whereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder
and under any other Loan Document, shall become forthwith due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrower, anything contained herein or
in any other Loan Document to the contrary notwithstanding; and in any event
with respect to the Borrower described in paragraph (g) or (h) above, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder and under any other
Loan Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrower, anything contained herein or in any other Loan
Document to the contrary notwithstanding.
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ARTICLE VIII
The Administrative Agent and the Collateral Agent
In order to expedite the transactions contemplated by this Agreement, The
Chase Manhattan Bank is hereby appointed to act as Administrative Agent and
Collateral Agent on behalf of the Lenders and the Issuing Bank (for purposes of
this Article VIII, the Administrative Agent and the Collateral Agent are
referred to collectively as the "Agents"). Each of the Lenders and each assignee
of any such Lender, hereby irrevocably authorizes the Agents to take such
actions on behalf of such Lender or assignee or the Issuing Bank and to exercise
such powers as are specifically delegated to the Agents by the terms and
provisions hereof and of the other Loan Documents, together with such actions
and powers as are reasonably incidental thereto. The Administrative Agent is
hereby expressly authorized by the Lenders and the Issuing Bank, without hereby
limiting any implied authority, (a) to receive on behalf of the Lenders and the
Issuing Bank all payments of principal of and interest on the Loans, all
payments in respect of L/C Disbursements and all other amounts due to the
Lenders hereunder, and promptly to distribute to each Lender or the Issuing Bank
its proper share of each payment so received; (b) to give notice on behalf of
each of the Lenders to the Borrower of any Event of Default specified in this
Agreement of which the Administrative Agent has actual knowledge acquired in
connection with its agency hereunder; and (c) to distribute to each Lender
copies of all notices, financial statements and other materials delivered by the
Borrower or any other Loan Party pursuant to this Agreement or the other Loan
Documents as received by the Administrative Agent. Without limiting the
generality of the foregoing, the Agents are hereby expressly authorized to
execute any and all documents (including releases) with respect to the
Collateral and the rights of the Secured Parties with respect thereto, as
contemplated by and in accordance with the provisions of this Agreement and the
Security Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower or any other Loan Party of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agents shall not be responsible
to the Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other Loan Documents, instruments or
agreements. The Agents shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders and, except as otherwise specifically provided herein, such
instructions and any action or inaction pursuant thereto shall be binding on all
the Lenders. Each Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Agents nor any of their respective directors, officers,
employees or agents shall have any responsibility in their capacity as such to
the Borrower or any other Loan Party on account of the failure of or delay in
performance or breach by any Lender or the Issuing Bank of any of its
obligations hereunder or to any Lender or the Issuing Bank on account of the
failure of or delay
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in performance or breach by any other Lender or the Issuing Bank or the Borrower
or any other Loan Party of any of their respective obligations hereunder or
under any other Loan Document or in connection herewith or therewith. Each of
the Agents may execute any and all duties hereunder by or through agents or
employees and shall be entitled to rely upon the advice of legal counsel
selected by it with respect to all matters arising hereunder and shall not be
liable for any action taken or suffered in good faith by it in accordance with
the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so by
the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as provided
below, either Agent may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right
to appoint a successor, subject to the Borrower's approval, not to be
unreasonably withheld, so long as no Default or Event of Default shall have
occurred and be continuing. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent which shall be a bank with
an office in New York, New York, having a combined capital and surplus of at
least $500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent and the retiring Agent shall be discharged from its duties and
obligations hereunder. After the Agent's resignation hereunder, the provisions
of this Article and Section 9.05 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with Holdings, the Borrower or any
Subsidiary or other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the amount
of its pro rata share (based on its Commitments hereunder) of any expenses
incurred for the benefit of the Lenders by the Agents, including counsel fees
and compensation of agents and employees paid for services rendered on behalf of
the Lenders, that shall not have been reimbursed by the Borrower and (b) to
indemnify and hold harmless each Agent and any of its directors, officers,
employees or agents, on demand, in the amount of such pro rata share, from and
against any and all liabilities, taxes, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by or asserted against it in
its capacity as Agent, or any of them in any way relating to or arising out of
this Agreement or any other Loan Document or any action taken or omitted by it
or any of them under this Agreement or any other Loan Document, to the extent
the same shall not have been reimbursed by the Borrower or any other Loan Party,
provided that no Lender shall be liable to an Agent or any such other
indemnified person for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
are determined by
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a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Agent or any of
its directors, officers, employees or agents. Each Revolving Credit Lender
agrees to reimburse and indemnify the Issuing Bank to the same extent and
subject to the same limitations as provided for the Agents in the preceding
sentence.
Each Lender acknowledges that it has, independently and without reliance
upon the Agents or any other Lender and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon the Agents or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, or sent by telecopy, as follows:
(a) if to the Borrower or Holdings, to it at 2121 Brooks Avenue,
Neenah, WI 54956, Attention of President or Chief Financial Officer
(Telecopy No. (414) 729-3633) with copies to (which shall not constitute
notice to the Borrower) Citicorp Venture Capital, Ltd., 399 Park Avenue,
14th Floor, Zone 4, New York, NY 10043, Attention of Mr. David F. Thomas
and Mr. John D. Weber (Telecopy No. (212) 888-2940) and Kirkland & Ellis,
Citicorp Center, 153 East 53rd Street, New York, NY 10022, Attention of
Kirk A. Radke, Esq. (Telecopy No. (212) 446-4900);
(b) if to the Administrative Agent, to The Chase Manhattan Bank,
Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New
York, New York 10081, Attention of Janet Belden (Telecopy No. (212)
552-5658), with a copy to The Chase Manhattan Bank, One Chase Manhattan
Plaza, 5th Floor, New York, New York 10081, Attention of James H. Ramage
(Telecopy No. (212) 552-5555); and
(c) if to a Lender, to it at its address (or telecopy number) set
forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to
which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch
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by certified or registered mail if mailed, in each case delivered, sent or
mailed (properly addressed) to such party as provided in this Section 9.01 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower or Holdings herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and the Issuing Bank and shall survive the
making by the Lenders of the Loans and the issuance of Letters of Credit by the
Issuing Bank, regardless of any investigation made by the Lenders or the Issuing
Bank or on their behalf, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any Fee or any other
amount then due and payable under this Agreement or any other Loan Document is
outstanding and unpaid (other than wholly-contingent indemnification
obligations) or any Letter of Credit is outstanding and so long as the
Commitments have not been terminated. The provisions of Sections 2.14, 2.16,
2.20 and 9.05 shall remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank.
SECTION 9.03. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrower, Holdings and the Administrative
Agent and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the permitted successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Borrower, Holdings, the Administrative
Agent, the Issuing Bank or the Lenders that are contained in this Agreement
shall bind and inure to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a Lender or an
Affiliate of, or an Approved Fund with respect to, such Lender, (x) the Borrower
and the Administrative Agent (and, in the case of any assignment of a Revolving
Credit Commitment, the Issuing Bank) must give their prior written consent to
such assignment (which consent shall not be unreasonably withheld) and (y) the
amount of the Commitment of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 (or, if less, the entire remaining amount of such Lender's
Commitment), (ii) the parties to each such assignment shall execute and deliver
to the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500 and (iii) the assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Upon
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acceptance and recording pursuant to paragraph (e) of this Section 9.04, from
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution thereof,
(A) the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and (B) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees accrued
for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Loan Commitment and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent,
the Collateral Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Administrative
Agent and the Collateral Agent, respectively, by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the
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terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive and the Borrower, the Administrative Agent, the Issuing
Bank, the Collateral Agent and the Lenders may treat each person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower, the Issuing Bank,
the Collateral Agent and any Lender, at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of the Borrower, the Issuing
Bank and the Administrative Agent to such assignment, the Administrative Agent
shall (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Lenders and the Issuing Bank. No assignment shall be effective unless it has
been recorded in the Register as provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrower, the Issuing Bank
or the Administrative Agent sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided, however, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participating
banks or other entities shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.14, 2.16 and 2.20 to the same extent as if
they were Lenders and (iv) the Borrower, the Administrative Agent, the Issuing
Bank and the Lenders shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Agreement,
and such Lender shall retain the sole right to enforce the obligations of the
Borrower relating to the Loans or L/C Disbursements and to approve any
amendment, modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable hereunder or
the amount of principal of or the rate at which interest is payable on the
Loans, extending any scheduled principal payment date or date fixed for the
payment of interest on the Loans or increasing or extending the Commitments).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure of
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.16.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank to secure extensions of credit by
such Federal Reserve Bank to such Lender; provided that no such assignment shall
release a Lender from any of its obligations
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hereunder or substitute any such Bank for such Lender as a party hereto. In
order to facilitate such an assignment to a Federal Reserve Bank, the Borrower
shall, at the request of the assigning Lender, duly execute and deliver to the
assigning Lender a promissory note or notes evidencing the Loans made to the
Borrower by the assigning Lender hereunder.
(i) Neither Holdings nor the Borrower shall assign or delegate any of its
rights or duties hereunder without the prior written consent of the
Administrative Agent, the Issuing Bank and each Lender, and any attempted
assignment without such consent shall be null and void.
(j) In the event that Standard & Poor's Ratings Group, Moody's Investors
Service, Inc., and Thompson's BankWatch (or InsuranceWatch Ratings Service, in
the case of Lenders that are insurance companies (or Best's Insurance Reports,
if such insurance company is not rated by Insurance Watch Ratings Service))
shall, after the date that any Lender becomes a Revolving Credit Lender,
downgrade the long-term certificate deposit ratings of such Lender, and the
resulting ratings shall be below BBB-, Baa3 and C (or BB, in the case of a
Lender that is an insurance company (or B, in the case of an insurance company
not rated by InsuranceWatch Ratings Service)), then the Issuing Bank shall have
the right, but not the obligation, at its own expense, upon notice to such
Lender and the Administrative Agent, to replace (or to request the Borrower to
use its reasonable efforts to replace) such Lender with an assignee (in
accordance with and subject to the restrictions contained in paragraph (b)
above), and such Lender hereby agrees to transfer and assign without recourse
(in accordance with and subject to the restrictions contained in paragraph (b)
above) all its interests, rights and obligations in respect of its Revolving
Credit Commitment to such assignee; provided, however, that (i) no such
assignment shall conflict with any law, rule and regulation or order of any
Governmental Authority and (ii) the Issuing Bank or such assignee, as the case
may be, shall pay to such Lender in immediately available funds on the date of
such assignment the principal of and interest accrued to the date of payment on
the Loans made by such Lender hereunder and all other amounts accrued for such
Lender's account or owed to it hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower and Holdings agree,
jointly and severally, to pay all out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent and the Issuing Bank in connection
with the syndication of the credit facilities provided for herein and the
preparation and administration of this Agreement and the other Loan Documents or
in connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) or incurred by the Administrative Agent, the
Collateral Agent or any Lender in connection with the enforcement or protection
of its rights in connection with this Agreement and the other Loan Documents or
in connection with the Loans made or Letters of Credit issued hereunder,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Administrative Agent and the Collateral Agent, and, in
connection with any such enforcement or protection, the reasonable fees, charges
and disbursements of any other counsel for the Administrative Agent, the
Collateral Agent or any Lender.
(b) The Borrower and Holdings agree, jointly and severally, to indemnify
the Administrative Agent, the Collateral Agent, each Lender and the Issuing
Bank, each Affiliate of any of the foregoing persons and each of their
respective directors, officers, employees and agents
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(each such person being called an "Indemnitee") against, and to hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees, charges and disbursements,
incurred by or asserted against any Indemnitee arising out of, in any way
connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of the Transactions and the other transactions
contemplated thereby, (ii) the use of the proceeds of the Loans or issuance of
Letters of Credit, (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto, or (iv) any actual or alleged presence or Release of Hazardous
Materials on any property owned or operated by the Borrower or any of the
Subsidiaries, or any Environmental Claim related in any way to the Borrower or
the Subsidiaries; provided that such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of any Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the expiration of any Letter of
Credit, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Administrative Agent, the Collateral Agent, any Lender or the Issuing
Bank. All amounts due under this Section 9.05 shall be payable on written demand
therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, except to the extent prohibited by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower or Holdings against any of and all the
obligations of the Borrower or Holdings now or hereafter existing under this
Agreement and other Loan Documents held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such other
Loan Document and although such obligations may be unmatured. The rights of each
Lender under this Section 9.06 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
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SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower or any other Loan Party therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on the Borrower or Holdings in
any case shall entitle the Borrower or Holdings to any other or further notice
or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Borrower, Holdings and the Required Lenders; provided, however, that
no such agreement shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan or any date for reimbursement of an L/C Disbursement,
or waive or excuse any such payment or any part thereof, or decrease the rate of
interest on any Loan or L/C Disbursement, without the prior written consent of
each Lender affected thereby, (ii) change or extend the Commitment or decrease
or extend the date for payment of the Commitment Fees of any Lender without the
prior written consent of such Lender, (iii) amend or modify the provisions of
Section 2.17 or 9.04(i), the provisions of this Section, the definition of the
term "Required Lenders" or release any Guarantor or all or any substantial part
of the Collateral, without the prior written consent of each Lender, (iv) change
the allocation between Tranche A Term Loans and Tranche B Term Loans of any
prepayment pursuant to Section 2.12 or 2.13 without the prior written consent of
(A) Lenders holding Tranche A Term Loans representing more than 50% of the
aggregate outstanding principal amount of the Tranche A Term Loans and (B)
Lenders holding Tranche B Term Loans representing more than 50% of the aggregate
outstanding principal amount of the Tranche B Term Loans, (v) decrease the
principal amount of, or extend the date for payment of, any prepayment of (A)
Tranche A Term Loans or (B) Tranche B Term Loans, in each case required pursuant
to Section 2.13 without the prior written consent of (x) Lenders holding Tranche
A Term Loans representing more than 50% of the aggregate outstanding principal
amount of the Tranche A Term Loans or (y) Lenders holding Tranche B Term Loans
representing more than 50% of the aggregate outstanding principal amount of the
Tranche B Term Loans, respectively, or (vi) amend Section 2.13(k) without the
prior written consent of Lenders holding Tranche B Term Loans representing more
than 50% of the aggregate outstanding principal amount of the Tranche B Term
Loans; provided further that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent, the Collateral Agent or
the Issuing Bank hereunder or under any other Loan Document without the prior
written consent of the Administrative Agent, the Collateral Agent or the Issuing
Bank.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan or
participation in any L/C Disbursement,
<PAGE> 92
86
together with all fees, charges and other amounts which are treated as interest
on such Loan or participation in such L/C Disbursement under applicable law
(collectively the "Charges"), shall exceed the maximum lawful rate (the "Maximum
Rate") which may be contracted for, charged, taken, received or reserved by the
Lender holding such Loan or participation in accordance with applicable law, the
rate of interest payable in respect of such Loan or participation hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan or participation but were not payable as a
result of the operation of this Section 9.09 shall be cumulated and the interest
and Charges payable to such Lender in respect of other Loans or participations
or periods shall be increased (but not above the Maximum Rate therefor) until
such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of repayment, shall have been received by such
Lender.
SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and the
other Loan Documents constitute the entire contract between the parties relative
to the subject matter hereof. Any other previous agreement among the parties
with respect to the subject matter hereof (including, following the Closing
Date, the Commitment Letter dated January 6, 1997 among the Administrative
Agent, Chase Securities Inc., 399 Venture Partners Inc. and Holdings) is
superseded by this Agreement and the other Loan Documents and shall be
terminated on the Closing Date. Nothing in this Agreement or in the other Loan
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
<PAGE> 93
87
SECTION 9.13. Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section 9.03.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Each of
Holdings and the Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent, the Collateral Agent, the Issuing Bank or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against the Borrower, Holdings or their
respective properties in the courts of any jurisdiction.
(b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16. Confidentiality. The Administrative Agent, the Collateral
Agent, the Issuing Bank and each of the Lenders agrees to keep confidential (and
to use its best efforts to cause its respective agents and representatives to
keep confidential) the Information (as defined below) and all copies thereof,
extracts therefrom and analyses or other materials based thereon, except that
the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender
shall be permitted to disclose Information (a) to such of its respective
officers, directors, employees, agents, affiliates and representatives as need
to know such Information, (b) to the extent requested by any regulatory
authority, (c) to the extent otherwise required by applicable laws and
regulations or by any subpoena or similar legal process, (d) in connection with
any suit, action or proceeding relating to the enforcement of its rights
hereunder or under the other Loan Documents or (e) to the
<PAGE> 94
88
extent such Information (i) becomes publicly available other than as a result of
a breach of this Section 9.16 or (ii) becomes available to the Administrative
Agent, the Issuing Bank, any Lender or the Collateral Agent on a nonconfidential
basis from a source other than the Borrower or Holdings. For the purposes of
this Section, "Information" shall mean all financial statements, certificates,
reports, agreements and information (including all analyses, compilations and
studies prepared by the Administrative Agent, the Collateral Agent, the Issuing
Bank or any Lender based on any of the foregoing) heretofore or hereafter
received from the Borrower or Holdings or any of their respective Affiliates and
related to the Borrower or Holdings, any shareholder or Affiliate of the
Borrower or Holdings or any employee, customer or supplier of the Borrower or
Holdings, other than any of the foregoing that were available to the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender on a
nonconfidential basis prior to its disclosure thereto by the Borrower or
Holdings, and which are in the case of Information provided after the date
hereof, clearly identified at the time of delivery as confidential. The
provisions of this Section 9.16 shall remain operative and in full force and
effect regardless of the expiration and term of this Agreement.
<PAGE> 95
89
SECTION 9.17. Termination. Subject to the last sentence of Section 9.02,
this Agreement and the other Loan Documents shall terminate when all the
Obligations have been indefeasibly paid in full, the Lenders have no further
commitment to lend, the L/C Exposure has been reduced to zero and the Issuing
Bank has no further commitment to issue Letters of Credit under this Agreement,
at which time the Collateral Agent shall execute and deliver to the Borrower,
Holdings and the Subsidiary Guarantors all Uniform Commercial Code termination
statements and similar documents which the Borrower, Holdings and the Subsidiary
Guarantors shall reasonably request to evidence such termination.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
NC MERGER COMPANY,
by_____________________________
Name:
Title:
NFC CASTINGS, INC.,
by______________________________
Name:
Title:
<PAGE> 96
90
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent,
Collateral Agent and Issuing Bank,
by______________________________
Name:
Title:
<PAGE> 97
91
BANK ONE, WISCONSIN,
by______________________________
Name:
Title:
<PAGE> 98
92
BHF BANK AKTIENGESELLSCHAFT,
by______________________________
Name:
Title:
by______________________________
Name:
Title:
<PAGE> 99
93
BANKBOSTON, N.A.
by______________________________
Name:
Title:
<PAGE> 100
94
THE FIRST NATIONAL BANK OF CHICAGO,
by______________________________
Name:
Title:
<PAGE> 101
95
FIRST SOURCE FINANCIAL LLP,
By First Source Financial Inc.,
its manager
by: ________________________________
Name:
Title:
<PAGE> 102
96
HELLER FINANCIAL, INC.,
by_______________________________
Name:
Title:
<PAGE> 103
97
NATIONAL CITY BANK,
by_______________________________
Name:
Title:
<PAGE> 104
98
PNC BANK, NATIONAL ASSOCIATION,
by______________________________
Name:
Title:
<PAGE> 105
99
SENIOR HIGH INCOME PORTFOLIO, INC.,
by______________________________
Name:
Title:
<PAGE> 106
100
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST,
by______________________________
Name:
Title:
<PAGE> 1
Exhibit 10.10
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This is a First Amendment to the Employment Agreement entered into the
9th day of September, 1994, by and between NEENAH FOUNDRY COMPANY, a Wisconsin
corporation, and its affiliated companies, to-wit, NEENAH CORPORATION, HARTLEY
CONTROLS CORPORATION and NEENAH TRANSPORT, INC., hereinafter called the
Employer, and JAMES P. KEATING, JR., of Neenah, Wisconsin, hereinafter called
the Employee.
WITNESSETH:
WHEREAS, the parties desire to amend the aforesaid employment
agreement.
NOW, THEREFORE, it is agreed between the parties that the employment
agreement be as amended as follows:
1. That Section 11 be deleted in its entirety and replaced with
the following Section 11.
"11. Supplemental Employee Retirement Payments (SERP).
As additional consideration for entering into this
Employment Agreement, which Employment Agreement ends
prior to Employee reaching age sixty-five, Employer
agrees that at the end of this Employment Agreement
period, Employee shall be paid full benefits under
Employer's SERP plan as if he retired at age
sixty-five without regard to Employer's right to
amend, modify or revoke the SERP Plan. The SERP
payments will commence on July 1, 1997. Employer and
Employee agree that Employee's benefits under the
SERP plan shall be fully vested and irrevocable as of
the date of this Agreement."
2. All other terms and conditions of the employment
agreement, except as modified by this first amendment, are agreed by both
parties to be in full force and effect and binding on their heirs, personal
representatives, successors and assigns.
<PAGE> 2
IN WITNESS WHEREOF, the parties have set their hands and seals
this 23rd day of July, 1996.
In the Presence of:
COMPANY:
NEENAH FOUNDRY COMPANY
By: __________________________________
Name:
Title:
NEENAH CORPORATION
By: __________________________________
Name:
Title:
HARTLEY CONTROLS CORPORATION
By: __________________________________
Name:
Title:
NEENAH TRANSPORT, INC.
By: __________________________________
Name:
Title:
CONSULTANT:
______________________________________
James P. Keating, Jr.
-2-
<PAGE> 1
EXHIBIT 10.11
PLEDGE AGREEMENT dated as of April 30, 1997, among NC MERGER
COMPANY, a Wisconsin corporation (the "Borrower"), NFC CASTINGS, INC.,
a Delaware corporation ("Holdings"), each Subsidiary of the Borrower
listed on Schedule I hereto (each such Subsidiary, individually, a
"Subsidiary Pledgor" and, collectively, the "Subsidiary Pledgors"; the
Borrower, Holdings and the Subsidiary Pledgors are referred to
collectively herein as the "Pledgors") and THE CHASE MANHATTAN BANK, a
New York banking corporation ("Chase"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured Parties (as defined
in the Credit Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of April 30, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, Holdings, the lenders from time to time party
thereto (the "Lenders") and Chase, as administrative agent for the Lenders,
Collateral Agent and issuing bank (in such capacity, the "Issuing Bank"), (b)
the Parent Guarantee Agreement dated as of April 30, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Parent Guarantee
Agreement"), between Holdings and the Collateral Agent and (c) the Subsidiary
Guarantee Agreement dated as of April 30, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Subsidiary Guarantee Agreement"; and,
collectively with the Parent Guarantee Agreement, the "Guarantee Agreements")
among the Subsidiary Guarantors and the Collateral Agent.
The Lenders have agreed to make Loans to the Borrower and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrower, pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. Holdings and the Subsidiary Guarantors have agreed to guarantee,
among other things, all the obligations of the Borrower under the Credit
Agreement. The obligations of the Lenders to make Loans and of the Issuing Bank
to issue Letters of Credit are conditioned upon, among other things, the
execution and delivery by the Pledgors of a Pledge Agreement in the form hereof
to secure (a) the due and punctual payment by the Borrower of (i) the principal
of and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including reasonable fees, costs, expenses
and indemnities, whether primary, secondary, direct, contingent, fixed or
otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Borrower to the Secured
Parties under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of Holdings under or pursuant
to the Parent Guarantee Agreement or the other Loan Documents, (d) the due and
punctual payment and performance of all the covenants, agreements, obligations
and liabilities of each Subsidiary Guarantor under or pursuant to the Subsidiary
Guarantee Agreement or the other Loan Documents and (e) the due and punctual
payment and performance of all obligations of the Borrower under each Interest
Rate Protection Agreement entered into with any counterparty that was a Lender
at the time such Interest Rate Protection Agreement was entered into (all the
monetary and other obligations referred to in the preceding clauses (a) through
(e) being referred to collectively as the "Obligations"). Capitalized terms used
herein and not defined herein shall have meanings assigned to such terms in the
Credit Agreement.
<PAGE> 2
2
Accordingly, the Pledgors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
SECTION 1. Pledge. As security for the payment and performance, as the
case may be, in full of the Obligations, each Pledgor hereby transfers, grants,
bargains, sells, conveys, hypothecates, pledges, sets over and delivers unto the
Collateral Agent, its successors and assigns, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in all of the Pledgor's right, title and
interest in, to and under (a) the shares of capital stock owned by it and listed
on Schedule II hereto and any shares of capital stock of the Borrower or any
Subsidiary obtained in the future by the Pledgor and the certificates
representing all such shares (the "Pledged Stock"); provided that the Pledged
Stock shall not include (i) more than 65% of the issued and outstanding shares
of stock of any Foreign Subsidiary or (ii) to the extent that applicable law
requires that a Subsidiary of the Pledgor issue directors' qualifying shares,
such qualifying shares; (b)(i) the debt securities listed opposite the name of
the Pledgor on Schedule II hereto, (ii) any debt securities in the future issued
to the Pledgor and (iii) the promissory notes and any other instruments
evidencing such debt securities (the "Pledged Debt Securities"); (c) all other
property that may be delivered to and held by the Collateral Agent pursuant to
the terms hereof; (d) subject to Section 5, all payments of principal or
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed, in respect of, in exchange for or
upon the conversion of the securities referred to in clauses (a) and (b) above;
(e) subject to Section 5, all rights and privileges of the Pledgor with respect
to the securities and other property referred to in clauses (a), (b), (c) and
(d) above; and (f) all proceeds of any of the foregoing (the items referred to
in clauses (a) through (f) above being collectively referred to as the
"Collateral"). Upon delivery to the Collateral Agent, (a) any stock
certificates, notes or other securities now or hereafter included in the
Collateral (the "Pledged Securities") shall be accompanied by stock powers duly
executed in blank or other instruments of transfer reasonably satisfactory to
the Collateral Agent and by such other instruments and documents as the
Collateral Agent may reasonably request and (b) all other property comprising
part of the Collateral shall be accompanied by proper instruments of assignment
duly executed by the applicable Pledgor and such other instruments or documents
as the Collateral Agent may reasonably request. Each delivery of Pledged
Securities shall be accompanied by a schedule describing the securities
theretofore and then being pledged hereunder, which schedule shall be attached
hereto as Schedule II and made a part hereof. Each schedule so delivered shall
supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.
SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees promptly to
deliver or cause to be delivered to the Collateral Agent any and all Pledged
Securities, and any and all certificates or other instruments or documents
representing the Collateral.
(b) Each Pledgor will cause any Indebtedness for borrowed money owed to
the Pledgor by any person to be evidenced by a duly executed promissory note
that is pledged and delivered to the Collateral Agent pursuant to the terms
thereof.
SECTION 3. Representations, Warranties and Covenants. Each Pledgor hereby
represents, warrants and covenants, as to itself and the Collateral pledged by
it hereunder, to and with the Collateral Agent that:
(a) the Pledged Stock represents that percentage as set forth on
Schedule II of the issued and outstanding shares of each class of the
capital stock of the issuer with respect thereto;
<PAGE> 3
3
(b) except for the security interest granted hereunder, the Pledgor
(i) is and will at all times continue to be the direct owner, beneficially
and of record, of the Pledged Securities indicated on Schedule II, (ii)
holds the same free and clear of all Liens, (iii) will make no assignment,
pledge, hypothecation or transfer of, or create or permit to exist any
security interest in or other Lien on, the Collateral, other than pursuant
hereto, and (iv) subject to Section 5, will cause any and all Collateral,
whether for value paid by the Pledgor or otherwise, to be forthwith
deposited with the Collateral Agent and pledged or assigned hereunder;
(c) the Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will defend
its title or interest thereto or therein against any and all Liens (other
than the Lien created by this Agreement), however arising, of all persons
whomsoever;
(d) no consent of any other person (including stockholders or
creditors of any Pledgor) and no consent or approval of any Governmental
Authority or any securities exchange was or is necessary to the validity
of the pledge effected hereby;
(e) by virtue of the execution and delivery by the Pledgors of this
Agreement, when the Pledged Securities, certificates or other documents
representing or evidencing the Collateral are delivered to the Collateral
Agent in accordance with this Agreement, the Collateral Agent will obtain
a valid and perfected first lien upon and security interest in such
Pledged Securities as security for the payment and performance of the
Obligations;
(f) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of the
Collateral Agent in the Collateral as set forth herein;
(g) all of the Pledged Stock has been duly authorized and validly
issued and is fully paid and nonassessable;
(h) all information set forth herein relating to the Pledged Stock
is accurate and complete in all material respects as of the date hereof;
and
(i) the pledge of the Pledged Stock pursuant to this Agreement does
not violate Regulation G, T, U or X of the Federal Reserve Board or any
successor thereto as of the date hereof.
SECTION 4. Registration in Nominee Name; Denominations. The Collateral
Agent, on behalf of the Secured Parties, shall have the right (in its sole and
absolute discretion) to hold the Pledged Securities in its own name as pledgee,
the name of its nominee (as pledgee or as sub-agent) or the name of the
Pledgors, endorsed or assigned in blank or in favor of the Collateral Agent.
Each Pledgor will promptly give to the Collateral Agent copies of any notices or
other communications received by it with respect to Pledged Securities
registered in the name of such Pledgor. The Collateral Agent shall at all times
have the right to exchange the certificates representing Pledged Securities for
certificates of smaller or larger denominations for any purpose consistent with
this Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc. (a) Unless and
until an Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms
of this Agreement, the Credit Agreement and the other Loan Documents;
<PAGE> 4
4
provided, however, that such Pledgor will not be entitled to exercise any
such right if the result thereof could materially and adversely affect the
rights inuring to a holder of the Pledged Securities or the rights and
remedies of any of the Secured Parties under this Agreement or the Credit
Agreement or any other Loan Document or the ability of the Secured Parties
to exercise the same.
(ii) The Collateral Agent shall promptly execute and deliver to each
Pledgor, or cause to be executed and delivered to each Pledgor, all such
proxies, dividend payment orders, powers of attorney and other instruments
as such Pledgor may reasonably request for the purpose of enabling such
Pledgor to exercise the voting and/or consensual rights and powers it is
entitled to exercise pursuant to subparagraph (i) above and to receive the
cash dividends it is entitled to receive pursuant to subparagraph (iii)
below.
(iii) Each Pledgor shall be entitled to receive and retain any and
all cash dividends, distributions, interest and principal paid on the
Pledged Securities to the extent and only to the extent that such cash
dividends, distributions, interest and principal are permitted by, and
otherwise paid in accordance with, the terms and conditions of the Credit
Agreement, the other Loan Documents and applicable laws. All noncash
dividends, distributions, interest and principal, and all dividends,
distributions, interest and principal paid or payable in cash or otherwise
in connection with a partial or total liquidation or dissolution, return
of capital, capital surplus or paid-in surplus, and all other
distributions (other than distributions referred to in the preceding
sentence) made on or in respect of the Pledged Securities, whether paid or
payable in cash or otherwise, whether resulting from a subdivision,
combination or reclassification of the outstanding capital stock of the
issuer of any Pledged Securities or received in exchange for Pledged
Securities or any part thereof, or in redemption thereof, or as a result
of any merger, consolidation, acquisition or other exchange of assets to
which such issuer may be a party or otherwise, shall be and become part of
the Collateral, and, if received by any Pledgor, except to the extent
otherwise permitted pursuant to the Credit Agreement, shall not be
commingled by such Pledgor with any of its other funds or property but
shall be held separate and apart therefrom, shall be held in trust for the
benefit of the Collateral Agent and shall be forthwith delivered to the
Collateral Agent in the same form as so received (with any necessary
endorsement).
(b) Upon the occurrence and during the continuance of an Event of Default,
all rights of any Pledgor to dividends, distributions, interest or principal
that such Pledgor is authorized to receive pursuant to paragraph (a)(iii) above
shall cease other than with respect to any such dividends or distributions
pursuant to Sections 6.06(a)(ii) and 6.06(a)(v) of the Credit Agreement, and all
such rights shall thereupon become vested in the Collateral Agent, which shall
have the sole and exclusive right and authority to receive and retain such
dividends, distributions, interest or principal. All dividends, distributions,
interest or principal received by the Pledgor contrary to the provisions of this
Section 5 shall be held in trust for the benefit of the Collateral Agent, shall
be segregated from other property or funds of such Pledgor and shall be
forthwith delivered to the Collateral Agent upon demand in the same form as so
received (with any necessary endorsement). Any and all money and other property
paid over to or received by the Collateral Agent pursuant to the provisions of
this paragraph (b) shall be retained by the Collateral Agent in an account to be
established by the Collateral Agent upon receipt of such money or other property
and shall be applied in accordance with the provisions of Section 7. After all
Events of Default have been cured or waived, the Collateral Agent shall, within
five Business Days after all such Events of Default have been cured or waived,
repay to each Pledgor all cash and non-cash dividends, distributions, interest
or principal (without interest), that such Pledgor would otherwise be permitted
to retain pursuant to the terms of paragraph (a)(iii) above and which remain in
such account.
(c) Upon the occurrence and during the continuance of an Event of Default,
all rights of any Pledgor to exercise the voting and consensual rights and
powers it is entitled to exercise pursuant to
<PAGE> 5
5
paragraph (a)(i) of this Section 5, and the obligations of the Collateral Agent
under paragraph (a)(ii) of this Section 5, shall cease, and all such rights
shall thereupon become vested in the Collateral Agent, which shall have the sole
and exclusive right and authority to exercise such voting and consensual rights
and powers, provided that, unless otherwise directed by the Required Lenders,
the Collateral Agent shall have the right from time to time following and during
the continuance of an Event of Default to permit the Pledgors to exercise such
rights. After all Events of Default have been cured or waived, such Pledgor will
have the right to exercise the voting and consensual rights and powers that it
would otherwise be entitled to exercise pursuant to the terms of paragraph
(a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, subject to applicable regulatory and legal
requirements, the Collateral Agent may sell the Collateral, or any part thereof,
at public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate. The Collateral Agent shall be authorized at any such
sale (if it deems it advisable to do so) to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are purchasing the
Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of any Pledgor, and, to the extent permitted by applicable
law, the Pledgors hereby waive all rights of redemption, stay, valuation and
appraisal any Pledgor now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days' prior written notice
(which each Pledgor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of such Pledgor's Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Collateral Agent may fix and state in the
notice of such sale. At any such sale, the Collateral, or portion thereof, to be
sold may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any Collateral if it
shall determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Collateral Agent until the sale price is paid in full by the
purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
be sold again upon like notice. At any public (or, to the extent permitted by
applicable law, private) sale made pursuant to this Section 6, any Secured Party
may bid for or purchase, free from any right of redemption, stay or appraisal on
the part of any Pledgor (all said rights being also hereby waived and released
to the fullest extent permitted by applicable law), the Collateral or any part
thereof offered for sale and may make payment on account thereof by using any
claim then due and payable to it from such Pledgor as a credit against the
purchase price, and it may, upon compliance with the terms of sale, hold, retain
and dispose of such property without further accountability to such Pledgor
therefor. For purposes hereof, (a) a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof, (b) the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and (c) such Pledgor shall not be entitled to the
<PAGE> 6
6
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Collateral Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Collateral Agent may proceed by a suit or suits at law or in equity
to foreclose upon the Collateral and to sell the Collateral or any portion
thereof pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale
pursuant to the provisions of this Section 6 shall be deemed to conform to the
commercially reasonable standards as provided in Section 9-504(3) of the Uniform
Commercial Code as in effect in the State of New York or its equivalent in other
jurisdictions.
SECTION 7. Application of Proceeds of Sale. The proceeds of any sale of
Collateral pursuant to Section 6, as well as any Collateral consisting of cash,
shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses incurred by the
Collateral Agent in connection with such sale or otherwise in connection
with this Agreement, any other Loan Document or any of the Obligations,
including all court costs and the reasonable fees and expenses of its
agents and legal counsel, the repayment of all advances made by the
Collateral Agent hereunder or under any other Loan Document on behalf of
any Pledgor and any other reasonable costs or expenses incurred in
connection with the exercise of any right or remedy hereunder or under any
other Loan Document;
SECOND, to the payment in full of the Obligations (other than
Obligations in respect of indemnification and expense reimbursement
obligations hereunder or under any other Loan Document to the extent such
Obligations are not due and payable) (the amounts so applied to be
distributed among the Secured Parties pro rata in accordance with the
amounts of the Obligations owed to them on the date of any such
distribution); and
THIRD, as promptly as practicable, to the Pledgors, their successors
or assigns, or as a court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 8. Reimbursement of Collateral Agent. (a) Each Pledgor agrees to
pay upon reasonable notice to the Collateral Agent the amount of any and all
reasonable expenses, including the reasonable fees, other charges and
disbursements of its counsel and of any experts or agents, that the Collateral
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Collateral Agent hereunder or (iv) the material failure
by such Pledgor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the other
Loan Documents, each Pledgor agrees to indemnify the Collateral Agent and the
Indemnitees (as defined in Section 9.05 of the Credit Agreement) against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, other
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of the
<PAGE> 7
7
execution, delivery or performance of this Agreement or any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8 shall remain operative and in full force and effect regardless
of the termination of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document or any investigation made by or on behalf of the Collateral Agent or
any other Secured Party. All amounts due under this Section 8 shall be payable
on written demand therefor and shall bear interest at the rate specified in
Section 2.07 of the Credit Agreement.
SECTION 9. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor
hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may reasonably
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Collateral Agent shall have the right, upon the occurrence
and during the continuance of an Event of Default, with full power of
substitution either in the Collateral Agent's name or in the name of such
Pledgor, to ask for, demand, sue for, collect, receive and give acquittance for
any and all moneys due or to become due under and by virtue of any Collateral,
to endorse checks, drafts, orders and other instruments for the payment of money
payable to the Pledgor representing any interest or dividend or other
distribution payable in respect of the Collateral or any part thereof or on
account thereof and to give full discharge for the same, to settle, compromise,
prosecute or defend any action, claim or proceeding with respect thereto, and to
sell, assign, endorse, pledge, transfer and to make any agreement respecting, or
otherwise deal with, the same; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent, or to present or file any claim or notice, or
to take any action with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby.
The Collateral Agent and the other Secured Parties shall be accountable only for
amounts actually received as a result of the exercise of the powers granted to
them herein, and neither they nor their officers, directors, employees or agents
shall be responsible to any Pledgor for any act or failure to act hereunder,
except for their own gross negligence or wilful misconduct.
SECTION 10. Waivers; Amendment. (a) No failure or delay of the Collateral
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and of
the other Secured Parties under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor to any
other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Collateral Agent and the Pledgor or Pledgors with
<PAGE> 8
8
respect to which such waiver, amendment or modification is to apply, subject to
any consent required in accordance with Section 9.08 of the Credit Agreement.
SECTION 11. Securities Act, etc. In view of the position of the Pledgors
in relation to the Pledged Securities, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time in
effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Securities, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Securities could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Pledgor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Securities, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Securities for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion, (a) may proceed to make such a sale whether
or not a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under the Federal Securities
Laws and (b) may approach and negotiate with a single potential purchaser to
effect such sale. Each Pledgor acknowledges and agrees that any such sale might
result in prices and other terms less favorable to the seller than if such sale
were a public sale without such restrictions. In the event of any such sale, the
Collateral Agent shall incur no responsibility or liability for selling all or
any part of the Pledged Securities at a price that the Collateral Agent, in its
sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might have been realized if the sale were deferred until after registration as
aforesaid or if more than a single purchaser were approached. The provisions of
this Section 11 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.
SECTION 12. Registration, etc. Each Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default hereunder, if for
any reason the Collateral Agent desires to sell any of the Pledged Securities of
the Borrower at a public sale, it will, at any time and from time to time, upon
the written request of the Collateral Agent, use its best efforts to take or to
cause the issuer of such Pledged Securities to take such action and prepare,
distribute and/or file such documents, as are required or advisable in the
reasonable opinion of counsel for the Collateral Agent to permit the public sale
of such Pledged Securities. Each Pledgor further agrees to indemnify, defend and
hold harmless the Collateral Agent, each other Secured Party, any underwriter
and their respective officers, directors, affiliates and controlling persons
from and against all loss, liability, reasonable expenses, reasonable costs of
counsel (including, without limitation, reasonable fees and expenses to the
Collateral Agent for legal counsel), and claims (including the costs of
investigation) that they may incur insofar as such loss, liability, expense or
claim arises out of or is based upon any alleged untrue statement of a material
fact contained in any prospectus (or any amendment or supplement thereto) or in
any notification or offering circular, or arises out of or is based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements in any thereof not misleading, except insofar
as the same may have been caused by any untrue statement or omission based upon
information furnished in writing to such Pledgor or the issuer of such Pledged
Securities by the Collateral Agent or any other Secured Party expressly for use
therein. Each Pledgor further agrees, upon such written request referred to
above, to use its best efforts to qualify, file or register, or cause the issuer
of such Pledged Securities to qualify, file or register, any of the Pledged
Securities under the Blue Sky or other securities laws of such states as may be
reasonably requested by the
<PAGE> 9
9
Collateral Agent and keep effective, or cause to be kept effective, all such
qualifications, filings or registrations. Each Pledgor will bear all costs and
expenses of carrying out its obligations under this Section 12. Each Pledgor
acknowledges that there is no adequate remedy at law for failure by it to comply
with the provisions of this Section 12 and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section 12 may be specifically enforced.
SECTION 13. Security Interest Absolute. All rights of the Collateral Agent
hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
indefeasible payment in full of all the Obligations).
SECTION 14. Termination or Release. (a) This Agreement and the security
interests granted hereby shall terminate when all the Obligations have been
indefeasibly paid in full (other than Obligations in respect of indemnification
and expense reimbursement obligations hereunder or under any other Loan Document
to the extent such Obligations are not due and payable) and the Lenders have no
further commitment to lend under the Credit Agreement, the L/C Exposure has been
reduced to zero and the Issuing Bank has no further obligation to issue Letters
of Credit under the Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any Collateral that
is permitted under the Credit Agreement to any person that is not a Pledgor, or,
upon the effectiveness of any written consent to the release of the security
interest granted hereby in any Collateral pursuant to Section 9.08(b) of the
Credit Agreement, the security interest in such Collateral shall be
automatically released.
(c) In connection with any termination or release pursuant to paragraph
(a) or (b), the Collateral Agent shall execute and deliver to any Pledgor, at
such Pledgor's expense, all documents that such Pledgor shall reasonably request
to evidence such termination or release. Any execution and delivery of documents
pursuant to this Section 14 shall be without recourse to or warranty by the
Collateral Agent.
SECTION 15. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Pledgor shall be given to
it at the address for notices set forth on Schedule I in care of the Borrower.
SECTION 16. Further Assurances. Each Pledgor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Collateral Agent its rights and remedies
hereunder.
SECTION 17. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Pledgor that are contained in
this Agreement shall bind and inure to the benefit of its successors and
assigns. This Agreement shall
<PAGE> 10
10
become effective as to any Pledgor when a counterpart hereof executed on behalf
of such Pledgor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Pledgor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Pledgor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Pledgor shall have the right
to assign its rights hereunder or any interest herein or in the Collateral (and
any such attempted assignment shall be void and the Collateral Agent shall not
have the right to assign its rights or obligations hereunder or any interest
herein other than pursuant to any assignment or resignation permitted under the
Credit Agreement), except as expressly contemplated by this Agreement or the
other Loan Documents. If all of the capital stock of a Pledgor is sold,
transferred or otherwise disposed of to a person that is not an Affiliate of the
Borrower pursuant to a transaction permitted by Section 6.05 of the Credit
Agreement, such Pledgor shall be released from its obligations under this
Agreement without further action. This Agreement shall be construed as a
separate agreement with respect to each Pledgor and may be amended, modified,
supplemented, waived or released with respect to any Pledgor without the
approval of any other Pledgor and without affecting the obligations of any other
Pledgor hereunder.
SECTION 18. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by each Pledgor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank, regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan Document is
outstanding and unpaid (other than Obligations in respect of indemnification and
expense reimbursement obligations hereunder or under any other Loan Document to
the extent such Obligations are not due and payable) or the L/C Exposure does
not equal zero and as long as the Commitments and the L/C Commitments have not
been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (BUT WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICT OF LAWS).
SECTION 20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute a single contract, and shall become effective
as provided in Section 17. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart of this Agreement.
SECTION 21. Rules of Interpretation. The rules of interpretation specified
in Section 1.02 of the Credit Agreement shall be applicable to this Agreement.
Section headings used herein are for convenience of reference only, are not part
of this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting this Agreement.
<PAGE> 11
11
SECTION 22. Jurisdiction; Consent to Service of Process. (a) Each Pledgor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that, to the extent permitted by applicable law, all claims in respect of
any such action or proceeding may be heard and determined in such New York State
or, to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent or any other Secured Party may otherwise have to
bring any action or proceeding relating to this Agreement or the other Loan
Documents against any Pledgor or its properties in the courts of any
jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 15. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 23. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 24. Additional Pledgors. Pursuant to Section 5.11 of the Credit
Agreement, each Domestic Subsidiary of the Borrower that was not in existence or
not such a Subsidiary on the date of the Credit Agreement is required to enter
in this Agreement as a Subsidiary Pledgor upon becoming a Subsidiary if such
Subsidiary owns or possesses property of a type that would be considered
Collateral hereunder. Upon execution and delivery by the Collateral Agent and a
Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall become
a Subsidiary Pledgor hereunder with the same force and effect as if originally
named as a Subsidiary Pledgor herein. The execution and delivery of such
instrument shall not require the consent of any Pledgor hereunder. The rights
and obligations of each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Pledgor as a party to this
Agreement.
<PAGE> 12
12
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
NFC CASTINGS, INC.,
by
-----------------------------
Name:
Title:
NC MERGER COMPANY,
by
-----------------------------
Name:
Title:
NEENAH FOUNDRY COMPANY,
by
-----------------------------
Name:
Title:
HARTLEY CONTROLS CORPORATION,
by
-----------------------------
Name:
Title:
NEENAH TRANSPORT, INC.,
by
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral Agent,
by
------------------------------
Name:
Title:
<PAGE> 13
Schedule I to the
Pledge Agreement
SUBSIDIARY PLEDGORS
Name
<PAGE> 14
Schedule II to the
Pledge Agreement
CAPITAL STOCK
Number and
Number of Registered Class of Percentage
Issuer Certificate Owner Shares of Shares
- ------ ----------- ----- ------ ---------
DEBT SECURITIES
Principal Date of Maturity
Pledgor Issuer Amount Note Date
- ------- ------ ------ ---- ----
<PAGE> 15
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of [ ], to the PLEDGE AGREEMENT dated
as of April 30, 1997, among NC MERGER COMPANY, a Wisconsin
corporation (the "Borrower"), NFC CASTINGS, INC., a Delaware
corporation ("Holdings") and each subsidiary of the Borrower listed
on Schedule I to such Pledge Agreement (each such subsidiary,
individually, a "Subsidiary Pledgor" and, collectively, the
"Subsidiary Pledgors"; the Borrower, Holdings and Subsidiary
Pledgors are referred to collectively herein as the "Pledgors") and
THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"),
as collateral agent (in such capacity, the "Collateral Agent") for
the Secured Parties (as defined in the Credit Agreement referred to
below).
A. Reference is made to (a) the Credit Agreement dated as of April 30,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, the lenders from time to time
party thereto (the "Lenders"), Chase, as administrative agent for the Lenders,
Collateral Agent and issuing bank (in such capacity, the "Issuing Bank"), (b)
the Parent Guarantee Agreement dated as of April 30, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Parent Guarantee
Agreement"), between Holdings and the Collateral Agent and (c) the Subsidiary
Guarantee Agreement dated as of April 30, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Subsidiary Guarantee Agreement"; and,
collectively with the Parent Guarantee Agreement, the "Guarantee Agreements")
among the Subsidiary Guarantors and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
C. The Pledgors have entered into the Pledge Agreement in order to induce
the Lenders to make Loans and the Issuing Bank to issue Letters of Credit.
Pursuant to Section 5.11 of the Credit Agreement, each Domestic Subsidiary of
the Borrower that was not in existence or not such a Subsidiary on the date of
the Credit Agreement is required to enter into the Pledge Agreement as a
Subsidiary Pledgor upon becoming such a Subsidiary if such Subsidiary owns or
possesses property of a type that would be considered Collateral under the
Pledge Agreement. Section 24 of the Pledge Agreement provides that such
Subsidiaries may become Subsidiary Pledgors under the Pledge Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary (the "New Pledgor") is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Subsidiary
Pledgor under the Pledge Agreement in order to induce the Lenders to make
additional Loans and the Issuing Bank to issue additional Letters of Credit and
as consideration for Loans previously made and Letters of Credit previously
issued.
Accordingly, the Collateral Agent and the New Pledgor agree as follows:
SECTION 1. In accordance with Section 24 of the Pledge Agreement, the New
Pledgor by its signature below becomes a Pledgor under the Pledge Agreement with
the same force and effect as if originally named therein as a Pledgor and the
New Pledgor hereby agrees (a) to all the terms and provisions of the Pledge
Agreement applicable to it as a Pledgor thereunder and (b) represents and
warrants that the representations and warranties made by it as a Pledgor
thereunder are true and correct on and as of the date hereof. In furtherance of
the foregoing, the New Pledgor, as security for the payment and performance in
full of the Obligations (as defined in the Pledge Agreement), does hereby create
and grant to the Collateral Agent, its successors and assigns, for the benefit
of the Secured Parties, their successors and assigns, a security interest in and
lien on all of the New Pledgor's right, title and interest in and to the
Collateral (as defined in the Pledge Agreement) of the New Pledgor. Each
reference to a "Subsidiary Pledgor" or a "Pledgor" in the Pledge Agreement shall
be deemed to include the New Pledgor. The Pledge Agreement is hereby
incorporated herein by reference.
<PAGE> 16
2
SECTION 2. The New Pledgor represents and warrants to the Collateral Agent
and the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Pledgor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that set forth
on Schedule I attached hereto is a true and correct schedule of all its Pledged
Securities.
SECTION 5. Except as expressly supplemented hereby, the Pledge Agreement
shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (BUT WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICT OF LAWS).
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
The parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 15 of the Pledge Agreement. All communications
and notices hereunder to the New Pledgor shall be given to it at the address set
forth under its signature hereto in care of the Borrower.
SECTION 9. The New Pledgor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly
executed this Supplement to the Pledge Agreement as of the day and year first
above written.
[Name of New Pledgor],
by
Name:
<PAGE> 17
3
Title:
Address:
THE CHASE MANHATTAN BANK, as Collateral
Agent,
by
-----------------------------
Name:
Title:
<PAGE> 18
Schedule I to
Supplement No.___
to the Pledge Agreement
Pledged Securities of the New Pledgor
CAPITAL STOCK
Number and
Number of Registered Class of Percentage
Issuer Certificate Owner Shares of Shares
- ------ ----------- ----- ------ ---------
DEBT SECURITIES
Principal Date of Maturity
Pledgor Issuer Amount Note Date
- ------- ------ ------ ---- ----
<PAGE> 1
EXHIBIT 10.12
SUBSIDIARY GUARANTEE AGREEMENT dated as of April 30, 1997,
among each of the subsidiaries listed on Schedule I hereto (each
such subsidiary, individually, a "Guarantor" and, collectively, the
"Guarantors") of NC MERGER COMPANY, a Wisconsin corporation (the
"Borrower"), and THE CHASE MANHATTAN BANK, a New York banking
corporation ("Chase"), as collateral agent (the "Collateral Agent")
for the Secured Parties (as defined in the Credit Agreement referred
to below).
Reference is made to the Credit Agreement dated as of April 30, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, NFC Castings, Inc. ("Holdings"), the lenders
from time to time party thereto (the "Lenders"), and Chase, as administrative
agent for the Lenders, Collateral Agent and as issuing bank (in such capacity,
the "Issuing Bank"). Capitalized terms used herein and not defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Guarantors is a wholly owned Subsidiary of the
Borrower and acknowledges that it will derive substantial benefit from the
making of the Loans by the Lenders, and the issuance of the Letters of Credit by
the Issuing Bank. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit are conditioned on, among other things,
the execution and delivery by the Guarantors of a Subsidiary Guarantee Agreement
in the form hereof. As consideration therefor and in order to induce the Lenders
to make Loans and the Issuing Bank to issue Letters of Credit, the Guarantors
are willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally guarantees, jointly
with the other Guarantors and severally, as a primary obligor and not merely as
a surety, (a) the due and punctual payment of (i) the principal of and premium,
if any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including reasonable fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Secured Parties under
the Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Loan Parties under or pursuant to the Credit Agreement and the other Loan
Documents and (c) unless otherwise agreed upon in writing by the applicable
Lender party thereto, all obligations of the Borrower, monetary or otherwise,
under each Interest Rate Protection Agreement entered into with a counterparty
that was a Lender at the time such Interest Rate Protection Agreement was
entered into (all the monetary and other obligations referred to in the
preceding clauses (a) through (c) being collectively called the "Obligations").
Each Guarantor further agrees that the Obligations may be extended or renewed,
in whole or in part, without notice to or further assent from it, and that it
will remain bound upon its guarantee notwithstanding any extension or renewal of
any Obligation.
Anything contained in this Agreement to the contrary notwithstanding, the
obligations of each Guarantor hereunder shall be limited to a maximum aggregate
amount equal to the greatest amount that
<PAGE> 2
2
would not render such Guarantor's obligations hereunder subject to avoidance as
a fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any provisions of applicable state law (collectively, the
"Fraudulent Transfer Laws"), in each case after giving effect to all other
liabilities of such Guarantor, contingent or otherwise, that are relevant under
the Fraudulent Transfer Laws (specifically excluding, however, any liabilities
of such Guarantor (a) in respect of intercompany indebtedness to the Borrower or
Affiliates of the Borrower to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by such Guarantor hereunder and
(b) under any Guarantee of senior unsecured indebtedness or Indebtedness
subordinated in right of payment to the Obligations which Guarantee contains a
limitation as to maximum amount similar to that set forth in this paragraph,
pursuant to which the liability of such Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
contribution, reimbursement, indemnity or similar rights of such Guarantor
pursuant to (i) applicable law or (ii) any agreement providing for an equitable
allocation among such Guarantor and other Affiliates of the Borrower of
obligations arising under Guarantees by such parties (including the Indemnity,
Subrogation and Contribution Agreement).
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To the fullest
extent permitted by applicable law, the obligations of each Guarantor hereunder
shall not be affected by (a) the failure of the Collateral Agent or any other
Secured Party to assert any claim or demand or to enforce or exercise any right
or remedy against the Borrower or any other Guarantor under the provisions of
the Credit Agreement, any other Loan Document or otherwise, (b) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of this Agreement, any other Loan Document, any Guarantee or any
other agreement, including with respect to any other Guarantor under this
Agreement or (c) the failure to perfect any security interest in, or the release
of, any of the security held by or on behalf of the Collateral Agent or any
other Secured Party.
SECTION 3. Security. Each of the Guarantors authorizes the Collateral
Agent and each of the other Secured Parties, to (a) take and hold security for
the payment of this Guarantee and the Obligations and exchange, enforce, waive
and release any such security, (b) apply such security and direct the order or
manner of sale thereof as they in their sole discretion may reasonably determine
and (c) release or substitute any one or more endorsees, other guarantors of
other obligors.
SECTION 4. Guarantee of Payment. Each Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of the Borrower or any
other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of
each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in
full in cash of the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Collateral Agent or any other Secured
Party to assert any claim or demand or to enforce any remedy under the Credit
Agreement, any other Loan Document or any other agreement, by any waiver or
modification of any provision of any thereof, by any default, failure or delay,
wilful or otherwise, in the performance of the Obligations, or by any other act
or omission that may or might in any manner or to any
<PAGE> 3
3
extent vary the risk of any Guarantor or that would otherwise operate as a
discharge of each Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted by
applicable law, each of the Guarantors waives any defense based on or arising
out of any defense of the Borrower or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower, other than the final and indefeasible payment in full
in cash of the Obligations. The Collateral Agent and the other Secured Parties
may, at their election, foreclose on any security held by one or more of them by
one or more judicial or nonjudicial sales, accept an assignment of any such
security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
guarantor or exercise any other right or remedy available to them against the
Borrower or any other guarantor, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Obligations have
been fully, finally and indefeasibly paid in cash. Pursuant to applicable law,
each of the Guarantors waives any defense arising out of any such election even
though such election operates, pursuant to applicable law, to impair or to
extinguish any right of reimbursement or subrogation or other right or remedy of
such Guarantor against the Borrower or any other Guarantor or guarantor, as the
case may be, or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
or such other Secured Party as designated thereby in cash the amount of such
unpaid Obligations. Upon payment by any Guarantor of any sums to the Collateral
Agent or any Secured Party as provided above, all rights of such Guarantor
against the Borrower arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full in cash of all the Obligations. In addition, any indebtedness of the
Borrower now or hereafter held by any Guarantor is hereby subordinated in right
of payment to the prior payment in full of the Obligations. If any amount shall
erroneously be paid to any Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of the Borrower, such amount shall be held in trust for the benefit
of the Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 8. Information. Each of the Guarantors assumes all responsibility
for being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that such
Guarantor assumes and incurs hereunder, and agrees that none of the Collateral
Agent or the other Secured Parties will have any duty to advise any of the
Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 9. Representations and Warranties. Each of the Guarantors
represents and warrants as to itself that all representations and warranties
relating to it contained in the Credit Agreement are true and correct.
SECTION 10. Termination. The Guarantees made hereunder (a) shall terminate
when all the Obligations have been indefeasibly paid in full and the Lenders
have no further commitment to lend under the Credit Agreement, the L/C Exposure
has been reduced to zero and the Issuing Bank has no further obligation to issue
Letters of Credit under the Credit Agreement and (b) shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded
<PAGE> 4
4
or must otherwise be restored by any Secured Party or any Guarantor upon the
bankruptcy or reorganization of the Borrower, any Guarantor or otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
as to any Guarantor when a counterpart hereof executed on behalf of such
Guarantor shall have been delivered to the Collateral Agent, and a counterpart
hereof shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Guarantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Guarantor shall have the right
to assign its rights or obligations hereunder or any interest herein (and any
such attempted assignment shall be void). If all of the capital stock of a
Guarantor is sold, transferred or otherwise disposed of pursuant to a
transaction permitted by Section 6.05 of the Credit Agreement, such Guarantor
shall be released from its obligations under this Agreement without further
action. This Agreement shall be construed as a separate agreement with respect
to each Guarantor and may be amended, modified, supplemented, waived or released
with respect to any Guarantor without the approval of any other Guarantor and
without affecting the obligations of any other Guarantor hereunder.
SECTION 12. Waivers; Amendment. (a) No failure or delay of the Collateral
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and of
the other Secured Parties under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Guarantors with respect to which such waiver, amendment or modification relates
and the Collateral Agent, with the prior written consent of the Required Lenders
(except as otherwise provided in the Credit Agreement).
SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (BUT WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICT OF LAWS).
SECTION 14. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to each Guarantor shall be given to it in
care of the Borrower at its address set forth in Schedule I.
SECTION 15. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by the Guarantors herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as
<PAGE> 5
5
long as the principal of or any accrued interest on any Loan or any other fee or
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid or the L/C Exposure does not equal zero and as long as the
Commitments and the L/C Commitment have not been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 16. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 11. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of interpretation specified
in Section 1.02 of the Credit Agreement shall be applicable to this Agreement.
SECTION 18. Jurisdiction; Consent to Service of Process. (a) Each
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Guarantor or its properties in the courts of any jurisdiction.
(b) Each Guarantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 19. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
<PAGE> 6
6
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 19.
SECTION 20. Additional Guarantors. Pursuant to Section 5.11 of the Credit
Agreement, each Domestic Subsidiary of the Borrower that was not in existence or
not such a Subsidiary on the date of the Credit Agreement is required to enter
into this Agreement as a Guarantor upon becoming such a Subsidiary. Upon
execution and delivery after the date hereof by the Collateral Agent and such a
Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall become
a Guarantor hereunder with the same force and effect as if originally named as a
Guarantor herein. The execution and delivery of any instrument adding an
additional Guarantor as a party to this Agreement shall not require the consent
of any other Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Guarantor as a party to this Agreement.
<PAGE> 7
7
SECTION 21. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Secured Party is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other Indebtedness at any time owing by such Secured Party to
or for the credit or the account of any Guarantor against any or all the
obligations of such Guarantor now or hereafter existing under this Agreement and
the other Loan Documents held by such Secured Party, irrespective of whether or
not such Secured Party shall have made any demand under this Agreement or any
other Loan Document and although such obligations may be unmatured. The rights
of each Secured Party under this Section 21 are in addition to other rights and
remedies (including other rights of setoff) which such Secured Party may have.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
NEENAH FOUNDRY COMPANY,
by
----------------------------------
Name:
Title:
HARTELY CONTROLS CORPORATION,
by
----------------------------------
Name:
Title:
NEENAH TRANSPORT, INC.,
by
----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Collateral
Agent,
by
Name:
Title:
<PAGE> 8
Schedule I to the
Subsidiary Guarantee Agreement
GUARANTORS
<TABLE>
<CAPTION>
Guarantor Address
<S> <C> <C>
Neenah Foundry Company 2121 Brooks Avenue
Neenah, WI 54956
Hartley Controls Corporation 2400 Holly Road
Neenah, WI 54956
Neenah Transport, Inc. 2121 Brooks Avenue
Neenah, WI 54956
</TABLE>
<PAGE> 9
Annex 1 to the
Subsidiary Guarantee Agreement
SUPPLEMENT NO. dated as of
[ ], to the Subsidiary Guarantee Agreement
dated as of April 30, 1997, among each of the
subsidiaries listed on Schedule I thereto (each such
subsidiary, individually, a "Guarantor" and,
collectively, the "Guarantors") of NC MERGER COMPANY,
a Wisconsin corporation (the "Borrower"), and THE
CHASE MANHATTAN BANK, a New York banking corporation
("Chase"), as collateral agent (the "Collateral
Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).
A. Reference is made to the Credit Agreement dated as of April 30, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, NFC Castings, Inc. ("Holdings"), the lenders
from time to time party thereto (the "Lenders"), and Chase, as administrative
agent for the Lenders, Collateral Agent and issuing bank (in such capacity, the
"Issuing Bank"). Capitalized terms used herein and not defined herein shall have
the meanings assigned to such terms in the Credit Agreement.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Subsidiary Guarantee Agreement
and the Credit Agreement.
C. The Guarantors have entered into the Subsidiary Guarantee Agreement
in order to induce the Lenders to make Loans and the Issuing Bank to issue
Letters of Credit. Pursuant to Section 5.11 of the Credit Agreement, each
Domestic Subsidiary of the Borrower that was not in existence or not such a
Subsidiary on the date of the Credit Agreement is required to enter into the
Subsidiary Guarantee Agreement as a Guarantor upon becoming such a Subsidiary.
Section 20 of the Subsidiary Guarantee Agreement provides that additional
Subsidiaries of the Borrower may become Guarantors under the Subsidiary
Guarantee Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary of the Borrower (the "New
Guarantor") is executing this Supplement in accordance with the requirements of
the Credit Agreement to become a Guarantor under the Subsidiary Guarantee
Agreement in order to induce the Lenders to make additional Loans and the
Issuing Bank to issue additional Letters of Credit and as consideration for
Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 20 of the Subsidiary Guarantee
Agreement, the New Guarantor by its signature below becomes a Guarantor under
the Guarantee Agreement with the same force and effect as if originally named
therein as a Guarantor and the New Guarantor hereby (a) agrees to all the terms
and provisions of the Subsidiary Guarantee Agreement applicable to it as a
Guarantor thereunder and (b) represents and warrants that the representations
and warranties made by it as a Guarantor thereunder are true and correct on and
as of the date hereof. Each reference to a "Guarantor" in the Subsidiary
Guarantee Agreement shall be deemed to include the New Guarantor. The Subsidiary
Guarantee Agreement is hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Guarantor and the Collateral
Agent. Delivery of an executed
<PAGE> 10
2
signature page to this Supplement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Guarantee
Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (BUT WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICT OF LAWS).
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Subsidiary Guarantee Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision hereof in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other jurisdiction). The
parties hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 14 of the Subsidiary Guarantee Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature below, with a copy to the Borrower.
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, disbursements and other charges of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have
duly executed this Supplement to the Subsidiary Guarantee Agreement as of the
day and year first above written.
[Name Of New Guarantor],
by
---------------------------------------
Name:
Title:
Address:
------------------------------
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
---------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.13
PARENT GUARANTEE AGREEMENT dated as of April
30, 1997, between NFC CASTINGS, INC., a Delaware
corporation (the "Guarantor") and THE CHASE MANHATTAN
BANK, a New York banking corporation ("Chase"), as
collateral agent (the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement
referred to below).
Reference is made to the Credit Agreement dated as of April 30, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among NC Merger Company, a Wisconsin corporation (the "Borrower"),
the Guarantor, the lenders from time to time party thereto (the "Lenders") and
Chase, as administrative agent for the Lenders, Collateral Agent and issuing
bank (in such capacity, the "Issuing Bank"). Capitalized terms used herein and
not defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. As the record owner of all of the issued and outstanding
capital stock of the Borrower, the Guarantor acknowledges that it will derive
substantial benefit from the making of the Loans by the Lenders and the issuance
of the Letters of Credit by the Issuing Bank. The obligations of the Lenders to
make Loans and of the Issuing Bank to issue Letters of Credit are conditioned
on, among other things, the execution and delivery by the Guarantor of a Parent
Guarantee Agreement in the form hereof. As consideration therefor and in order
to induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit, the Guarantor is willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. The Guarantor unconditionally guarantees, as a
primary obligor and not merely as a surety, (a) the due and punctual payment of
(i) the principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, (ii) each payment
required to be made by the Borrower under the Credit Agreement in respect of any
Letter of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral and (iii) all other monetary obligations, including reasonable fees,
costs, expenses and indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), of the Loan
Parties to the Secured Parties under the Credit Agreement and the other Loan
Documents, (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Loan Parties under or pursuant to the Credit
Agreement and the other Loan Documents and (c) unless otherwise agreed upon in
writing by the applicable Lender party thereto, all obligations of the Borrower,
monetary or otherwise, under each Interest Rate Protection Agreement entered
into with a counterparty that was a Lender at the time such Interest Rate
Protection Agreement was entered into (all the monetary and other obligations
referred to in the preceding clauses (a) through (c) being collectively called
the "Obligations"). The Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice to or further assent
from it, and that it will remain bound upon its guarantee not withstanding any
extension or renewal of any Obligation.
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, the Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To
<PAGE> 2
2
the fullest extent permitted by applicable law, the obligations of the Guarantor
hereunder shall not be affected by (a) the failure of the Collateral Agent or
any other Secured Party to assert any claim or demand or to enforce or exercise
any right or remedy against the Borrower or any other guarantor of the
Obligations under the provisions of the Credit Agreement, any other Loan
Document or otherwise, (b) any rescission, waiver, amendment or modification of,
or any release from any of the terms or provisions of this Agreement, any other
Loan Document, any Guarantee or any other agreement, including with respect to
any other guarantor of the Obligations or (c) the failure to perfect any
security interest in, or the release of, any of the security held by or on
behalf of the Collateral Agent or any other Secured Party.
SECTION 3. Security. The Guarantor authorizes the Collateral Agent and
each of the other Secured Parties to (a) take and hold security for the payment
of this Guarantee and the Obligations and exchange, enforce, waive and release
any such security, (b) apply such security and direct the order or manner of
sale thereof as they in their sole discretion may reasonably determine and (c)
release or substitute any one or more endorsees, other guarantors or other
obligors.
SECTION 4. Guarantee of Payment. The Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives to the fullest extent permitted by applicable law any right to require
that any resort be had by the Collateral Agent or any other Secured Party to any
of the security held for payment of the Obligations or to any balance of any
deposit account or credit on the books of the Collateral Agent or any other
Secured Party in favor of the Borrower or any other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations
of the Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in
full in cash of the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of the Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Collateral Agent or any other Secured
Party to assert any claim or demand or to enforce any remedy under the Credit
Agreement, any other Loan Document or any other agreement, by any waiver or
modification of any provision of any thereof, by any default, failure or delay,
wilful or otherwise, in the performance of the Obligations, or by any other act
or omission that may or might in any manner or to any extent vary the risk of
the Guarantor or that would otherwise operate as a discharge of the Guarantor as
a matter of law or equity (other than the indefeasible payment in full in cash
of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, the Guarantor waives any defense based on or arising out of
any defense of the Borrower or the unenforceability of the Obligations or any
part thereof from any cause, or the cessation from any cause of the liability of
the Borrower, other than the final and indefeasible payment in full in cash of
the Obligations. The Collateral Agent and the other Secured Parties may, at
their election, foreclose on any security held by one or more of them by one or
more judicial or nonjudicial sales, accept an assignment of any such security in
lieu of foreclosure, compromise or adjust any part of the Obligations, make any
other accommodation with the Borrower or any other guarantor or exercise any
other right or remedy available to them against the Borrower or any other
guarantor, without affecting or impairing in any way the liability of the
Guarantor hereunder except to the extent the Obligations have been fully,
finally and indefeasibly paid in cash. To the fullest extent permitted by
applicable law, the Guarantor waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other right
or remedy of the Guarantor against the Borrower or any other guarantor, as the
case may be, or any security.
<PAGE> 3
3
SECTION 7. Agreement to Pay; Subrogation. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against the Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, the Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
or such other Secured Party as designated thereby in cash the amount of such
unpaid Obligations. Upon payment by the Guarantor of any sums to the Collateral
Agent or any Secured Party as provided above, all rights of the Guarantor
against the Borrower arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full in cash of all the Obligations. In addition, any indebtedness of the
Borrower now or hereafter held by the Guarantor is hereby subordinated in right
of payment to the prior payment in full of the Obligations. If any amount shall
erroneously be paid to the Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of the Borrower, such amount shall be held in trust for the benefit
of the Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 8. Information. The Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that the Guarantor
assumes and incurs hereunder, and agrees that none of the Collateral Agent or
the other Secured Parties will have any duty to advise the Guarantor of
information known to it or any of them regarding such circumstances or risks.
SECTION 9. Termination. The Guarantee made hereunder (a) shall
terminate when all the Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit Agreement, the L/C
Exposure has been reduced to zero and the Issuing Bank has no further obligation
to issue Letters of Credit under the Credit Agreement and (b) shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any Obligation is rescinded or must otherwise be restored
by any Secured Party or the Guarantor upon the bankruptcy or reorganization of
the Borrower, the Guarantor or otherwise.
SECTION 10. Binding Agreement; Assignments. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Guarantor that are contained in this
Agreement shall bind and inure to the benefit of each party hereto and their
respective successors and assigns. This Agreement shall become effective when a
counterpart hereof executed on behalf of the Guarantor shall have been delivered
to the Collateral Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be binding upon the
Guarantor and the Collateral Agent and their respective successors and assigns,
and shall inure to the benefit of the Guarantor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
the Guarantor shall not have the right to assign its rights or obligations
hereunder or any interest herein (and any such attempted assignment shall be
void) and the Collateral Agent shall not have the right to assign its rights or
obligations hereunder or any interest herein other than pursuant to any
assignment or resignation permitted under the Credit Agreement.
SECTION 11. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents
<PAGE> 4
4
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by the Guarantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on the Guarantor in any case shall entitle the
Guarantor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Guarantor and the Collateral Agent, with the prior written consent of the
Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (BUT WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICT OF LAWS).
SECTION 13. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to the Guarantor shall be given to it at
2121 Brooks Avenue, Neenah, WI 54956.
SECTION 14. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Guarantors herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or the L/C Exposure does not equal zero and as long as
the Commitments and the L/C Commitment have not been terminated.
SECTION 15. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective as
provided in Section 10. Delivery of an executed signature page to this Agreement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 16. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
NFC CASTINGS, INC., as Guarantor,
by
Name:
Title:
<PAGE> 5
5
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
Name:
Title:
<PAGE> 1
EXHIBIT 10.14
SECURITY AGREEMENT dated as of April 30,
1997, among NC MERGER COMPANY, a Wisconsin
corporation (the "Borrower"), each subsidiary of the
Borrower listed on Schedule I hereto (each such
subsidiary, individually, a "Subsidiary Guarantor"
and, collectively, the "Subsidiary Guarantors"; the
Subsidiary Guarantors and the Borrower are referred
to collectively herein as the "Grantors") and THE
CHASE MANHATTAN BANK, a New York banking corporation
("Chase"), as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as
defined herein).
Reference is made to the Credit Agreement dated as of April 30, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, NFC Castings, Inc. ("Holdings"), the lenders
from time to time party thereto (the "Lenders") and Chase, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent"), Collateral
Agent and issuing bank (in such capacity, the "Issuing Bank").
The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Holdings and each Subsidiary Guarantor has agreed to
guarantee, among other things, all the obligations of the Borrower under the
Credit Agreement. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Grantors of an agreement in the form
hereof to secure (a) the due and punctual payment by the Borrower of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including reasonable fees, costs, expenses
and indemnities, whether primary, secondary, direct, contingent, fixed or
otherwise (including monetary obligations incurred during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Borrower to the Secured
Parties under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each Loan Party under or
pursuant to this Agreement and the other Loan Documents and (d) the due and
punctual payment and performance of all obligations of the Borrower under each
Interest Rate Protection Agreement entered into with any counterparty that was a
Lender at the time such Interest Rate Protection Agreement was entered into (all
the monetary and other obligations described in the preceding clauses (a)
through (d) being collectively called the "Obligations").
Accordingly, the Grantors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
<PAGE> 2
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ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:
"Account Debtor" shall mean any person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.
"Accounts" shall mean any and all right, title and interest of any
Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.
"Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
"Collateral" shall mean all (a) Accounts Receivable, (b) Documents, (c)
Equipment, (d) General Intangibles, (e) Inventory, (f) cash and cash accounts
(including the Concentration Account, the Collection Deposit Accounts and the
General Fund Account) and (g) Proceeds.
"Collection Deposit Account" shall mean a lockbox account of a Grantor
maintained for the benefit of the Secured Parties with the Collateral Agent or
with a Sub-Agent pursuant to a Lockbox and Depository Agreement.
"Concentration Account" shall mean the cash collateral account
established at the office of Chase located at 270 Park Avenue, New York, NY
10017, in the name of the Collateral Agent, Account No. [ ].
"Copyright License" shall mean any written agreement, now or hereafter
in effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule II.
"Credit Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
<PAGE> 3
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"Documents" shall mean all instruments, files, records, ledger sheets
and documents covering or relating to any of the Collateral.
"Equipment" shall mean all equipment, furniture and furnishings, and
all tangible personal property similar to any of the foregoing, including tools,
parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor. The term Equipment shall include Fixtures.
"Fixtures" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"General Fund Account" shall mean the general fund account established
at the office of Chase located at 270 Park Avenue, New York, NY 10017, in the
name of the Borrower, Account No. [ ].
"General Intangibles" shall mean all choses in action and causes of
action and all other assignable intangible personal property of any Grantor of
every kind and nature (other than Accounts Receivable) now owned or hereafter
acquired by any Grantor, including corporate or other business records,
indemnification claims, contract rights (including rights under leases, whether
entered into as lessor or lessee, Interest Rate Protection Agreements and other
agreements), Intellectual Property, goodwill, registrations, franchises, tax
refund claims and any letter of credit, guarantee, claim, security interest or
other security held by or granted to any Grantor to secure payment by an Account
Debtor of any of the Accounts Receivable.
"Intellectual Property" shall mean all intellectual and similar
property of any Grantor of every kind and nature now owned or hereafter acquired
by any Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.
"Inventory" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of any Grantor.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule III (other than those license agreements in
existence on the date hereof and listed on Schedule III and those license
agreements entered into after the date hereof, which by their terms prohibit
assignment or a grant of a security interest by such Grantor as licensee
thereunder).
"Lockbox and Depository Agreement" shall mean a Lockbox and Depository
Agreement substantially in the form of Annex 1 hereto among the Borrower, the
Collateral Agent and a Sub-Agent.
"Lockbox System" shall have the meaning assigned to such term in
Section 5.01.
"Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
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4
"Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent, now or hereafter owned by any Grantor or which any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.
"Patents" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all letters patent of the United States or any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including
those listed on Schedule IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate substantially in the
form of Annex 2 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer and
the chief legal officer of the Borrower.
"Proceeds" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession of
any Collateral and any payment received from any insurer or other person or
entity as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include (a) all cash and negotiable instruments received
by or held on behalf of the Collateral Agent pursuant to the Lockbox System, (b)
any claim of any Grantor against any third party for (and the right to sue and
recover for and the rights to damages or profits due or accrued arising out of
or in connection with) (i) past, present or future infringement of any Patent
now or hereafter owned by any Grantor, or licensed under a Patent License, (ii)
past, present or future infringement or dilution of any Trademark now or
hereafter owned by any Grantor or licensed under a Trademark License or injury
to the goodwill associated with or symbolized by any Trademark now or hereafter
owned by any Grantor, (iii) past, present or future breach of any License and
(iv) past, present or future infringement of any Copyright now or hereafter
owned by any Grantor or licensed under a Copyright License and (c) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) the Issuing Bank, (e) each counterparty to
an Interest Rate Protection Agreement entered into with the Borrower if such
counterparty was a Lender at the time the Interest Rate Protection Agreement was
entered into, (f) the beneficiaries of each indemnification obligation
undertaken by any Grantor under any Loan Document and (g) the successors and
assigns of each of the foregoing.
"Security Interest" shall have the meaning assigned to such term in
Section 2.01.
"Sub-Agent" shall mean a financial institution which shall have
delivered to the Collateral Agent an executed Lockbox and Depository Agreement.
"Trademark License" shall mean any written agreement, now or hereafter
in effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Grantor or which any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Grantor under any such
agreement.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious
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5
business names, trade styles, trade dress, logos, other source or business
identifiers, designs and general intangibles of like nature, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith, including
registrations and registration applications in the United States Patent and
Trademark Office, any State of the United States or any similar offices in any
other country or any political subdivision thereof, and all extensions or
renewals thereof, including those listed on Schedule V, (b) all goodwill
associated therewith or symbolized thereby and (c) all other assets, rights and
interests that uniquely reflect or embody such goodwill.
SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right, title and interest
in, to and under the Collateral (the "Security Interest"). Without limiting the
foregoing, the Collateral Agent is hereby authorized to file one or more
financing statements (including fixture filings), continuation statements,
filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other
country) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.
SECTION 2.02. No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Collateral.
ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and valid
rights in and title to the Collateral with respect to which it has purported to
grant a Security Interest hereunder and has full power and authority to grant to
the Collateral Agent the Security Interest in such Collateral pursuant hereto
and to execute, deliver and perform its obligations in accordance with the terms
of this Agreement, without the consent or approval of any other person other
than any consent or approval which has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Schedule 6 to the Perfection Certificate,
<PAGE> 6
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which are all the filings, recordings and registrations (other than filings
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks and Copyrights) that
are necessary to publish notice of and protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral in
which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
(b) Each Grantor represents and warrants that fully executed security
agreements in the form hereof and containing a description of all Collateral
consisting of Intellectual Property have been delivered to the Collateral Agent
for recording by the United States Patent and Trademark Office and the United
States Copyright Office pursuant to 35 U.S.C. Section 261, 15 U.S.C. Section
1060 or 17 U.S.C. Section 205 and the regulations thereunder, as applicable, and
otherwise as may be required pursuant to the laws of any other necessary
jurisdiction, to protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the ratable
benefit of the Secured Parties) in respect of all Collateral consisting of
Patents, Trademarks and Copyrights in which a security interest may be perfected
by filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, or in any other
necessary jurisdiction, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary (other than
such actions as are necessary to perfect the Security Interest with respect to
any Collateral consisting of Patents, Trademarks and Copyrights (or registration
or application for registration thereof) acquired or developed after the date
hereof).
SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions and
(c) a security interest that shall be perfected in all Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, within the three month period
(commencing as of the date hereof) pursuant to 35 U.S.C. Section 261 or 15
U.S.C. Section 1060 or the one month period (commencing as of the date hereof)
pursuant to 17 U.S.C. Section 205 and otherwise as may be required pursuant to
the laws of any other necessary jurisdiction. The Security Interest is and shall
be prior to any other Lien on any of the Collateral, other than Liens expressly
permitted to be prior to the Security Interest pursuant to Section 6.02 of the
Credit Agreement (including any such Lien expressly permitted pursuant to such
Section 6.02 in respect of which a release in a form acceptable to the
Collateral Agent has been delivered to the Collateral Agent).
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement (including any such Lien
expressly permitted pursuant to such Section 6.02 in respect of which a release
in a form acceptable to the Collateral Agent has been delivered to the
Collateral Agent). The Grantor has not filed or consented to the filing of (a)
any financing statement or analogous document under the Uniform Commercial Code
or any other applicable laws covering any Collateral, (b) any assignment in
which any Grantor assigns any Collateral or any security agreement or similar
instrument covering any Collateral with the United States Patent and Trademark
Office or the United States Copyright Office or (c) any assignment in which any
Grantor assigns any Collateral or any security agreement or similar instrument
covering any Collateral with any foreign governmental, municipal or other
office, which financing statement or analogous document, assignment, security
agreement or similar instrument is still in effect, except, in each case, for
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Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement
(including any such Lien expressly permitted pursuant to such Section 6.02 in
respect of which a release in a form acceptable to the Collateral Agent has been
delivered to the Collateral Agent).
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. (a) Each Grantor agrees promptly to notify the Collateral Agent in
writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains original books or records
relating to Collateral owned by it or any office or facility at which Collateral
owned by it is located (including the establishment of any such new office or
facility), (iii) in its identity or corporate structure or (iv) in its Federal
Taxpayer Identification Number. Each Grantor agrees not to effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Collateral Agent to continue at all times following such change to have a
valid, legal and perfected first priority security interest in all the
Collateral. Each Grantor agrees promptly to notify the Collateral Agent if any
material portion of the Collateral owned or held by such Grantor is damaged or
destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Collateral Agent
may reasonably request, promptly to prepare and deliver to the Collateral Agent
a duly certified schedule or schedules in form and detail reasonably
satisfactory to the Collateral Agent showing the identity, amount and location
of any and all Collateral.
SECTION 4.02. Periodic Certification. Each year, at the time of
delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.04 of the Credit Agreement, the Borrower shall
deliver to the Collateral Agent a certificate executed by a Financial Officer
and the chief legal officer of the Borrower (a) setting forth the information
required pursuant to Section 2 of the Perfection Certificate or confirming that
there has been no change in such information since the date of such certificate
or the date of the most recent certificate delivered pursuant to this Section
4.02 and (b) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (a) above to the extent necessary to
protect and perfect the Security Interest for a period of not less than 18
months after the date of such certificate (except as noted therein with respect
to any continuation statements to be filed within such period). Each certificate
delivered pursuant to this Section 4.02 shall identify in the format of Schedule
II, III, IV or V, as applicable, all Intellectual Property of any Grantor in
existence on the date thereof and not then listed on such Schedules or
previously so identified to the Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor shall, at its own
cost and expense, take any and all actions reasonably necessary to defend title
to the Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
expressly permitted pursuant to Section 6.02 of the Credit Agreement (including
any such Lien expressly
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permitted pursuant to such Section 6.02 in respect of which a release in a form
acceptable to the Collateral Agent has been delivered to the Collateral Agent).
SECTION 4.04. Further Assurances. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the Collateral
Agent may from time to time request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any reasonable fees and taxes required in connection
with the execution and delivery of this Agreement, the granting of the Security
Interest and the filing of any financing statements (including fixture filings)
or other documents in connection herewith or therewith. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to
supplement this Agreement by supplementing Schedule II, III, IV or V hereto or
adding additional schedules hereto to specifically identify any asset or item
that may constitute Copyrights, Licenses, Patents or Trademarks; provided,
however, that any Grantor shall have the right, exercisable within 10 days after
it has been notified by the Collateral Agent of the specific identification of
such Collateral, to advise the Collateral Agent in writing of any inaccuracy of
the representations and warranties made by such Grantor hereunder with respect
to such Collateral. Each Grantor agrees that it will use its best efforts to
take such action as shall be reasonably necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Collateral within 30 days after the date it has been notified by the
Collateral Agent of the specific identification of such Collateral.
SECTION 4.05. Inspection and Verification. Upon reasonable notice to
the Grantors, the Collateral Agent and such persons as the Collateral Agent may
reasonably designate shall at any reasonable time and from time to time at
reasonable intervals have the right, at the Grantors' own cost and expense, to
inspect the Collateral, all records related thereto (and to make extracts and
copies from such records) and the premises upon which any of the Collateral is
located, to discuss the Grantors' affairs with the officers of the Grantors and
their independent accountants and to verify under reasonable procedures, in
accordance with Sections 5.06 and 5.10 of the Credit Agreement, the validity,
amount, quality, quantity, value, condition and status of, or any other matter
relating to, the Collateral, including, in the case of Accounts or Collateral in
the possession of any third person, by contacting Account Debtors or the third
person possessing such Collateral for the purpose of making such a verification
provided, however, that, unless a Default or Event of Default shall have
occurred and be continuing, in no event shall the Administrative Agent or any
Lender or any of their respective designees contact any customer or supplier of
any Grantor regarding any of the Loan Documents or the Obligations without such
Grantor's prior consent. The Collateral Agent shall have the absolute right to
share any information it gains from such inspection or verification with any
Secured Party (it being understood that any such information shall be deemed to
be "Information" subject to the provisions of Section 9.16 of the Credit
Agreement).
SECTION 4.06. Taxes; Encumbrances. At its option, the Collateral Agent
may discharge past due taxes, assessments, charges, fees, Liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and not permitted pursuant to Section 6.02 of the Credit Agreement (including
any such Lien expressly permitted pursuant to such Section 6.02 in respect of
which a release in a form acceptable to the Collateral Agent has been delivered
to the Collateral Agent), and may pay for the maintenance and preservation of
the Collateral to the extent any Grantor fails to do so as required by the
Credit Agreement or this Agreement, and each Grantor jointly and severally
agrees to reimburse the Collateral Agent on demand for any payment made or any
expense incurred by the Collateral Agent pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4.06 shall be
interpreted as
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excusing any Grantor from the performance of, or imposing any obligation on the
Collateral Agent or any Secured Party to cure or perform, any covenants or other
promises of any Grantor with respect to taxes, assessments, charges, fees,
liens, security interests or other encumbrances and maintenance as set forth
herein or in the other Loan Documents.
SECTION 4.07. Assignment of Security Interest. If at any time any
Grantor shall take a security interest in any property of an Account Debtor or
any other person to secure payment and performance of an Account, such Grantor
shall promptly assign such security interest to the Collateral Agent. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account Debtor or other person granting the security interest.
SECTION 4.08. Continuing Obligations of the Grantors. Each Grantor
shall remain liable to observe and perform all the conditions and obligations to
be observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance.
SECTION 4.09. Use and Disposition of Collateral. None of the Grantors
shall make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect of the Collateral, except as
expressly permitted by Section 6.02 of the Credit Agreement (including any such
Lien expressly permitted pursuant to such Section 6.02 in respect of which a
release in a form acceptable to the Collateral Agent has been delivered to the
Collateral Agent). None of the Grantors shall make or permit to be made any
transfer of the Collateral and each Grantor shall remain at all times in
possession of the Collateral owned by it, except that (a) Inventory may be sold
in the ordinary course of business and (b) unless and until the Collateral Agent
shall notify the Grantors that an Event of Default shall have occurred and be
continuing and that during the continuance thereof the Grantors shall not sell,
convey, lease, assign, transfer or otherwise dispose of any Collateral (which
notice may be given by telephone if promptly confirmed in writing by first class
mail or delivery by hand, Federal Express or any other nationally recognized
courier service), the Grantors may use and dispose of the Collateral in any
lawful manner not inconsistent with the provisions of this Agreement, the Credit
Agreement or any other Loan Document. Without limiting the generality of the
foregoing, each Grantor agrees that it shall not permit any Inventory to be in
the possession or control of any warehouseman, bailee, agent or processor at any
time unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and shall have agreed in writing to hold the
Inventory subject to the Security Interest and the instructions of the
Collateral Agent and to waive and release any Lien held by it with respect to
such Inventory, whether arising by operation of law or otherwise.
SECTION 4.10. Limitation on Modification of Accounts. None of the
Grantors will, without the Collateral Agent's prior written consent, which,
prior to the occurrence and continuance of any Default or Event of Default, will
not be unreasonably withheld, grant any extension of the time of payment of any
of the Accounts Receivable, compromise, compound or settle the same for less
than the full amount thereof, release, wholly or partly, any person liable for
the payment thereof or allow any credit or discount whatsoever thereon, other
than extensions, credits, discounts, compromises or settlements granted or made
in the ordinary course of business and consistent with its current practices and
in accordance with such prudent and standard practices used in industries that
are the same as or similar to those in which such Grantor is engaged.
SECTION 4.11. Insurance. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Inventory and Equipment in accordance with Section 5.02 of the Credit
Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default,
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of making, settling and adjusting claims in respect of Collateral under policies
of insurance, endorsing the name of such Grantor on any check, draft, instrument
or other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral Agent
deems advisable. All sums disbursed by the Collateral Agent in connection with
this Section 4.11, including reasonable attorneys' fees, court costs, expenses
and other charges relating thereto, shall be payable, upon written demand, by
the Grantors to the Collateral Agent and shall be additional Obligations secured
hereby.
SECTION 4.12. Legend. Each Grantor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, its Accounts Receivable and its
books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Collateral Agent for the benefit of the Secured Parties and that
the Collateral Agent has a security interest therein.
SECTION 4.13. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent which is
material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
(c) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
(d) Each Grantor shall notify the Collateral Agent promptly if it knows
that any Patent, Trademark or Copyright material to the conduct of its business
may become abandoned, lost or dedicated to the public, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, United States Copyright Office or any court or similar office
of any country) regarding such Grantor's ownership of any Patent, Trademark or
Copyright, its right to register the same, or to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly informs
the Collateral Agent, and, upon reasonable request of the Collateral Agent,
executes and delivers any and all agreements, instruments, documents and papers
as the Collateral Agent may reasonably request to evidence the Collateral
Agent's security interest in such Patent, Trademark
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or Copyright, and each Grantor hereby appoints the Collateral Agent as its
attorney-in-fact to execute and file such writings for the foregoing purposes,
all acts of such attorney being hereby ratified and confirmed; such power, being
coupled with an interest, is irrevocable.
(f) Each Grantor will take all necessary steps that are consistent with
the practice in any proceeding before the United States Patent and Trademark
Office, United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, to maintain and pursue each material application relating
to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant
or registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is material to the conduct of any Grantor's
business, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with good business judgment, to initiate opposition, interference and
cancellation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.
(h) Upon and during the continuance of an Event of Default, each
Grantor shall use its best efforts to obtain all requisite consents or approvals
by the licensor of each Copyright License, Patent License or Trademark License
to effect the assignment of all of such Grantor's right, title and interest
thereunder to the Collateral Agent or its designee.
ARTICLE V
Collections
SECTION 5.01. Lockbox System. (a) The Grantors have established in the
name of the Collateral Agent, and subject to the control of the Collateral Agent
pursuant to the Lockbox and Depository Agreements, for the ratable benefit of
the Collateral Agent and the other Secured Parties, a system of lockboxes and
related deposit accounts (the "Lockbox System") with one or more financial
institutions that are reasonably satisfactory to the Collateral Agent into which
the Proceeds of all Accounts Receivable and Inventory shall be deposited and
forwarded to the Collateral Agent in accordance with the Lockbox and Depository
Agreements.
(b) All Proceeds of Inventory and Accounts Receivable that have been
received on any Business Day through the Lockbox System will be transferred into
the Concentration Account on such Business Day to the extent required by the
applicable Lockbox and Depository Agreement. All Proceeds stemming from the sale
of a substantial portion of the Collateral (other than Proceeds of Accounts)
that have been received by a Grantor on any Business Day will be transferred
into the Concentration Account on such Business Day. All Proceeds received on
any Business Day by the Collateral Agent pursuant to Section 5.02 will be
transferred into the Concentration Account on such Business Day.
(c) The Concentration Account is, and shall remain, under the sole
dominion and control of the Collateral Agent. Each Grantor acknowledges and
agrees that (i) such Grantor has no right of withdrawal from the Concentration
Account, (ii) the funds on deposit in the Concentration Account shall continue
to be collateral security for all of the Obligations and (iii) upon the
occurrence and during the continuance of an
<PAGE> 12
12
Event of Default, at the Collateral Agent's election, the funds on deposit in
the Concentration Account shall be applied as provided in Section 6.02. So long
as no Event of Default has occurred and is continuing, the Collateral Agent
shall promptly remit any funds on deposit in the Concentration Account to the
General Fund Account and the Borrower shall have the right, at any time and from
time to time, to withdraw such amounts from the General Fund Account as it shall
deem to be necessary or desirable.
(d) Effective upon notice to the Grantors from the Collateral Agent
after the occurrence and during the continuance of an Event of Default (which
notice may be given by telephone if promptly confirmed in writing by first class
mail, or delivery by hand, Federal Express or any other nationally recognized
courier service), the Concentration Account will, without any further action on
the part of any Grantor, the Collateral Agent or any Sub-Agent, convert into a
closed lockbox account under the exclusive dominion and control of the
Collateral Agent in which funds are held subject to the rights of the Collateral
Agent hereunder. Each Grantor irrevocably authorizes the Collateral Agent to
notify each Sub-Agent (i) of the occurrence of an Event of Default and (ii) of
the matters referred to in this paragraph (d). Following the occurrence of an
Event of Default, the Collateral Agent may instruct each Sub-Agent to transfer
immediately all funds held in each deposit account to the Concentration Account.
SECTION 5.02. Collections. (a) Each Grantor agrees (i) to notify and
direct promptly each Account Debtor and every other person obligated to make
payments on Accounts Receivable or in respect of any Inventory to make all such
payments directly to the Lockbox System established in accordance with Section
5.01, (ii) to use all reasonable efforts to cause each Account Debtor and every
other person identified in clause (i) above to make all payments with respect to
Accounts Receivable and Inventory directly to such Lockbox System and (iii)
promptly to deposit all payments received by it on account of Accounts
Receivable and Inventory, whether in the form of cash, checks, notes, drafts,
bills of exchange, money orders or otherwise, in the Lockbox System in precisely
the form in which received (but with any endorsements of such Grantor necessary
for deposit or collection), and until they are so deposited such payments shall
be held in trust by such Grantor for and as the property of the Collateral
Agent.
(b) Without the prior written consent of the Collateral Agent, no
Grantor shall, in a manner adverse to the Lenders, change the general
instructions given to Account Debtors in respect of payment on Accounts to be
deposited in the Lockbox System. Until the Collateral Agent shall have advised
the Grantors to the contrary, each Grantor shall, and the Collateral Agent
hereby authorizes each Grantor to, enforce and collect all amounts owing on the
Inventory and Accounts Receivable, for the benefit and on behalf of the
Collateral Agent and the other Secured Parties; provided, however, that such
privilege may at the option of the Collateral Agent be terminated upon the
occurrence and during the continuance of any Event of Default.
SECTION 5.03. Power of Attorney. Each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent with notice to the Grantor) as such
Grantor's true and lawful agent and attorney-in-fact, and in such capacity the
Collateral Agent shall have the right, with power of substitution for each
Grantor and in each Grantor's name or otherwise, for the use and benefit of the
Collateral Agent and the Secured Parties, upon the occurrence and during the
continuance of an Event of Default (a) to receive, endorse, assign and/or
deliver any and all notes, acceptances, checks, drafts, money orders or other
evidences of payment relating to the Collateral or any part thereof; (b) to
demand, collect, receive payment of, give receipt for and give discharges and
releases of all or any of the Collateral; (c) to sign the name of any Grantor on
any invoice or bill of lading relating to any of the Collateral; (d) to send
verifications of Accounts Receivable to any Account Debtor; (e) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (f) to
settle, com promise, compound, adjust or defend any actions, suits or
proceedings relating to all or any of the Collateral; (g) to notify, or to
require any Grantor to notify, Account Debtors to make payment directly to the
Collateral Agent; and (h) to use, sell, assign, transfer, pledge, make
<PAGE> 13
13
any agreement with respect to or otherwise deal with all or any of the
Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Collateral
Agent were the absolute owner of the Collateral for all purposes; provided,
however, that nothing herein contained shall be construed as requiring or
obligating the Collateral Agent or any Secured Party to make any commitment or
to make any inquiry as to the nature or sufficiency of any payment received by
the Collateral Agent or any Secured Party, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken or omitted to be taken by the Collateral Agent or
any Secured Party with respect to the Collateral or any part thereof shall give
rise to any defense, counterclaim or offset in favor of any Grantor or to any
claim or action against the Collateral Agent or any Secured Party. It is
understood and agreed that the appointment of the Collateral Agent as the agent
and attorney-in-fact of the Grantors for the purposes set forth above is coupled
with an interest and is irrevocable. The provisions of this Section shall in no
event relieve any Grantor of any of its obligations hereunder or under any other
Loan Document with respect to the Collateral or any part thereof or impose any
obligation on the Collateral Agent or any Secured Party to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Collateral Agent or any Secured Party of any other
or further right which it may have on the date of this Agreement or hereafter,
whether hereunder, under any other Loan Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest
to become an assignment, transfer and conveyance of any of or all such
Collateral by the applicable Grantors to the Collateral Agent, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the world on such terms
and conditions and in such manner as the Collateral Agent shall determine (other
than in violation of any then-existing licensing arrangements to the extent that
waivers cannot be obtained), and (b) with or without legal process and with or
without prior notice or demand for performance, to take possession of the
Collateral and without liability for trespass to enter any premises where the
Collateral may be located for the purpose of taking possession of or removing
the Collateral and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which such Grantor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.
<PAGE> 14
14
The Collateral Agent shall give the Grantors 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Collateral Agent may fix and state in the notice (if any)
of such sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine. The Collateral Agent
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale made
pursuant to this Section, any Secured Party may bid for or purchase, free (to
the extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of any Grantor (all said rights being also hereby waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then
due and payable to such Secured Party from any Grantor as a credit against the
purchase price, and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to any Grantor therefor. For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and no Grantor shall be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Obligations paid in full. As an alternative to exercising
the power of sale herein conferred upon it, the Collateral Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral Agent shall apply
the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent or the Collateral Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with
such collection or sale or otherwise in connection with this Agreement
or any of the Obligations, including all reasonable court costs and the
reasonable fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder or
under any other Loan Document on behalf of any Grantor and any other
costs or expenses incurred in connection with the exercise of any right
or remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
<PAGE> 15
15
THIRD, as promptly as practicable, to the Grantors, their
successors or assigns, or as a court of competent jurisdiction may
otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sub-license
any of the Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Collateral Agent
shall be exercised, at the option of the Collateral Agent, upon the occurrence
and during the continuation of an Event of Default; provided that any license,
sub-license or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and notices
hereunder to any Subsidiary Guarantor shall be given to it at its address or
telecopy number set forth on Schedule I, with a copy to the Borrower.
SECTION 7.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement (other
than the indefeasible payment in full of all the Obligations and termination of
all commitments of the Lenders and the Issuing Bank).
SECTION 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the making by the Lenders of the Loans, and
the execution and delivery to the Lenders of any
<PAGE> 16
16
notes evidencing such Loans, regardless of any investigation made by the Lenders
or on their behalf, and shall continue in full force and effect until this
Agreement shall terminate.
SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement. This Agreement
shall be construed as a separate agreement with respect to each Grantor and may
be amended, modified, supplemented, waived or released with respect to any
Grantor without the approval of any other Grantor and without affecting the
obligations of any other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 7.06. Collateral Agent's Fees and Expenses; Indemnification.
(a) Each Grantor jointly and severally agrees to pay upon demand to the
Collateral Agent the amount of any and all reasonable expenses, including the
reasonable fees, disbursements and other charges of its counsel and of any
experts or agents, which the Collateral Agent may incur in connection with (i)
the administration of this Agreement (including the customary fees and charges
of the Collateral Agent for any audits conducted by it or on its behalf with
respect to the Accounts Receivable or Inventory), (ii) the custody or
preservation of, or the sale of, collection from or other realization upon any
of the Collateral, (iii) the exercise, enforcement or protection of any of the
rights of the Collateral Agent hereunder or (iv) the failure of any Grantor to
perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor jointly and severally agrees to indemnify the
Collateral Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
with, or as a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or proceeding relating hereto
or to the Collateral, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Collateral Agent or any Lender. All amounts due under this Section 7.06
shall be payable on written demand therefor.
<PAGE> 17
17
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (BUT WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICT OF LAWS).
SECTION 7.08. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent, the Issuing Bank, the Administrative Agent and the
Lenders under the other Loan Documents are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or any other Loan Document or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Grantor in any case shall entitle such
Grantor or any other Grantor to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.
SECTION 7.10. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract (subject to Section 7.04),
and shall become effective as provided in Section 7.04. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
SECTION 7.12. Headings. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
<PAGE> 18
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SECTION 7.13. Jurisdiction; Consent to Service of Process. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final non-appealable judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent, the Administrative Agent, the Issuing Bank or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against any Grantor or its properties in
the courts of any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affected the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 7.14. Termination. This Agreement and the Security Interest
shall terminate when all the Obligations have been indefeasibly paid in full
(other than Obligations in respect of indemnification and expense reimbursement
obligations hereunder or under any other Loan Document to the extent such
Obligations are not due and payable), the Lenders have no further commitment to
lend, the L/C Exposure has been reduced to zero and the Issuing Bank has no
further commitment to issue Letters of Credit under the Credit Agreement, at
which time the Collateral Agent shall execute and deliver to the Grantors, at
the Grantors' expense, all Uniform Commercial Code termination statements and
similar documents which the Grantors shall reasonably request to evidence such
termination. Any execution and delivery of termination statements or documents
pursuant to this Section 7.14 shall be without recourse to or warranty by the
Collateral Agent. A Subsidiary Guarantor shall automatically be released from
its obligations hereunder and the Security Interest in the Collateral of such
Subsidiary Guarantor shall be automatically released in the event that all the
capital stock of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of to a person that is not an Affiliate of the Borrower in
accordance with the terms of the Credit Agreement; provided that the Required
Lenders shall have consented to such sale, transfer or other disposition (to the
extent required by the Credit Agreement) and the terms of such consent did not
provide otherwise.
<PAGE> 19
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SECTION 7.15. Additional Grantors. Upon execution and delivery by the
Collateral Agent and a Subsidiary of an instrument in the form of Annex 3
hereto, such Subsidiary shall become a Grantor hereunder with the same force and
effect as if originally named as a Grantor herein. The execution and delivery of
any such instrument shall not require the consent of any Grantor hereunder. The
rights and obligations of each Grantor hereunder shall remain in full force and
effect notwithstanding the addition of any new Grantor as a party to this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
NC MERGER COMPANY,
by
------------------------------------------
Name:
Title:
NEENAH FOUNDRY COMPANY,
by
------------------------------------------
Name:
Title:
HARTLEY CONTROLS CORPORATION,
by
------------------------------------------
Name:
Title:
NEENAH TRANSPORT, INC.,
by
------------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Collateral Agent,
by
------------------------------------------
Name:
Title:
<PAGE> 20
Schedule I to the
Security Agreement
SUBSIDIARY GUARANTORS
Neenah Foundry Company
Hartley Controls Corporation
Neenah Transport, Inc.
<PAGE> 21
Schedule II to the
Security Agreement
COPYRIGHTS
<PAGE> 22
Schedule III to the
Security Agreement
LICENSES
<PAGE> 23
Schedule IV to the
Security Agreement
PATENTS
<PAGE> 24
Schedule V to the
Security Agreement
TRADEMARKS
<PAGE> 25
Annex 1 to the
Security Agreement
LOCKBOX AND DEPOSITORY AGREEMENT dated as of [ ],
among [Name of Grantor], a [ ] corporation (the "Grantor"),
THE CHASE MANHATTAN BANK, a New York banking corporation
("Chase"), as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (such term, and
each other capitalized term used but not defined herein,
having the meaning given it in the Security Agreement referred
to below) and [ ], a [ ] banking corporation (the
"Sub-Agent").
A. The Grantor and the Collateral Agent are parties to a Security
Agreement dated as of April 30, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Security Agreement"). Pursuant to the terms of
the Security Agreement, the Grantor has granted to the Collateral Agent, for the
ratable benefit of the Secured Parties, a security interest in its Accounts
Receivable and other Collateral (including Inventory, cash, cash accounts and
Proceeds) to secure the payment and performance of the Obligations and has
irrevocably appointed the Collateral Agent as its agent to collect amounts due
in respect of Accounts Receivable and Inventory.
B. The Sub-Agent has agreed to act as collection sub-agent of the
Collateral Agent to receive and forward payments with respect to the Accounts
Receivable and Inventory on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Collateral Agent hereby appoints the Sub-Agent as its collection
sub-agent under the Security Agreement and authorizes the Sub-Agent, on the
terms and subject to the conditions set forth herein, to receive payments in
respect of Collateral consisting of Accounts Receivable and Inventory.
2. The Sub-Agent has established and shall maintain deposit account
number [ ] (including all subaccounts thereof) for the benefit of the
Collateral Agent (such account being called the "Collection Deposit Account").
The Collection Deposit Account shall be designated with the title "The Chase
Manhattan Bank, as Collateral Agent under the Neenah Corporation Security
Agreement dated as of April [ ], 1997" (or a similar title). [Subject to the
Sub-Agent's Terms for Remittance Banking (Lockbox) Services attached hereto as
Exhibit A, to the extent that the terms thereof relate to procedures or fees and
to the extent not inconsistent with the terms hereof,] all payments received by
the Sub-Agent in Lockbox Number [ ] and [ ] or any replacements in respect
thereof (the "Lockboxes") shall be promptly deposited in the Collection Deposit
Account and shall not be commingled with other funds. All funds at any time on
deposit in the Collection Deposit Account shall be held by the Sub-Agent for
application in accordance with the terms of this Agreement. The Sub-Agent agrees
to give the Collateral Agent prompt notice if the Collection Deposit Account
shall become subject to any writ, judgment, warrant of attachment, execution or
similar process. As security for the payment and performance of the Obligations,
the Grantor hereby confirms and pledges, assigns and transfers to the Collateral
Agent, and hereby creates and grants to the Collateral Agent, a security
interest in the Collection Deposit Account, all property and assets held therein
and all Proceeds thereof.
3. The Collection Deposit Account shall be under the sole dominion and
control of the Collateral Agent, who shall possess all right, title and interest
in all of the items from time to time in the Collection Deposit Account and
their Proceeds. The Sub-Agent shall be the Collateral Agent's agent for the
purpose of holding and collecting such items and their Proceeds. Neither the
Grantor nor any person or entity claiming by, through or under the Grantor shall
have any right, title or interest in, or control over the use of, or any right
to withdraw any amount from, the Collection Deposit Account, except that the
Collateral
<PAGE> 26
2
Agent shall have the right to withdraw amounts from the Collection Deposit
Account. The Sub-Agent shall be entitled to rely on, and shall act in accordance
with, all instructions given to it by the Collateral Agent with respect to the
Collection Deposit Account. The Collateral Agent shall have the sole power to
agree with the Sub-Agent as to specifications for Lockbox services.
4. Upon receipt of written, telecopy or telephonic notice (which, in
the case of telephonic notice, shall be promptly confirmed in writing or by
telecopy) from the Collateral Agent, the Sub-Agent shall, if so directed in such
notice (subject to the Sub-Agent's right to request that the Collateral Agent
furnish, in form satisfactory to the Sub-Agent, signature cards and/or other
appropriate documentation), promptly transmit or deliver to the Collateral Agent
at the office specified in paragraph 12 hereof (or such other office as the
Collateral Agent shall specify) (a) all funds, if any, then on deposit in, or
otherwise to the credit of, the Collection Deposit Account (provided that funds
on deposit that are subject to collection may be transmitted promptly upon
availability for withdrawal), (b) all checks, drafts and other instruments for
the payment of money received in the Lockboxes and in the possession of the
Sub-Agent, without depositing such checks, drafts or other instruments in the
Collection Deposit Account or any other account and (c) any checks, drafts and
other instruments for the payment of money received in the Lockboxes by the
Sub-Agent after such notice, in whatever form received, provided that the
Sub-Agent may retain a reasonable reserve in a separate deposit account with the
Sub-Agent in respect of unpaid fees and amounts which may be subject to
collection.
5. The Sub-Agent is hereby instructed and authorized to transfer by
wire transfer or Automated Clearing House ("ACH") from the Collection Deposit
Account all funds that are from time to time deposited or otherwise credited to
such account (after such funds become available to the Sub-Agent, either through
the Federal Reserve System or other clearing mechanism used by the Sub-Agent's
branch and to the extent such funds exceed $1,000), to such account as the
Collateral Agent may from time to time direct, provided that, unless the
Collateral Agent otherwise instructs, no such transfer shall be required if such
transfer would result in the transfer of an amount less than $1,000. Unless
otherwise directed by the Collateral Agent, such funds shall be transferred on
each business day by wire transfer or ACH and shall be identified as follows:
The Chase Manhattan Bank
ABA Number
For credit to The Chase Manhattan Bank, New York, NY 10017
Account Number
Re: Neenah Corporation Cash Collateral Account
These transfer instructions and authorizations may not be amended,
altered or revoked by the Grantor without the prior written consent of the
Collateral Agent. The Collateral Agent, however, shall have the right to amend
or revoke these transfer instructions and authorizations at any time without the
consent of the Grantor.
6. The Sub-Agent shall furnish the Collateral Agent with monthly
statements setting forth the amounts deposited in the Collection Deposit Account
and all transfers and withdrawals therefrom, and shall furnish such other
information at such times as shall be reasonably requested by the Collateral
Agent.
7. The fees for the services of the Sub-Agent shall be mutually agreed
upon between the Grantor and the Sub-Agent and shall be the obligation of the
Grantor; provided, however, that, notwithstanding the terms of any agreement
under which the Collection Deposit Account shall have been established with the
Sub-Agent, the Grantor and the Sub-Agent agree not to terminate such Collection
Deposit Account for any reason (including the failure of the Grantor to pay such
fees) for so long as this Agreement shall remain in effect (it being understood
that the foregoing shall not be construed to prohibit the resignation of the
Sub-Agent in accordance with paragraph 9 below). Neither the Collateral Agent
nor the Secured Parties shall
<PAGE> 27
3
have any liability for the payment of any such fees. The Sub-Agent may perform
any of its duties hereunder by or through its agents, officers or employees.
8. The Sub-Agent hereby represents and warrants that (a) it is a
banking corporation duly organized, validly existing and in good standing under
the laws of [] and has full corporate power and authority under such laws to
execute, deliver and perform its obligations under this Agreement and (b) the
execution, delivery and performance of this Agreement by the Sub-Agent have
been duly and effectively authorized by all necessary corporate action and this
Agreement has been duly executed and delivered by the Sub-Agent and constitutes
a valid and binding obligation of the Sub-Agent enforceable in accordance with
its terms.
9. The Sub-Agent may resign at any time as Sub-Agent hereunder by
delivery to the Collateral Agent of written notice of resignation not less than
thirty days prior to the effective date of such resignation. The SubAgent may be
removed by the Collateral Agent at any time, with or without cause, by written,
telecopy or telephonic notice (which, in the case of telephonic notice, shall be
promptly confirmed in writing or by telecopy) of removal delivered to the
Sub-Agent. Upon receipt of such notice of removal, or delivery of such notice of
resignation, the Sub-Agent shall (subject to the Sub-Agent's right to request
that the Collateral Agent furnish, in form satisfactory to the Sub-Agent,
signature cards and/or other appropriate documentation), promptly transmit or
deliver to the Collateral Agent at the office specified in paragraph 12 (or such
other office as the Collateral Agent shall specify) (a) all funds, if any, then
on deposit in, or otherwise to the credit of, the Collection Deposit Account
(provided that funds on deposit that are subject to collection may be
transmitted promptly upon availability for withdrawal), (b) all checks, drafts
and other instruments for the payment of money received in the Lockboxes and in
the possession of the Sub-Agent, without depositing such checks, drafts or other
instruments in the Collection Deposit Account or any other account and (c) any
checks, drafts and other instruments for the payment of money received in the
Lockboxes by the Sub-Agent after such notice, in whatever form received.
10. The Grantor consents to the appointment of the Sub-Agent and agrees
that the Sub-Agent shall incur no liability to the Grantor as a result of any
action taken pursuant to an instruction given by the Collateral Agent in
accordance with the provisions of this Agreement. The Grantor agrees to
indemnify and defend the Sub-Agent against any loss, liability, claim or expense
(including reasonable attorneys' fees) arising from the Sub-Agent's entry into
this Agreement and actions taken hereunder, except to the extent resulting from
the Sub-Agent's gross negligence or willful misconduct.
11. The term of this Agreement shall extend from the date hereof until
the earlier of (a) the date on which the Sub-Agent has been notified in writing
by the Collateral Agent that the Sub-Agent has no further duties under this
Agreement, (b) the Obligations have been indefeasibly paid in full and all
commitments of the Lenders and the Issuing Bank have been terminated and (c) the
date of termination specified in the notice of removal given by the Collateral
Agent, or notice of resignation given by the Sub-Agent, as the case may be,
pursuant to paragraph 9. The obligations of the Sub-Agent contained in the last
sentence of paragraph 9 and in paragraph 15, and the obligations of the Grantor
contained in paragraphs 7 and 10, shall survive the termination of this
Agreement.
12. All notices and communications hereunder shall be in writing and
shall be delivered by hand or by courier service, mailed by certified or
registered mail or sent by telecopy (except where telephonic instructions or
notices are authorized herein) and shall be effective on the day on which
received (a) in the case of the Collateral Agent, to The Chase Manhattan Bank,
270 Park Avenue, New York, New York 10017, Attention of [Collateral Monitoring
Department], and (b) in the case of the Sub-Agent, addressed to [ ],
Attention of [ ]. For purposes of this Agreement, any officer of the
Collateral Agent shall be authorized to act, and to give instructions and
notices, on behalf of the Collateral Agent hereunder.
<PAGE> 28
4
13. The Sub-Agent will not assign or transfer any of its rights or
obligations hereunder (other than to the Collateral Agent) without the prior
written consent of the other parties hereto, and any such attempted assignment
or transfer shall be void.
14. Except as provided in paragraph 5 above, this Agreement may be
amended only by a written instrument executed by the Collateral Agent, the
Sub-Agent and the Grantor, acting by their duly authorized representative
officers.
15. Except as otherwise provided in the Credit Agreement with respect
to rights of set off available to the Sub-Agent in its capacity as a Lender (if
and so long as the Sub-Agent is a Lender thereunder), the SubAgent hereby
irrevocably waives any right to set off against, or otherwise deduct from, any
funds held in the Collection Deposit Account and all items (and Proceeds
thereof) that come into its possession in connection with the Collection Deposit
Account any indebtedness or other claim owed by the Grantor or any affiliate
thereof to the Sub-Agent; provided, however, that this paragraph shall not limit
the ability of the Sub-Agent to, and the Sub-Agent may, (a) exercise any right
to set off against, or otherwise deduct from, any such funds to the extent
necessary for the Sub-Agent to collect any fees owed to it by the Grantor in
connection with the Collection Deposit Account, (b) charge back and net against
the Collection Deposit Account any returned or dishonored items or other
adjustments in accordance with the Sub-Agent's usual practices and (c) (i)
establish the reserves contemplated in paragraph 4 in respect of unpaid fees and
amounts which may be subject to collection and (ii) transfer funds in respect of
such reserves from the Collection Deposit Account to the separate deposit
account with the Sub-Agent as contemplated in paragraph 4.
16. This Agreement shall inure to the benefit of and be binding upon
the Collateral Agent, the SubAgent, the Grantor and their respective permitted
successors and assigns.
17. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.
18. EXCEPT TO THE EXTENT THE LAWS OF THE STATE OF [ ] GOVERN THE
COLLECTION DEPOSIT ACCOUNT, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (BUT WITHOUT GIVING EFFECT
TO PRINCIPLES OF CONFLICT OF LAWS).
19. The Sub-Agent shall be an independent contractor. This Agreement
does not give rise to any partnership, joint venture or fiduciary relationship.
20. In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
<PAGE> 29
5
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
[Name of Grantor],
by
-----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Collateral Agent,
by
-----------------------------------------
Name:
Title:
[Name of Sub-Agent],
by
-----------------------------------------
Name:
Title:
<PAGE> 30
Annex 2 to the
Security Agreement
[Form Of]
PERFECTION CERTIFICATE
Reference is made to the Credit Agreement dated as of April 30, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among NC Merger Company (the "Borrower"), NFC Castings, Inc.
("Holdings"), the lenders from time to time party thereto (the "Lenders") and
The Chase Manhattan Bank, as administrative agent for the Lenders, collateral
agent for the Lenders and as issuing bank. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement and the Security Agreement.
The undersigned, a Financial Officer and a legal officer, respectively,
of the Borrower, hereby certify to the Collateral Agent and each other Secured
Party as follows:
1. Names. (a) The exact corporate name of each Grantor under the
Security Agreement, as such name appears in its respective certificate of
incorporation, is as follows:
(b) Set forth below is each other corporate name each Grantor has had
in the past five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, no Grantor has changed
its identity or corporate structure in any way within the past five years.
Changes in identity or corporate structure would include mergers, consolidations
and acquisitions, as well as any change in the form, nature or jurisdiction of
corporate organization. If any such change has occurred, include in Schedule 1
the information required by Sections 1 and 2 of this certificate as to each
acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade names
or similar appellations) used by each Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
(e) Set forth below is the Federal Taxpayer Identification Number of
each Grantor:
2. Current Locations. (a) The chief executive office of each Grantor is
located at the address set forth opposite its name below:
<TABLE>
<CAPTION>
Grantor Mailing Address County State
<S> <C> <C> <C>
</TABLE>
(b) Set forth below opposite the name of each Grantor are all locations
where such Grantor maintains any books or records relating to any Accounts
Receivable (with each location at which chattel paper, if any, is kept being
indicated by an "*"):
<TABLE>
<CAPTION>
Grantor Mailing Address County State
<S> <C> <C> <C>
</TABLE>
(c) Set forth below opposite the name of each Grantor are all the
places of business of such Grantor not identified in paragraph (a) or (b) above:
<TABLE>
<CAPTION>
Grantor Mailing Address County State
<S> <C> <C> <C>
</TABLE>
<PAGE> 31
2
(d) Set forth below opposite the name of each Grantor are all the
locations where such Grantor maintains any Collateral not identified above:
<TABLE>
<CAPTION>
Grantor Mailing Address County State
<S> <C> <C> <C>
</TABLE>
(e) Set forth below opposite the name of each Grantor are the names and
addresses of all persons other than such Grantor that have possession of any of
the Collateral of such Grantor:
<TABLE>
<CAPTION>
Grantor Mailing Address County State
<S> <C> <C> <C>
</TABLE>
3. Unusual Transactions. All Accounts Receivable have been originated
by the Grantors and all Inventory has been acquired by the Grantors in the
ordinary course of business.
4. File Search Reports. Attached hereto as Schedule 4(A) are true
copies of file search reports from the Uniform Commercial Code filing offices
where filings described in Section 3.19 of the Credit Agreement are to be made.
Attached hereto as Schedule 4(B) is a true copy of each financing statement or
other filing identified in such file search reports.
5. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 5 hereto have been prepared for filing in the
Uniform Commercial Code filing office in each jurisdiction where a Grantor has
Collateral as identified in Section 2 hereof.
6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule
setting forth, with respect to the filings described in Section 5 above, each
filing and the filing office in which such filing is to be made.
7. Filing Fees. All filing fees and taxes payable in connection with
the filings described in Section 5 above have been paid.
8. Stock Ownership. Attached hereto as Schedule 8 is a true and correct
list of all the duly authorized, issued and outstanding stock of the Borrower
and each Subsidiary and the record and beneficial owners of such stock. Also set
forth on Schedule 8 is each equity investment of the Borrower and each
Subsidiary that represents 50% or less of the equity of the entity in which such
investment was made.
9. Notes. Attached hereto as Schedule 9 is a true and correct list of
all notes held by Holdings, the Borrower and each Subsidiary and all
intercompany notes between Holdings, the Borrower and each Subsidiary and
between each Subsidiary and each other such Subsidiary.
10. Advances. Attached hereto as Schedule 10 is (a) a true and correct
list of all advances made by the Borrower to any subsidiary of the Borrower, or
made by any subsidiary of the Borrower or any other subsidiary of the Borrower,
which advances will be on and after the date hereof evidenced by one or more
intercompany notes pledged to the Collateral Agent under the Pledge Agreement,
and (b) a true and correct list of all unpaid intercompany transfers of goods
sold and delivered by or to the Borrower or any subsidiary of the Borrower.
11. Mortgage Filings. Attached hereto as Schedule 11 is a schedule
setting forth, with respect to each Mortgaged Property, (i) the exact corporate
name of the corporation that owns such property as such name
<PAGE> 32
3
appears in its certificate of incorporation, (ii) if different from the name
identified pursuant to clause (i), the exact name of the current record owner of
such property reflected in the records of the filing office for such property
identified pursuant to the following clause and (iii) the filing office in which
a Mortgage with respect to such property must be filed or recorded in order for
the Collateral Agent to obtain a perfected security interest therein.
IN WITNESS WHEREOF, the undersigned have duly executed this certificate
on this [ ] day of [ ].
NC MERGER COMPANY,
by
------------------------------------------
Name:
Title:[Financial Officer]
by
------------------------------------------
Name:
Title: [Legal Officer]
<PAGE> 33
Annex 3 to the
Security Agreement
SUPPLEMENT NO. __ dated as of , to the Security
Agreement dated as of April 30, 1997, among NC MERGER COMPANY,
a Wisconsin corporation (the "Borrower"), each subsidiary of
the Borrower listed on Schedule I thereto (each such
subsidiary, individually, a "Subsidiary Guarantor" and,
collectively, the "Subsidiary Guarantors"; the Subsidiary
Guarantors and the Borrower are referred to collectively
herein as the "Grantors") and THE CHASE MANHATTAN BANK, a New
York banking corporation ("Chase"), as collateral agent (in
such capacity, the "Collateral Agent") for the Secured Parties
(as defined herein).
A. Reference is made to the Credit Agreement dated as of April 30, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, NFC Castings, Inc., ("Holdings"), the lenders
from time to time party thereto (the "Lenders"), and Chase, as administrative
agent for the Lenders, Collateral Agent and issuing bank (in such capacity, the
"Issuing Bank").
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement and the
Credit Agreement.
C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Section 7.15 of Security Agreement provides that additional Subsidiaries
of the Borrower may become Grantors under the Security Agreement by execution
and delivery of an instrument in the form of this Supplement. The undersigned
Subsidiary (the "New Grantor") is executing this Supplement in accordance with
the requirements of the Credit Agreement to become a Grantor under the Security
Agreement in order to induce the Lenders to make additional Loans and the
Issuing Bank to issue additional Letters of Credit and as consideration for
Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 7.15 of the Security Agreement,
the New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and (b)
represents and warrants that the representations and warranties made by it as a
Grantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Grantor, as security for the payment and
performance in full of the Obligations (as defined in the Security Agreement),
does hereby create and grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors and assigns, a
security interest in and lien on all of the New Grantor's right, title and
interest in and to the Collateral (as defined in the Security Agreement) of the
New Grantor. Each reference to a "Grantor" in the Security Agreement shall be
deemed to include the New Grantor. The Security Agreement is hereby incorporated
herein by reference.
SECTION 2. The New Grantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, subject
to the effects of applicable bankruptcy, insolvency, moratorium, reorganization
or similar laws affecting creditors' rights generally and equitable principles
of general applicability (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall
<PAGE> 34
2
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that (a) set
forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Grantor and (b) set forth under
its signature hereto, is the true and correct location of the chief executive
office of the New Grantor.
SECTION 5. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (BUT WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICT OF LAWS).
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it at
the address set forth under its signature below.
<PAGE> 35
3
SECTION 9. The New Grantor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.
[Name Of New Grantor],
by
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
--------------------------------------------
Name:
Title:
<PAGE> 36
Schedule I
to Supplement No.___ to the
Security Agreement
LOCATION OF COLLATERAL
<TABLE>
<CAPTION>
Description Location
- ----------- --------
<S> <C>
</TABLE>
<PAGE> 1
EXHIBIT 10.15
[FORM OF] MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
THIS MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND
RENTS dated as of April [ ], 1997 (this "Mortgage"), by NEENAH
FOUNDRY COMPANY, a Wisconsin corporation, having an office at 2121
Brooks Avenue, Neenah, WI 54956] (the "Mortgagor"), to THE CHASE
MANHATTAN BANK, a New York banking corporation ("Chase"), having an
office at 270 Park Avenue, New York, New York 10017, as collateral
agent (in such capacity, the "Collateral Agent") for the benefit of
the Secured Parties (as defined below) (the "Mortgagee");
WITNESSETH THAT:
A. Reference is made to the Credit Agreement dated as of April [ ], 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Neenah Corporation (the "Borrower"), NFC Castings, Inc., the
financial institutions party thereto as lenders (the "Lenders") and Chase, as
administrative agent (in such capacity, the "Administrative Agent"), as
Collateral Agent and as issuing bank (in such capacity, the "Issuing Bank"). As
used herein, the term "Secured Parties" shall mean (i) the Lenders, (ii) the
Administrative Agent, (iii) the Collateral Agent, (iv) the Issuing Bank, (v)
each counterparty to an Interest Rate Protection Agreement entered into with the
Borrower if such counterparty was a Lender at the time the Interest Rate
Protection Agreement was entered into, (vi) the beneficiaries of each
indemnification obligation undertaken by the Borrower under any Loan Document
and (vii) the successors and permitted assigns of each of the foregoing.
Pursuant to the Credit Agreement, (i) the Lenders have lent or agreed to lend to
the Borrower (a) on a term basis, Tranche A Term Loans (such term and each other
capitalized term used herein but not defined herein shall have the meaning
assigned to such term in the Credit Agreement) in an aggregate principal amount
not in excess of $30,000,000, (b) on a term basis, Tranche B Term Loans in an
aggregate principal amount not in excess of $25,000,000 and (c) on a revolving
basis, Revolving Loans, at any time and from time to time prior to the Revolving
Credit Maturity Date, in an aggregate principal amount at any time outstanding
not in excess of $30,000,000 and (ii) the Issuing Bank has issued and has agreed
to issue Letters of Credit in an aggregate face amount at any time outstanding
not in excess of $15,000,000 in each case on the terms and subject to the
conditions of the Credit Agreement.
B. The Borrower has entered into a Merger Agreement whereby the Borrower
will merge with and into Neenah Corporation, a Wisconsin corporation ("Neenah"),
with Neenah as the surviving corporation. Following the consummation of the
Merger, the Mortgagor will become a wholly owned subsidiary of the Borrower and
will derive substantial benefit from the making of the Loans by the Lenders and
the issuing of the Letters of Credit by the Issuing Bank. In order to induce the
Lenders to make Loans and the Issuing Bank to issue Letters of Credit, the
Mortgagor has agreed to guarantee pursuant to the Guarantee Agreement the due
and punctual payment and performance of Obligations (as defined in paragraph D
below).
C. The proceeds of the Term Loans will be used by the Borrower, together
with proceeds of Revolving Loans to be made on the Closing Date, the proceeds of
the Senior Subordinated Notes and the
<PAGE> 2
Equity Contribution solely (a) to pay the Merger Consideration and (b) to pay
related fees and expenses. The remaining proceeds of the Revolving Loans and the
Letters of Credit will be used for general corporate purposes in the ordinary
course of the Borrower's business.
D. The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit under the Credit Agreement are conditioned upon, among
other things, the execution and delivery by the Mortgagor of this Mortgage in
the form hereof, to secure the due and punctual payment of (a) the principal of
and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (b) each payment required to be made
by the Borrower under the Credit Agreement in respect of any Letter of Credit,
when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral, (c)
all other monetary obligations, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
deficiency judgments and monetary obligations incurred during the pendency of
any bankruptcy, insolvency, receivership or other similar proceeding, regardless
of whether allowed or allowable in such proceeding), of the Mortgagor and the
Borrower to the Secured Parties under the Credit Agreement, this Mortgage and
the other Loan Documents to which the Mortgagor or the Borrower is or is to be a
party, (d) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Mortgagor and the Borrower under or pursuant
to the Credit Agreement, this Mortgage and the other Loan Documents to which the
Mortgagor or the Borrower is or is to be a party and (e) the due and punctual
payment and performance of all obligations of the Borrower under each Interest
Rate Protection Agreement entered into with a counterparty that was a Lender at
the time such Interest Rate Protection Agreement was entered into (all the
obligations referred to in the preceding clauses (a) through (e) being referred
to collectively, as the "Obligations").
E. Pursuant to the requirements of the Credit Agreement, the Mortgagor is
entering into this Mortgage to create a security interest in the Mortgaged
Property (as defined herein) to secure the performance and payment by the
Mortgagor and the Borrower of the Obligations. The Credit Agreement also
requires the granting by Borrower and other Domestic Subsidiaries (the "Other
Mortgages") that create security interests in certain Mortgaged Properties other
than the Mortgaged Property to secure the performance of the Obligations.
Granting Clauses
NOW THEREFORE, IN CONSIDERATION OF the foregoing and in order to secure
(A) the due and punctual payment and performance of the Obligations, (B) the due
and punctual payment by the Mortgagor of all taxes and insurance premiums
relating to the Mortgaged Property and (C) all disbursements made by Mortgagee
for the payment of taxes, common area charges or insurance premiums, all fees,
expenses or advances in connection with or relating to the Mortgaged Property,
and interest on such disbursements and other amounts not timely paid in
accordance with the terms of the Credit Agreement, this Mortgage and the other
Loan Documents, Mortgagor hereby grants, conveys, mortgages,
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assigns and pledges to the Mortgagee, for the ratable benefit of the Secured
Parties, a security interest in, all the following described property (the
"Mortgaged Property") whether now owned or held or hereafter acquired:
(1) all Mortgagor's right, title and interest in all the fee estate
in the land more particularly described on Exhibit A hereto (the "Land"),
together with all rights appurtenant thereto, including the easements over
certain other adjoining land granted by any easement agreements, covenant
or restrictive agreements and all air rights, mineral rights, water
rights, oil and gas rights and development rights, if any, relating
thereto, and also together with all of the other easements, rights,
privileges, interests, hereditaments and appurtenances thereunto belonging
or in anyway appertaining and all of the estate, right, title, interest,
claim or demand whatsoever of Mortgagor therein and in the streets and
ways adjacent thereto, either in law or in equity, in possession or
expectancy, now or hereafter acquired (the "Premises");
(2) all Mortgagor's right, title and interest in all buildings,
improvements, structures, paving, parking areas, walkways and landscaping
now or hereafter erected or located upon the Land, and all fixtures of
every kind and type affixed to the Premises or attached to or forming part
of any structures, buildings or improvements and replacements thereof now
or hereafter erected or located upon the Land (the "Improvements");
(3) all Mortgagor's right, title and interest in all apparatus,
movable appliances, building materials, equipment, fittings, furnishings,
furniture, machinery and other articles of tangible personal property of
every kind and nature, and replacements thereof, now or at any time
hereafter placed upon or used in any way in connection with the use,
enjoyment, occupancy or operation of the Improvements or the Premises,
including all of Mortgagor's books and records relating thereto and
including all pumps, tanks, goods, machinery, tools, equipment, lifts
(including fire sprinklers and alarm systems, fire prevention or control
systems, cleaning rigs, air conditioning, heating, boilers, refrigerating,
electronic monitoring, water, loading, unloading, lighting, power,
sanitation, waste removal, entertainment, communications, computers,
recreational, window or structural, maintenance, truck or car repair and
all other equipment of every kind), restaurant, bar and all other indoor
or outdoor furniture (including tables, chairs, booths, serving stands,
planters, desks, sofas, racks, shelves, lockers and cabinets), bar
equipment, glasses, cutlery, uniforms, linens, memorabilia and other
decorative items, furnishings, appliances, supplies, inventory, rugs,
carpets and other floor coverings, draperies, drapery rods and brackets,
awnings, venetian blinds, partitions, chandeliers and other lighting
fixtures, freezers, refrigerators, walk-in coolers, signs (indoor and
outdoor), computer systems, cash registers and inventory control systems,
and all other apparatus, equipment, furniture, furnishings, and articles
used in connection with the use or operation of the Improvements or the
Premises, it being understood that the enumeration of any specific
articles of property shall in no way result in or be held to exclude any
items of property not specifically mentioned (the property referred to in
this subparagraph (3), the "Personal Property");
(4) all Mortgagor's right, title and interest in all general
intangibles relating to design, development, operation, management and use
of the Premises or the Improvements, all certificates of occupancy, zoning
variances, building, use or other permits, approvals, authorizations and
consents obtained from and all materials prepared for filing or filed with
any governmental agency in connection with the development, use, operation
or management of the Premises and
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Improvements, all construction, service, engineering, consulting, leasing,
architectural and other similar contracts concerning the design,
construction, management, operation, occupancy and/or use of the Premises
and Improvements, all architectural drawings, plans, specifications, soil
tests, feasibility studies, appraisals, environmental studies, engineering
reports and similar materials relating to any portion of or all of the
Premises and Improvements, and all payment and performance bonds or
warranties or guarantees relating to the Premises or the Improvements, all
to the extent assignable (the "Permits, Plans and Warranties");
(5) Mortgagor's interest in and rights under any and all now or
hereafter existing leases or licenses (under which Mortgagor is landlord
or licensor) and subleases (under which Mortgagor is sublandlord),
concession, management, mineral or other agreements of a similar kind that
permit the use or occupancy of the Premises or the Improvements for any
purpose in return for any payment, or the extraction or taking of any gas,
oil, water or other minerals from the Premises in return for payment of
any fee, rent or royalty (collectively, "Leases"), and all agreements or
contracts for the sale or other disposition of all or any part of the
Premises or the Improvements, now or hereafter entered into by Mortgagor,
together with all charges, fees, income, issues, profits, receipts, rents,
revenues or royalties payable thereunder ("Rents");
(6) all Mortgagor's right, title and interest in and to all real
estate tax refunds and all proceeds of the conversion, voluntary or
involuntary, of any of the Mortgaged Property into cash or liquidated
claims ("Proceeds"), including Proceeds of insurance maintained by the
Mortgagor and condemnation awards, any awards that may become due by
reason of the taking by eminent domain or any transfer in lieu thereof of
the whole or any part of the Premises or Improvements or any rights
appurtenant thereto, and any awards for change of grade of streets,
together with any and all moneys now or hereafter on deposit for the
payment of real estate taxes, assessments or common area charges levied
against the Mortgaged Property, unearned premiums on policies of fire and
other insurance maintained by the Mortgagor covering any interest in the
Mortgaged Property or required by the Credit Agreement; and
(7) all Mortgagor's right, title and interest in and to all
extensions, improvements, betterments, renewals, substitutes and
replacements of and all additions and appurtenances to, the Land, the
Premises, the Improvements, the Personal Property, the Permits, Plans and
Warranties and the Leases, hereinafter acquired by or released to the
Mortgagor or constructed, assembled or placed by the Mortgagor on the
Land, the Premises or the Improvements, and all conversions of the
security constituted thereby, immediately upon such acquisition, release,
construction, assembling, placement or conversion, as the case may be, and
in each such case, without any further mortgage, deed of trust,
conveyance, assignment or other act by the Mortgagor, all of which shall
become subject to the lien of this Mortgage as fully and completely, and
with the same effect, as though now owned by the Mortgagor and
specifically described herein.
TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee, its
successors and assigns, for the ratable benefit of the Secured Parties, forever,
subject only to the Permitted Encumbrances (as hereinafter defined) and to
satisfaction and cancellation as provided in Section 3.04
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ARTICLE I
Representations, Warranties and Covenants of Mortgagor
Mortgagor agrees, covenants, represents and/or warrants as follows:
SECTION 1.01. Title. (a) Mortgagor has good and marketable title to an
indefeasible fee estate in the Land and Improvements subject to no lien, charge
or encumbrance, and this Mortgage is and will remain a valid and enforceable
first and prior lien on the Premises, Improvements and the Rents subject only
to, in each case, Liens permitted by Section 6.02 of the Credit Agreement and
the exceptions and encumbrances referred to in Schedule B to the title insurance
policy being issued to insure the lien of this Mortgage (collectively, the
"Permitted Encumbrances"). The Permitted Encumbrances do not materially
interfere with the current use, enjoyment or operation of the Mortgaged
Property.
(b) Mortgagor has good and marketable title to all the Personal Property
subject to no lien, charge or encumbrance other than this Mortgage and the
Permitted Encumbrances. Except as may be permitted under the Credit Agreement,
the Personal Property is not and will not become the subject matter of any lease
or other arrangement that is not a Permitted Encumbrance whereby the ownership
of any Personal Property will be held by any person or entity other than
Mortgagor; except as permitted under the Credit Agreement, none of the Personal
Property will be removed from the Premises or the Improvements unless the same
is no longer needed for the continued operation of the Premises and the
Improvements as currently operated (or as then operated, to the extent that any
change from the current manner of operation was permitted by the Credit
Agreement) or is replaced by other Personal Property of substantially equal or
greater utility and value; and Mortgagor will not create or cause to be created
(other than Permitted Encumbrances) any security interest covering any of the
Personal Property other than the security interest in the Personal Property
created in favor of Mortgagee by this Mortgage or any other agreement collateral
hereto. The Mortgaged Property is served by water, gas, electric, storm and
sanitary sewage facilities, and such utilities serving the Premises and the
Improvements are located in and in the future will be located in the Premises as
is reasonable and customary for like kind Improvements in the area. There is
vehicular access to the Premises and the Improvements which is provided by,
either a public right-of-way abutting and contiguous with the Land or valid
recorded unsubordinated easements.
(c) Except as set forth on Schedule A hereto, there are no leases
affecting any portion of the Mortgaged Property. Each Lease is in full force and
effect, and, except as set forth on Schedule A hereto, Mortgagor has not given,
nor to Mortgagor's knowledge has it received, any uncured or unwaived notice of
default with respect to any material obligation under any Lease. Each Lease is
subject to no lien, charge or encumbrance other than this Mortgage and the
Permitted Encumbrances.
(d) All easement agreements, covenant or restrictive agreements,
supplemental agreements and any other material instruments hereinabove referred
to and mortgaged hereby are and will remain valid, subsisting and in full force
and effect, unless the failure to remain valid, subsisting and in full force and
effect, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the Mortgaged Property, and Mortgagor is not
in default thereunder and has fully performed the material terms thereof
required to be performed through the date hereof, and has no knowledge of any
default thereunder or failure to fully perform the terms thereof by any other
party, nor of the occurrence of any event that after notice or the passage of
time or both will constitute a default thereunder.
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(e) Mortgagor has good and lawful right and full power and authority to
mortgage the Mortgaged Property and will forever warrant and defend its title to
the Mortgaged Property, the rights of Mortgagee therein under this Mortgage and
the validity and priority of the lien of this Mortgage thereon against the
claims of all persons and parties except those having rights under Permitted
Encumbrances to the extent of those rights.
(f) This Mortgage, when duly recorded in the appropriate public records
and when financing statements are duly filed in the appropriate public records,
will create a valid and enforceable lien upon and security interest in all the
Mortgaged Property and there will be no defenses or offsets to this Mortgage
that will be asserted by Mortgagor or its Affiliates (or any third party defense
or offset now known to Mortgagor or its Affiliates) or to any of the Obligations
secured hereby for so long as any portion of the Obligations is outstanding,
other than payment of the Obligations.
SECTION 1.02. Credit Agreement; Certain Amounts. (a) This Mortgage is
given pursuant to the Credit Agreement. Each and every term and provision of the
Credit Agreement, including the rights, remedies, obligations, covenants,
conditions, agreements, indemnities, representations and warranties of the
parties thereto shall be considered as if a part of this Mortgage and to the
extent there is a specific conflict between the terms hereof and the terms of
the Credit Agreement (except with respect to Section 1.01 hereof), the terms of
the Credit Agreement shall control.
(b) If any remedy or right of Mortgagee pursuant hereto is acted upon by
Mortgagee or if any actions or proceedings (including any bankruptcy, insolvency
or reorganization proceedings) are commenced in which Mortgagee is made a party
and is obliged to defend or uphold or enforce this Mortgage or the rights of
Mortgagee hereunder or the terms of any Lease, or if a condemnation proceeding
is instituted affecting the Mortgaged Property, Mortgagor will pay all
reasonable sums, including reasonable attorneys' fees and disbursements,
incurred by Mortgagee related to the exercise of any remedy or right of
Mortgagee pursuant hereto or for the reasonable expense of any such action or
proceeding together with all statutory or other costs, disbursements and
allowances, interest thereon from the date of demand for payment thereof at the
rate specified in clause (b) of Section 2.07 of the Credit Agreement (the
"Default Interest Rate"), and such sums and the interest thereon shall, to the
extent permissible by law, be a lien on the Mortgaged Property prior to any
right, title to, interest in or claim upon the Mortgaged Property attaching or
accruing subsequent to the recording of this Mortgage and shall be secured by
this Mortgage to the extent permitted by law. Any payment of amounts due to
Mortgagee under this Mortgage not made on or before the due date for such
payments shall accrue interest daily without notice from the due date until paid
at the Default Interest Rate, and such interest at the Default Interest Rate
shall be immediately due upon demand by Mortgagee.
SECTION 1.03. Payment of Taxes, Liens and Charges. (a) Except as may be
permitted by Section 5.03 of the Credit Agreement, Mortgagor will pay and
discharge from time to time prior to the time when the same shall become
delinquent, and before any interest or penalty accrues thereon or attaches
thereto, all taxes of every kind and nature, all general and special
assessments, levies, permits, inspection and license fees, all water and sewer
rents, all vault charges, and all other public charges, and all service charges,
common area charges, private maintenance charges, utility charges and all other
private charges, whether of a like or different nature, imposed upon or assessed
against the Mortgaged Property or any part thereof or upon the Rents from the
Mortgaged Property or arising in respect of the occupancy, use or possession
thereof.
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(b) In the event of the passage of any state, Federal, municipal or other
governmental law, order, rule or regulation subsequent to the date hereof (i)
deducting from the value of real property for the purpose of taxation any lien
or encumbrance thereon or in any manner changing or modifying the laws now in
force governing the taxation of this Mortgage or debts secured by mortgages or
deeds of trust (other than laws governing income, franchise and similar taxes
generally) or the manner of collecting taxes thereon and (ii) imposing a tax to
be paid by Mortgagee, either directly or indirectly, on this Mortgage or any of
the Loan Documents or requiring an amount of taxes to be withheld or deducted
therefrom, Mortgagor will promptly notify Mortgagee of such event. In such event
Mortgagor shall (i) agree to enter into such further instruments as may be
reasonably necessary or desirable to obligate Mortgagor to make any applicable
additional payments and (ii) make such additional payments.
(c) At any time that an Event of Default shall occur hereunder and be
continuing, or if required by any law applicable to Mortgagor or to Mortgagee,
Mortgagee shall have the right to direct Mortgagor to make an initial deposit on
account of real estate taxes and assessments, insurance premiums and common area
charges, levied against or payable in respect of the Mortgaged Property in
advance and thereafter semi-annually, each such deposit to be equal to one-half
of any such annual charges estimated in a reasonable manner by Mortgagee in
order to accumulate with Mortgagee sufficient funds to pay such taxes,
assessments, insurance premiums and charges when the same are due and payable.
SECTION 1.04. Payment of Closing Costs. Mortgagor shall pay all costs in
connection with, relating to or arising out of the preparation, execution and
recording of this Mortgage, including title company premiums and charges,
inspection costs, survey costs, recording fees and taxes which are due,
reasonable attorneys', engineers', appraisers' and consultants' fees and
disbursements and all other similar reasonable expenses of every kind.
SECTION 1.05. Alterations and Waste; Plans. (a) Except as may be permitted
under the Credit Agreement, no Improvements will be materially altered in a way
which will materially interfere with the operation of such Improvements or
demolished or removed in whole or in part by Mortgagor. Mortgagor will not erect
any additions to the existing Improvements or other structures on the Premises
which will materially interfere with the operation conducted thereon on the date
hereof, without the written consent of Mortgagee. Mortgagor will not commit any
waste on the Mortgaged Property or make any alteration to, or change in the use
of, the Mortgaged Property that will diminish the utility thereof for the
operation of the business except as may be permitted under the Credit Agreement
or materially increase any ordinary fire or other hazard arising out of
construction or operation, but in no event shall any such alteration or change
be contrary to the terms of any insurance policy required to be kept pursuant to
Section 1.06. Mortgagor will maintain and operate the Improvements and Personal
Property in good repair, working order and condition, reasonable wear and tear
excepted (notwithstanding the terms of Section 5.01 of the Credit Agreement).
(b) To the extent the same exist on the date hereof or are obtained in
connection with future permitted alterations, Mortgagor shall maintain a
complete set of final plans, specifications, blueprints and drawings for the
Mortgaged Property either at the Mortgaged Property or in a particular office at
the headquarters of Mortgagor to which Mortgagee shall have access upon
reasonable advance notice and at reasonable times.
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SECTION 1.06. Insurance. Mortgagor will keep or cause to be kept the
Improvements and Personal Property insured against such risks, and in the
manner, required by Section 5.02 of the Credit Agreement.
SECTION 1.07. Casualty; Condemnation. (a) Notwithstanding any other
provision of this Mortgage, the Credit Agreement or the Security Documents, the
Mortgagee is authorized, at its option (for the benefit of the Secured Parties),
to collect and receive, to the extent payable to the Mortgagor or any other Loan
Party, all insurance proceeds, damages, claims and rights of action under any
insurance policies with respect to any casualty or other insured damage
("Casualty") to any portion of any Mortgaged Property (collectively, "Insurance
Proceeds"), unless the amount of the related Insurance Proceeds is less than
$1,000,000 and an Event of Default shall not have occurred and be continuing.
The Mortgagor agrees to notify the Mortgagee and the Administrative Agent, in
writing, promptly after the Mortgagor obtains notice or knowledge of any
Casualty to a Mortgaged Property, which notice shall set forth a description of
such Casualty and the Mortgagor's good faith estimate of the amount of related
damages. The Mortgagor agrees, subject to the foregoing limitations, to endorse
and transfer or cause to be endorsed or transferred any Insurance Proceeds
received by it or any other Loan Party to the Mortgagee.
(b) The Mortgagor will notify the Mortgagee and the Administrative Agent
immediately upon obtaining knowledge of the institution of any action or
proceeding for the taking of the Mortgaged Property, or any part thereof or
interest therein, for public or quasi-public use under the power of eminent
domain, by reason of any public improvement or condemnation proceeding, or in
any other manner (a "Condemnation"). No settlement or compromise of any claim in
connection with any such action or proceeding shall be made without the consent
of the Mortgagee, which consent shall not be unreasonably withheld. The
Mortgagee is authorized, at its option (for the benefit of the Secured Parties),
to collect and receive all proceeds of any such Condemnation (in each case, the
"Condemnation Proceeds"). The Mortgagor agrees to execute or cause to be
executed such further assignments of any Condemnation Proceeds as the Mortgagee
may reasonably require.
(c) In the event of any Condemnation of the Mortgaged Property, or any
part thereof and subject to the provisions of paragraph (e) below, the Mortgagee
shall apply the Condemnation Proceeds first, in the case of a partial
Condemnation, to the repair or restoration of any integrated structure subject
to such Condemnation or, in the case of a total or "substantially all"
Condemnation, to the location of a replacement property, acquisition of such
replacement property and construction of the replacement structures, and second,
shall apply the remainder of such Condemnation Proceeds (less the reasonable
costs, if any, incurred by the Mortgagee in the recovery of such Condemnation
Proceeds) to prepay obligations outstanding under the Credit Agreement, with any
remaining Condemnation Proceeds being returned to the Mortgagor.
(d) In the event of any Casualty of less than 50% of the useable square
footage of the improvements of the Mortgaged Property, the Mortgagor shall,
subject to the conditions contained in paragraph (e), restore the Mortgaged
Property to substantially its same condition immediately prior to such Casualty.
In the event of any Casualty of greater than 50% of the useable square footage
of the improvements of the Mortgaged Property and so long as no Default or Event
of Default has occurred and is continuing, the Mortgagee shall require the
Mortgagor to either:
(i) restore the Mortgaged Property to a condition substantially
similar to its condition immediately prior to such Casualty, provided that
the Mortgagor, promptly deposits any excess
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Insurance Proceeds in a cash collateral account established with the
Mortgagee for the benefit of the Secured Parties, or
(ii) to apply the related Net Insurance Proceeds (as defined in the
last sentence of the next succeeding paragraph) towards prepayment of the
Obligations with any remaining Insurance Proceeds being returned to the
Mortgagor.
If the Mortgagor shall be required to restore the Mortgaged Property, the
insufficiency of any Insurance Proceeds or Condemnation Proceeds to defray the
entire expense of such restoration shall in no way relieve the Mortgagor of such
obligation so to restore. In the event the Mortgagor shall be required to
restore, the Mortgagor shall diligently and continuously prosecute the
restoration of the Mortgaged Property to completion. In addition, there shall
first be allowed to the Mortgagor out of the related Insurance Proceeds, an
amount sufficient to, and the Mortgagor shall be required to, place the
remaining portion, if any, of the Mortgaged Property in a safe condition that is
otherwise in compliance with the requirements of applicable Governmental
Authorities and the provisions of the Credit Agreement and this Mortgage, and
the balance of such related Insurance Proceeds (the "Net Insurance Proceeds")
shall constitute the Net Insurance Proceeds to be applied in clause (ii) above.
(e) Except as otherwise specifically provided in this Section 1.07, all
Insurance Proceeds and all Condemnation Proceeds recovered by the Mortgagee (A)
are to be applied to the restoration of the Mortgaged Property (less the
reasonable cost, if any, to the Mortgagee of such recovery and of paying out
such proceeds, including reasonable attorneys' fees, other charges and
disbursements and costs allocable to inspecting the Work (as defined below)) and
(B) shall be applied by the Mortgagee to the payment of the cost of restoring or
replacing the Mortgaged Property so damaged, destroyed or taken or of the
portion or portions of the Mortgaged Property not so taken (the "Work") and (C)
shall be paid out from time to time to the Mortgagor as and to the extent the
Work (or the location and acquisition of any replacement of any Mortgaged
Property) progresses for the payment thereof, but subject to each of the
following conditions:
(i) the Mortgagor must promptly commence the restoration process or
the location, acquisition and replacement process (in the case of a total
or "substantially all" Condemnation) in connection with the Mortgaged
Property;
(ii) the Work shall be in the charge of an architect or engineer and
before the Mortgagor commences any Work, other than temporary work to
protect property or prevent interference with business, the Mortgagee
shall have received the plans and specifications and the general contract
for the Work from the Mortgagor. The plans and specifications shall
provide for such Work that, upon completion thereof, the improvements
shall (A) be in compliance with all requirements of applicable
Governmental Authorities such that all representations and warranties of
the Mortgagor relating to the compliance of the Mortgaged Property with
applicable laws, rules or regulations in this Mortgage, the Credit
Agreement or the Security Documents will be correct in all respects and
(B) be at least equal in value and general utility to the improvements
that were on the Mortgaged Property (or that were on the Mortgaged
Property that has been replaced, if applicable) prior to the Casualty or
Taking, and in the case of a Taking, subject to the effect of such Taking;
(iii) except as provided in (iv) below, each request for payment
shall be made on seven days' prior notice to the Mortgagee and shall be
accompanied by a certificate to be made by such architect or engineer,
stating (A) that all the Work completed has been done in substantial
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compliance with the plans and specifications, (B) that the sum requested
is justly required to reimburse the Mortgagor for payments by the
Mortgagor to, or is justly due to, the contractor, subcontractors,
materialmen, laborers, engineers, architects or other persons rendering
services or materials for the Work (giving a brief description of such
services and materials) and that, when added to all sums previously paid
out by the Mortgagee, does not exceed the value of the Work done to the
date of such certificate;
(iv) each request for payment in connection with the acquisition of
a replacement Mortgaged Property (in the case of a total or "substantially
all" Condemnation) shall be made on 30 days' prior notice to the Mortgagee
and, in connection therewith, (A) each such request shall be accompanied
by a copy of the sales contract or other document governing the
acquisition of the replacement property by the Mortgagor and a certificate
of the Mortgagor stating that the sum requested represents the sales price
under such contract or document and the related reasonable transaction
fees and expenses (including brokerage fees) and setting forth in
sufficient detail the various components of such requested sum and (B) the
Mortgagor shall (I) in addition to any other items required to be
delivered under this Section 1.07), provide the Administrative Agent and
the Mortgagee with such opinions, documents, certificates, title insurance
policies, surveys and other insurance policies as they may reasonably
request and (II) take such other actions as the Administrative Agent and
the Mortgagee may reasonably deem necessary or appropriate (including
actions with respect to the delivery to the Mortgagee of a first priority
Mortgage with respect to such real property for the ratable benefit of the
Secured Parties);
(v) each request shall be accompanied by waivers of lien
satisfactory to the Mortgagee covering that part of the Work for which
payment or reimbursement is being requested and, if required by the
Mortgagee, by a search prepared by a title company or licensed abstractor
or by other evidence satisfactory to the Mortgagee, that there has not
been filed with respect to the Mortgaged Property any mechanics' or other
lien or instrument for the retention of title in respect of any part of
the Work not discharged of record or bonded to the reasonable satisfaction
of the Mortgagee;
(vi) there shall be no Default or Event of Default that has occurred
and is continuing;
(vii) the request for any payment after the Work has been completed
shall be accompanied by a copy of any certificate or certificates required
by law to render occupancy of the improvements being rebuilt, repaired or
restored legal; and
(viii) after commencing the Work, the Mortgagor shall continue to
perform the Work diligently and in good faith to completion in accordance
with the approved plans and specifications.
Upon completion of the Work and payment in full therefor, the Mortgagee will
disburse to the Mortgagor the amount of any Insurance Proceeds or Condemnation
Proceeds then or thereafter in the hands of the Mortgagee on account of the
Casualty or Taking that necessitated such Work to be applied (x) to prepay
obligations outstanding under the Credit Agreement, with any excess being
returned to the Mortgagor, or (y) to be reinvested in the Mortgagor's principal
lines of business within 180 days after the receipt thereof, provided that the
Mortgagor, pending such reinvestment, promptly deposits such amounts in a cash
collateral account established with the Mortgagee for the benefit of the Secured
Parties.
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(f) Notwithstanding any other provisions of this Section 1.07, if the
Mortgagor shall have elected to replace the Mortgaged Property in connection
with a total or "substantially all" Condemnation as contemplated in paragraph
(c) above, all Condemnation Proceeds held by the Mortgagee in connection
therewith shall be applied to prepay obligations outstanding under the Credit
Agreement if (i) the Mortgagor notifies the Mortgagee and the Administrative
Agent that it does not intend to replace the Mortgaged Property, (ii) a
Responsible Officer of the Mortgagor shall not have notified the Administrative
Agent and the Mortgagee in writing that the Mortgagor has acquired or has
entered into a binding contract to acquire land upon which it will construct the
replacement property within six months after the Condemnation or (iii) the
Mortgagor shall have not notified the Administrative Agent and the Mortgagee in
writing that it has begun construction of the replacement structures within one
year after the related Condemnation.
(g) Nothing in this Section 1.07 shall prevent the Mortgagee from applying
at any time all or any part of the Insurance Proceeds or Condemnation Proceeds
to (i) the curing of any Event of Default under the Credit Agreement or (ii) the
payment of any of the Obligations after the occurrence and during the
continuance of an Event of Default.
SECTION 1.08. Assignment of Leases and Rents. (a) Mortgagor hereby
irrevocably and absolutely grants, transfers and assigns all of its right title
and interest in all Leases, together with any and all extensions and renewals
thereof for purposes of securing and discharging the performance by Mortgagor of
the Obligations. Mortgagor has not assigned or executed any assignment of, and
will not assign or execute any assignment of, any other Lease or their
respective Rents to anyone other than Mortgagee.
(b) Without Mortgagee's prior written consent, Mortgagor will not (i)
modify, amend, terminate or consent to the cancellation or surrender of any
Lease if such modification, amendment, termination or consent would, in the
reasonable judgment of the Mortgagee, be adverse in any material respect to the
interests of the Lenders, the value of the Mortgaged Property or the lien
created by this Mortgage or (ii) consent to an assignment of any tenant's
interest in any Lease or to a subletting thereof covering a material portion of
the Mortgaged Property.
(c) Subject to Section 1.08(d), Mortgagor has assigned and transferred to
Mortgagee all of Mortgagor's right, title and interest in and to the Rents now
or hereafter arising from each Lease
heretofore or hereafter made or agreed to by Mortgagor, it being intended that
this assignment establish, subject to Section 1.08(d), an absolute transfer and
assignment of all Rents and all Leases to Mortgagee and not merely to grant a
security interest therein. Subject to Section 1.08(d), Mortgagee may in
Mortgagor's name and stead (with or without first taking possession of any of
the Mortgaged Property personally or by receiver as provided herein) operate the
Mortgaged Property and rent, lease or let all or any portion of any of the
Mortgaged Property to any party or parties at such rental and upon such terms as
Mortgagee shall, in its sole discretion, determine, and may collect and have the
benefit of all of said Rents arising from or accruing at any time thereafter or
that may thereafter become due under any Lease.
(d) So long as an Event of Default shall not have occurred and be
continuing, Mortgagee will not exercise any of its rights under Section 1.08(c),
and Mortgagor shall receive and collect the Rents accruing under any Lease; but
after the happening and during the continuance of any Event of Default,
Mortgagee may, at its option, receive and collect all Rents and enter upon the
Premises and Improvements through its officers, agents, employees or attorneys
for such purpose and for the operation and maintenance thereof. Mortgagor hereby
irrevocably authorizes and directs each tenant, if any, and each successor, if
any, to the interest of any tenant under any Lease, respectively, to rely upon
any notice of a claimed Event of Default
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sent by Mortgagee to any such tenant or any of such tenant's successors in
interest, and thereafter to pay Rents to Mortgagee without any obligation or
right to inquire as to whether an Event of Default actually exists and even if
some notice to the contrary is received from the Mortgagor, who shall have no
right or claim against any such tenant or successor in interest for any such
Rents so paid to Mortgagee. Each tenant or any of such tenant's successors in
interest from whom Mortgagee or any officer, agent, attorney or employee of
Mortgagee shall have collected any Rents, shall be authorized to pay Rents to
Mortgagor only after such tenant or any of their successors in interest shall
have received written notice from Mortgagee that the Event of Default is no
longer continuing, unless and until a further notice of an Event of Default is
given by Mortgagee to such tenant or any of its successors in interest.
(e) Mortgagee will not become a mortgagee in possession so long as it does
not enter or take actual possession of the Mortgaged Property. In addition,
Mortgagee shall not be responsible or liable for performing any of the
obligations of the landlord under any Lease, for any waste by any tenant, or
others, for any dangerous or defective conditions of any of the Mortgaged
Property, for negligence in the management, upkeep, repair or control of any of
the Mortgaged Property or any other act or omission by any other person.
(f) Mortgagor shall furnish to Mortgagee, within 30 days after a request
by Mortgagee to do so, a written statement containing the names of all tenants,
subtenants and concessionaires of the Premises or Improvements, the terms of any
Lease, the space occupied and the rentals or license fees payable thereunder.
SECTION 1.09. Restrictions on Transfers and Encumbrances. Except as
permitted by the Credit Agreement, Mortgagor shall not directly or indirectly
sell, convey, alienate, assign, lease, sublease, license, mortgage, pledge,
encumber or otherwise transfer, create, consent to or suffer the creation of any
lien, charges or any form of encumbrance upon any interest in or any part of the
Mortgaged Property, or be divested of its title to the Mortgaged Property or any
interest therein in any manner or way, whether voluntarily or involuntarily
(other than resulting from a Condemnation), or engage in any common,
cooperative, joint, time-sharing or other congregate ownership of all or part
thereof; provided, however, that Mortgagor may in the ordinary course of
business within reasonable commercial standards, enter into easement or covenant
agreements that relate to and/or benefit the operation of the Mortgaged Property
and that do not materially or adversely affect the use and operation of the same
(except for customary utility easements that service the Mortgaged Property,
which are permitted).
SECTION 1.10. Security Agreement. This Mortgage is both a mortgage of real
property and a grant of a security interest in personal property, and shall
constitute and serve as a "Security Agreement" within the meaning of the uniform
commercial code as adopted in the state wherein the Premises are located.
Mortgagor has hereby granted unto Mortgagee a security interest in and to all
the Mortgaged Property described in this Mortgage that is not real property, and
simultaneously with the recording of this Mortgage, Mortgagor has filed or will
file UCC financing statements, and will file continuation statements prior to
the lapse thereof, at the appropriate offices in the state in which the Premises
are located to perfect the security interest granted by this Mortgage in all the
Mortgaged Property that is not real property. Mortgagor hereby appoints
Mortgagee as its true and lawful attorney-in-fact and agent, for Mortgagor and
in its name, place and stead, in any and all capacities, to execute any document
and to file the same in the appropriate offices (to the extent it may lawfully
do so), and to perform each and every act and thing reasonably requisite and
necessary to be done to perfect the security interest contemplated by the
preceding sentence. Mortgagee shall have all rights with respect to the part of
the Mortgaged Property that is the
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subject of a security interest afforded by the uniform commercial code as
adopted in the state wherein the Premises are located in addition to, but not in
limitation of, the other rights afforded Mortgagee hereunder and under the
Security Agreement.
SECTION 1.11. Filing and Recording. Mortgagor will cause this Mortgage,
any other security instrument creating a security interest in or evidencing the
lien hereof upon the Mortgaged Property and each instrument of further assurance
to be filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect the lien hereof upon, and the security interest of Mortgagee in, the
Mortgaged Property. Mortgagor will pay all filing, registration or recording
fees, and all reasonable expenses incidental to the execution and acknowledgment
of this Mortgage, any mortgage supplemental hereto, any security instrument with
respect to the Personal Property, and any instrument of further assurance and
all Federal, state, county and municipal recording, documentary or intangible
taxes and other taxes, duties, imposts, assessments and charges arising out of
or in connection with the execution, delivery and recording of this Mortgage,
any mortgage supplemental hereto, any security instrument with respect to the
Personal Property or any instrument of further assurance.
SECTION 1.12. Further Assurances. Upon demand by Mortgagee, Mortgagor
will, at the cost of Mortgagor and without expense to Mortgagee, do, execute,
acknowledge and deliver all such further acts, deeds, conveyances, mortgages,
assignments, notices of assignment, transfers and assurances as Mortgagee shall
from time to time reasonably require for the better assuring, conveying,
assigning, transferring and confirming unto Mortgagee the property and rights
hereby conveyed or assigned or intended now or hereafter so to be, or which
Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee,
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage, or for filing, registering or recording this Mortgage, and on
demand, Mortgagor will also execute and deliver and hereby appoints Mortgagee as
its true and lawful attorney-in-fact and agent, for Mortgagor and in its name,
place and stead, in any and all capacities, to execute and file to the
extent it may lawfully do so, one or more financing statements, chattel
mortgages or comparable security instruments reasonably requested by Mortgagee
to evidence more effectively the lien hereof upon the Personal Property and to
perform each and every act and thing requisite and necessary to be done to
accomplish the same.
SECTION 1.13. Additions to Mortgaged Property. All right, title and
interest of Mortgagor in and to all extensions, improvements, betterments,
renewals, substitutes and replacements of, and all additions and appurtenances
to, the Mortgaged Property hereafter acquired by or released to Mortgagor or
constructed, assembled or placed by Mortgagor upon the Premises or the
Improvements, and all conversions of the security constituted thereby,
immediately upon such acquisition, release, construction, assembling, placement
or conversion, as the case may be, and in each such case without any further
mortgage, conveyance, assignment or other act by Mortgagor, shall become subject
to the lien and security interest of this Mortgage as fully and completely and
with the same effect as though now owned by Mortgagor and specifically described
in the grant of the Mortgaged Property above, but at any and all times Mortgagor
will execute and deliver to Mortgagee any and all such further assurances,
mortgages, conveyances or assignments thereof as Mortgagee may reasonably
require for the purpose of expressly and specifically subjecting the same to the
lien and security interest of this Mortgage.
SECTION 1.14. No Claims Against Mortgagee. Nothing contained in this
Mortgage shall constitute any consent or request by Mortgagee, express or
implied, for the performance of any labor or services or the furnishing of any
materials or other property in respect of the Mortgaged Property or any
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part thereof, nor as giving Mortgagor any right, power or authority to contract
for or permit the performance of any labor or services or the furnishing of any
materials or other property in such fashion as would permit the making of any
claim against Mortgagee in respect thereof.
SECTION 1.15. Fixture Filing. Certain of the Mortgaged Property is or will
become "fixtures" (as that term is defined in the UCC) on the Land, and this
Mortgage upon being filed for record in the real estate records of the county
wherein such fixtures are situated shall operate also as a financing statement
filed as a fixture filing in accordance with the applicable provisions of said
UCC upon such of the Mortgaged Property that is or may become fixtures.
ARTICLE II
Defaults and Remedies
SECTION 2.01. Events of Default. It shall be an Event of Default under
this Mortgage if any Event of Default (as therein defined) shall exist pursuant
to the Credit Agreement.
SECTION 2.02. Demand for Payment. If an Event of Default as set forth
herein shall occur and be continuing, then, upon written demand of Mortgagee,
Mortgagor will pay to Mortgagee all amounts due hereunder and such further
amount as shall be sufficient to cover the costs and expenses of collection,
including attorneys' fees, disbursements and expenses incurred by Mortgagee and
Mortgagee shall be entitled and empowered to institute an action or proceedings
at law or in equity for the collection of the sums so due and unpaid, to
prosecute any such action or proceedings to judgment or final decree, to enforce
any such judgment or final decree against Mortgagor and to collect, in any
manner provided by law, all moneys adjudged or decreed to be payable.
SECTION 2.03. Rights To Take Possession, Operate and Apply Revenues. (a)
To the extent permitted by applicable law, if an Event of Default shall occur
and be continuing, Mortgagor shall, upon demand of Mortgagee, forthwith
surrender to Mortgagee actual possession of the Mortgaged Property and, if and
to the extent permitted by law, Mortgagee itself, or by such officers or agents
as it may appoint, may then enter and take possession of all the Mortgaged
Property without the appointment of a receiver or an application therefor,
exclude Mortgagor and its agents and employees wholly therefrom, and have access
to the books, papers and accounts of Mortgagor.
(b) To the extent permitted by applicable law, if Mortgagor shall for any
reason fail to surrender or deliver the Mortgaged Property or any part thereof
after such demand by Mortgagee, Mortgagee may obtain a judgment or decree
conferring upon Mortgagee the right to immediate possession or requiring
Mortgagor to deliver immediate possession of the Mortgaged Property to
Mortgagee, to the entry of which judgment or decree Mortgagor hereby
specifically consents. Mortgagor will pay to Mortgagee, upon demand, all
reasonable expenses of obtaining such judgment or decree, including reasonable
compensation to Mortgagee's attorneys and agents with interest thereon at the
Default Interest Rate; and all such expenses and compensation shall, until paid,
be secured by this Mortgage.
(c) To the extent permitted by applicable law, upon every such entry or
taking of possession, Mortgagee may hold, store, use, operate, manage and
control the Mortgaged Property, conduct the business thereof and, from time to
time, (i) make all necessary and proper maintenance, repairs, renewals,
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replacements, additions, betterments and improvements thereto and thereon, (ii)
purchase or otherwise acquire additional fixtures, personalty and other
property, (iii) insure or keep the Mortgaged Property insured, (iv) manage and
operate the Mortgaged Property and exercise all the rights and powers of
Mortgagor to the same extent as Mortgagor could in its own name or otherwise
with respect to the same, or (v) enter into any and all agreements with respect
to the exercise by others of any of the powers herein granted Mortgagee, all as
may from time to time be directed or determined by Mortgagee to be in its best
interest and Mortgagor hereby appoints Mortgagee as its true and lawful
attorney-in-fact and agent, for Mortgagor and in its name, place and stead, in
any and all capacities, to perform any of the foregoing acts. Mortgagee may
collect and receive all the Rents, issues, profits and revenues from the
Mortgaged Property, including those past due as well as those accruing
thereafter, and, after deducting (i) all expenses of taking, holding, managing
and operating the Mortgaged Property (including compensation for the services of
all persons employed for such purposes), (ii) the costs of all such maintenance,
repairs, renewals, replacements, additions, betterments, improvements, purchases
and acquisitions, (iii) the costs of insurance, (iv) such taxes, assessments and
other similar charges as Mortgagee may at its option pay, (v) other proper
charges upon the Mortgaged Property or any part thereof and (vi) the
compensation, expenses and disbursements of the attorneys and agents of
Mortgagee, Mortgagee shall apply the remainder of the moneys and proceeds so
received first to the payment of the Mortgagee for the satisfaction of the
Obligations, and second, if there is any surplus, to Mortgagor, subject to the
entitlement of others thereto under applicable law.
(d) To the extent permitted by applicable law, whenever, before any sale
of the Mortgaged Property under Section 2.06, all Obligations that are then due
shall have been paid and all Events of Default fully cured, Mortgagee will
surrender possession of the Mortgaged Property back to Mortgagor, its successors
or assigns. The same right of taking possession shall, however, arise again if
any subsequent Event of Default shall occur and be continuing.
SECTION 2.04. Right To Cure Mortgagor's Failure to Perform. After any
Event of Default at anytime (without requiring future notice) should Mortgagor
fail in the payment, performance or observance of any term, covenant or
condition required by this Mortgage or the Credit Agreement (with respect to the
Mortgaged Property), Mortgagee may pay, perform or observe the same, and all
payments made or costs or expenses incurred by Mortgagee in connection therewith
shall be secured hereby and shall be, without demand, immediately repaid by
Mortgagor to Mortgagee with interest thereon at the Default Interest Rate.
Mortgagee shall be the judge using reasonable discretion of the necessity for
any such actions and of the amounts to be paid. Mortgagee is hereby empowered to
enter and to authorize others to enter upon the Premises or the Improvements or
any part thereof for the purpose of performing or observing any such defaulted
term, covenant or condition without having any obligation to so perform or
observe and without thereby becoming liable to Mortgagor, to any person in
possession holding under Mortgagor or to any other person.
SECTION 2.05. Right to a Receiver. If an Event of Default shall occur and
be continuing, Mortgagee, upon application to a court of competent jurisdiction,
shall be entitled as a matter of right to the appointment of a receiver to take
possession of and to operate the Mortgaged Property and to collect and apply the
Rents. The receiver shall have all of the rights and powers permitted under the
laws of the state wherein the Mortgaged Property is located. Mortgagor shall pay
to Mortgagee upon demand all reasonable expenses, including receiver's fees,
reasonable attorney's fees and disbursements, costs and agent's compensation
incurred pursuant to the provisions of this Section 2.05; and all such expenses
shall
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be secured by this Mortgage and shall be, without demand, immediately
repaid by Mortgagor to Mortgagee with interest thereon at the Default Interest
Rate.
SECTION 2.06. Foreclosure and Sale. (a) If an Event of Default shall occur
and be continuing, Mortgagee may elect to sell the Mortgaged Property or any
part of the Mortgaged Property by exercise of the power of foreclosure or of
sale granted to Mortgagee by applicable law or this Mortgage. In such case,
Mortgagee may commence a civil action to foreclose this Mortgage, or it may
proceed and sell the Mortgaged Property to satisfy any Obligation. Mortgagee or
an officer appointed by a judgment of foreclosure to sell the Mortgaged
Property, may sell all or such parts of the Mortgaged Property as may be chosen
by Mortgagee at the time and place of sale fixed by it in a notice of sale,
either as a whole or in separate lots, parcels or items as Mortgagee shall deem
expedient, and in such order as it may determine, at public auction to the
highest bidder. Mortgagee or an officer appointed by a judgment of foreclosure
to sell the Mortgaged Property may postpone any foreclosure or other sale of all
or any portion of the Mortgaged Property by public announcement at such time and
place of sale, and from time to time thereafter may postpone such sale by public
announcement or subsequently noticed sale. Without further notice, Mortgagee or
an officer appointed to sell the Mortgaged Property may make such sale at the
time fixed by the last postponement, or may, in its discretion, give a new
notice of sale. Any person, including Mortgagor or Mortgagee or any designee or
affiliate thereof, may purchase at such sale.
(b) The Mortgaged Property may be sold subject to unpaid taxes and
Permitted Encumbrances, and, after deducting all costs, fees and expenses of
Mortgagee (including costs of evidence of title in connection with the sale),
Mortgagee or an officer that makes any sale shall apply the proceeds of sale in
the manner set forth in Section 2.08.
(c) Any foreclosure or other sale of less than the whole of the Mortgaged
Property or any defective or irregular sale made hereunder shall not exhaust the
power of foreclosure provided for herein; and subsequent sales may be made
hereunder until the Obligations have been satisfied, or the entirety of the
Mortgaged Property has been sold.
(d) If an Event of Default shall occur and be continuing, Mortgagee may
instead of, or in addition to, exercising the rights described in Section
2.06(a) above and either with or without entry or taking possession as herein
permitted, proceed by a suit or suits in law or in equity or by any other
appropriate proceeding or remedy (i) to specifically enforce payment of some or
all of the Obligations, or the performance of any term, covenant, condition or
agreement of this Mortgage or any other Loan Document or any other right, or
(ii) to pursue any other remedy available to it, all as Mortgagee shall
determine most effectual for such purposes.
SECTION 2.07. Other Remedies. (a) In case an Event of Default shall occur
and be continuing, Mortgagee may also exercise, to the extent not prohibited by
law, any or all of the remedies available to a secured party under the uniform
commercial code of the State wherein the Premises are located, including, to the
extent not prohibited by applicable law.
(b) In connection with a sale of the Mortgaged Property or any Personal
Property and the application of the proceeds of sale as provided in Section
2.08, Mortgagee shall be entitled to enforce payment of and to receive up to the
principal amount of the Obligations, plus all other charges, payments and costs
due under this Mortgage, and to recover a deficiency judgment for any portion of
the aggregate principal amount of the Obligations remaining unpaid, with
interest.
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SECTION 2.08. Application of Sale Proceeds and Rents. After any
foreclosure sale of all or any of the Mortgaged Property, Mortgagee shall
receive the proceeds of sale, no purchaser shall be required to see to the
application of the proceeds and Mortgagee shall apply the proceeds of the sale
together with any Rents that may have been collected and any other sums that
then may be held by Mortgagee under this Mortgage as follows:
FIRST, to the payment of the costs and expenses of such sale,
including compensation to Mortgagee's attorneys and agents, and of any
judicial proceedings wherein the same may be made, and of all expenses,
liabilities and advances made or incurred by Mortgagee under this
Mortgage, together with interest at the Default Interest Rate on all
advances made by Mortgagee, including all taxes or assessments (except any
taxes, assessments or other charges subject to which the Mortgaged
Property shall have been sold) and the cost of removing any Permitted
Encumbrance (except any Permitted Encumbrance subject to which the
Mortgaged Property was sold);
SECOND, to the Mortgagee for the distribution to the Secured Parties
for the satisfaction of the Obligations owed to the Secured Parties; and
THIRD, to the Mortgagor, its successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
The Mortgagee shall have absolute discretion as to the time of application of
any such proceeds, moneys or balances in accordance with this Mortgage. Upon any
sale of the Mortgaged Property by the Mortgagee (including pursuant to a power
of sale granted by statute or under a judicial proceeding), the receipt of the
purchase money paid over to the Mortgagee or the officer making the sale shall
be a sufficient discharge to the purchaser or purchasers of the Mortgaged
Property so sold and such purchaser or purchasers shall not be obligated to see
to the application of any part of the purchase money paid over to the Mortgagee
or such officer or be answerable in any way for the misapplication thereof.
SECTION 2.09. Mortgagor as Tenant Holding Over. If Mortgagor remains in
possession of any of the Mortgaged Property after any foreclosure sale by
Mortgagee, at Mortgagee's election Mortgagor shall be deemed a tenant holding
over and shall forthwith surrender possession to the purchaser or purchasers at
such sale or be summarily dispossessed or evicted according to provisions of law
applicable to tenants holding over.
SECTION 2.10. Waiver of Appraisement, Valuation, Stay, Extension and
Redemption Laws. Mortgagor waives, to the extent not prohibited by law, (i) the
benefit of all laws now existing or that hereafter may be enacted providing for
any appraisement of any portion of the Mortgaged Property, (ii) the benefit of
all laws now existing or that may be hereafter enacted in any way extending the
time for the enforcement or the collection of amounts due under any of the
Obligations or creating or extending a period of redemption from any sale made
in collecting said debt or any other amounts due Mortgagee, (iii) any right to
at any time insist upon, plead, claim or take the benefit or advantage of any
law now or hereafter in force providing for any appraisement, valuation, stay,
extension or redemption, or sale of the Mortgaged Property as separate tracts,
units or estates or as a single parcel in the event of foreclosure, and (iv) all
rights of redemption, valuation, appraisement, stay of execution, notice of
election to mature or declare due the whole of or each of the Obligations and
marshalling in the event of foreclosure of this Mortgage.
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SECTION 2.11. Discontinuance of Proceedings. In case Mortgagee shall
proceed to enforce any right, power or remedy under this Mortgage by
foreclosure, entry or otherwise, and such proceedings shall be discontinued or
abandoned for any reason, or shall be determined adversely to Mortgagee, then
and in every such case Mortgagor and Mortgagee shall be restored to their former
positions and rights hereunder, and all rights, powers and remedies of Mortgagee
shall continue as if no such proceeding had been taken.
SECTION 2.12. Suits To Protect the Mortgaged Property. Mortgagee shall
have power (a) to institute and maintain suits and proceedings to prevent any
impairment of the Mortgaged Property by any acts that may be unlawful or in
violation of this Mortgage, (b) to preserve or protect its interest in the
Mortgaged Property and in the Rents arising therefrom and (c) to restrain the
enforcement of or compliance with any legislation or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of or compliance with such enactment, rule or order would impair
the security or be prejudicial to the interest of Mortgagee hereunder.
SECTION 2.13. Filing Proofs of Claim. In case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or
other proceedings affecting Mortgagor, Mortgagee shall, to the extent permitted
by law, be entitled to file such proofs of claim and other documents as may be
necessary or advisable in order to have the claims of Mortgagee allowed in such
proceedings for the Obligations secured by this Mortgage at the date of the
institution of such proceedings and for any interest accrued, late charges and
additional interest or other amounts due or that may become due and payable
hereunder after such date.
SECTION 2.14. Possession by Mortgagee. Notwithstanding the appointment of
any receiver, liquidator or trustee of Mortgagor, any of its property or the
Mortgaged Property, Mortgagee shall be entitled, to the extent not prohibited by
law, to remain in possession and control of all parts of the Mortgaged Property
now or hereafter granted under this Mortgage to Mortgagee in accordance with the
terms hereof and applicable law.
SECTION 2.15. Waiver. (a) No delay or failure by Mortgagee to exercise any
right, power or remedy accruing upon any breach or Event of Default shall
exhaust or impair any such right, power or remedy or be construed to be a waiver
of any such breach or Event of Default or acquiescence therein; and every right,
power and remedy given by this Mortgage to Mortgagee may be exercised from time
to time and as often as may be deemed expedient by Mortgagee. No consent or
waiver by Mortgagee to or of any breach or default by Mortgagor in the
performance of the Obligations shall be deemed or construed to be a consent or
waiver to or of any other breach or Event of Default in the performance of the
same or any other Obligations by Mortgagor hereunder. No failure on the part of
Mortgagee to complain of any act or failure to act or to declare an Event of
Default, irrespective of how long such failure continues, shall constitute a
waiver by Mortgagee of its rights hereunder or impair any rights, powers or
remedies consequent on any future Event of Default by Mortgagor.
(b) Even if Mortgagee (i) grants some forbearance or an extension of time
for the payment of any sums secured hereby, (ii) takes other or additional
security for the payment of any sums secured hereby, (iii) waives or does not
exercise some right granted herein or under the Loan Documents, (iv) releases a
part of the Mortgaged Property from this Mortgage, (v) agrees to change some of
the terms, covenants, conditions or agreements of any of the Loan Documents,
(vi) consents to the filing of a map, plat or replat affecting the Premises
(vii) consents to the granting of an easement or other right affecting the
Premises or (viii) makes or consents to an agreement subordinating Mortgagee's
lien on the Mortgaged Property
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hereunder; no such act or omission shall preclude Mortgagee from exercising any
other right, power or privilege herein granted or intended to be granted in the
event of any breach or Event of Default then made or of any subsequent default;
nor, except as otherwise expressly provided in an instrument executed by
Mortgagee, shall this Mortgage be altered thereby. In the event of the sale or
transfer by operation of law or otherwise of all or part of the Mortgaged
Property, Mortgagee is hereby authorized and empowered to deal with any vendee
or transferee with reference to the Mortgaged Property secured hereby, or with
reference to any of the terms, covenants, conditions or agreements hereof, as
fully and to the same extent as it might deal with the original parties hereto
and without in any way releasing or discharging any liabilities, obligations or
undertakings.
SECTION 2.16. Remedies Cumulative. No right, power or remedy conferred
upon or reserved to Mortgagee by this Mortgage is intended to be exclusive of
any other right, power or remedy, and each and every such right, power and
remedy shall be cumulative and concurrent and in addition to any other right,
power and remedy given hereunder or now or hereafter existing at law or in
equity or by statute.
ARTICLE III
Miscellaneous
SECTION 3.01. Partial Invalidity. In the event any one or more of the
provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such validity, illegality or
unenforceability shall, at the option of Mortgagee, not affect any other
provision of this Mortgage, and this Mortgage shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein or
therein.
SECTION 3.02. Notices. All notices hereunder shall be in writing and given
in the case of communications and notices to Mortgagor or the Collateral Agent,
as provided in the Credit Agreement.
SECTION 3.03. Successors and Assigns. All of the grants, covenants, terms,
provisions and conditions herein shall run with the Premises and the
Improvements and shall apply to, bind and inure to, the benefit of the permitted
successors and assigns of Mortgagor and the successors and assigns of Mortgagee.
SECTION 3.04. Satisfaction and Cancelation. (a) The conveyance to
Mortgagee created and consummated by this Mortgage shall be null and void when
all the Obligations have been indefeasibly paid in full in accordance with the
terms of the Loan Documents and the Lenders have no further commitment to make
Loans under the Credit Agreement, no Letters of Credit are outstanding and the
Issuing Bank has no further obligation to issue Letters of Credit under the
Credit Agreement.
(b) The lien of this mortgage shall be released from such portion of the
Mortgaged Property as is required pursuant to and in accordance with the
operative provisions of Section 6.05 of the Credit Agreement.
(c) In connection with any termination or release pursuant to paragraph
(a), the Mortgage shall be marked "satisfied" by the Mortgagee, and this
Mortgage shall be canceled of record at the request and at the expense of the
Mortgagor. Mortgagee shall execute any documents reasonably requested by
Mortgagor
19
<PAGE> 20
to accomplish the foregoing or to accomplish any release contemplated by
paragraph (a) and Mortgagor will pay all costs and expenses, including
reasonable attorneys' fees, disbursements and other charges, incurred by
Mortgagee in connection with the preparation and execution of such documents.
SECTION 3.05. Definitions. As used in this Mortgage, the singular shall
include the plural as the context requires and the following words and phrases
shall have the following meanings: (a) "including" shall mean "including but not
limited to"; (b) "provisions" shall mean "provisions, terms, covenants and/or
conditions"; (c) "lien" shall mean "lien, charge, encumbrance, security
interest, mortgage or deed of trust"; (d) "obligation" shall mean "obligation,
duty, covenant and/or condition"; and (e) "any of the Mortgaged Property" shall
mean "the Mortgaged Property or any part thereof or interest therein". Any act
that Mortgagee is permitted to perform hereunder may be performed at any time
and from time to time by Mortgagee or any person or entity designated by
Mortgagee. Any act that is prohibited to Mortgagor hereunder is also prohibited
to all lessees of any of the Mortgaged Property. Each appointment of Mortgagee
as attorney-in-fact for Mortgagor under the Mortgage is irrevocable, with power
of substitution and coupled with an interest. Subject to the applicable
provisions hereof, Mortgagee has the right to refuse to grant its consent,
approval or acceptance or to indicate its satisfaction, in its sole discretion,
whenever such consent, approval, acceptance or satisfaction is required
hereunder.
SECTION 3.06. Multisite Real Estate Transaction. Mortgagor acknowledges
that this Mortgage is one of a number of Other Mortgages and Security Documents
that secure the Obligations. Mortgagor agrees that the lien of this Mortgage
shall be absolute and unconditional and shall not in any manner be affected or
impaired by any acts or omissions whatsoever of Mortgagee and without limiting
the generality of the foregoing, the lien hereof shall not be impaired by any
acceptance by the Mortgagee of any security for or guarantees of any of the
Obligations hereby secured, or by any failure, neglect or omission on the part
of Mortgagee to realize upon or protect any Obligation or indebtedness hereby
secured or any collateral security therefor including the Other Mortgages and
other Security Documents. The lien hereof shall not in any manner be impaired or
affected by any release (except as to the property released), sale, pledge,
surrender, compromise, settlement, renewal, extension, indulgence, alteration,
changing, modification or disposition of any of the Obligations secured or of
any of the collateral security therefor, including the Other Mortgages and other
Security Documents or of any guarantee thereof, and Mortgagee may at its
discretion foreclose, exercise any power of sale, or exercise any other remedy
available to it under any or all of the Other Mortgages and other Security
Documents without first exercising or enforcing any of its rights and remedies
hereunder. Such exercise of Mortgagee's rights and remedies under any or all of
the Other Mortgages and other Security Documents shall not in any manner impair
the indebtedness hereby secured or the lien of this Mortgage and any exercise of
the rights or remedies of Mortgagee hereunder shall not impair the lien of any
of the Other Mortgages and other Security Documents or any of Mortgagee's rights
and remedies thereunder. The Mortgagor specifically consents and agrees that
Mortgagee may exercise its rights and remedies hereunder and under the Other
Mortgages and other Security Documents separately or concurrently and in any
order that it may deem appropriate and waives any rights of subrogation.
20
<PAGE> 21
ARTICLE IV
Particular Provisions
This Mortgage is subject to the following provisions relating to the
particular laws of the state wherein the Premises are located:
SECTION 4.01. Applicable Law; Certain Particular Provisions. This Mortgage
shall be governed by and construed in accordance with the internal law of the
State of New York; provided, however, that the provisions of this Mortgage
relating to the creation, perfection and enforcement of the lien and security
interest created by this Mortgage in respect of the Mortgaged Property and the
exercise of each remedy provided hereby, including the power of foreclosure or
power of sale procedures set forth in this Mortgage, shall be governed by and
construed in accordance with the internal law of the state where the Mortgaged
Property is located, and Mortgagor and Mortgagee agrees to submit to
jurisdiction and the laying of venue for any suit on this Mortgage in such
state. The terms and provisions set forth in Appendix A attached hereto are
hereby incorporated by reference as though fully set forth herein. In the event
of any conflict between the terms and provisions contained in the body of this
Mortgage and the terms and provisions set forth in Appendix A, the terms and
provisions set forth in Appendix A shall govern and control.
IN WITNESS WHEREOF, this Mortgage has been duly authorized and has been
executed and delivered to Mortgagee by Mortgagor on the date first written
above.
NEENAH FOUNDARY COMPANY,
a Wisconsin corporation,
by_______________________________
Name:
Title:
Attest:
by_______________________________
Name:
Title:
[CORPORATE SEAL]
21
<PAGE> 22
[NEED ACKNOWLEDGEMENTS]
22
<PAGE> 23
Exhibit A
to the Mortgage Agreement
Legal Description
<PAGE> 1
EXHIBIT 12.1
NEENAH CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
----------
YEAR ENDED
YEAR ENDED MARCH 31, MARCH 31,
------------------------------------------------------ ----------
1993 1994 1995 1996 1997 1997
------ ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income before income
taxes................... $3,988 $10,794 $22,570 $28,818 $32,305 $ 8,770
Fixed charges............. 2,348 1,278 907 416 402 22,512
------ ------- ------- ------- ------- ----------
Earnings.................. $6,336 $12,072 $23,477 $29,234 $32,707 $ 31,282
====== ======== ======== ======== ======== =========
Interest expense.......... 2,128 1,049 624 84 39 $ 21,474
Amortization of deferred
financing costs......... -- -- -- -- -- 675
Interest portion of rent
expense................. 220 229 283 332 363 363
------ ------- ------- ------- ------- ----------
Fixed charges............. $2,348 $ 1,278 $ 907 $ 416 $ 402 $ 22,512
====== ======== ======== ======== ======== =========
Ratio of earnings to fixed
charges................. 2.70 9.45 25.88 70.27 81.36 1.39
====== ======== ======== ======== ======== =========
</TABLE>
<PAGE> 1
Exhibit 21.1
Subsidiaries of Registrants
1. Neenah Foundry Company
Hartley Controls Corporation
Neenah Transport, Inc.
2. Hartley Controls Corporation
None.
3. Neenah Transport, Inc.
None.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Experts,"
"Summary Consolidated Financial and Other Data" and "Selected Consolidated
Financial and Other Data" and to the use of our reports dated April 29, 1997, in
Amendment No. 1 to the Registration Statement (Form S-4, No. 333-28751) and
related Prospectus of Neenah Foundry Company for the registration of
$150,000,000 11 1/8% Senior Subordinated Notes.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
July 15, 1997
<PAGE> 1
EXHIBIT 25.1
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) _______
--------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036
New York, New York (Zip Code)
(Address of principal
executive offices)
--------------------------
Teekay Shipping Corporation
(Exact name of obligor as specified in its charter)
Republic of Liberia Not Applicable
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
Tradewinds Building, Sixth Floor
Bay Street, P.O. Box SS-6293 (Zip code)
Nassau, The Bahamas
(Address of principal executive offices)
--------------------------
<PAGE> 2
- 2 -
VSSI Oceans Inc.
(Exact name of guarantor as specified in its charter)
Republic of Liberia Not Applicable
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
Tradewinds Building, Sixth Floor
Bay Street, P.O. Box SS-6293 (Zip code)
Nassau, The Bahamas
(Address of principal executive offices)
--------------------------
VSSI Atlantic Inc.
(Exact name of guarantor as specified in its charter)
Republic of Liberia Not Applicable
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
Tradewinds Building, Sixth Floor
Bay Street, P.O. Box SS-6293 (Zip code)
Nassau, The Bahamas
(Address of principal executive offices)
--------------------------
Senang Spirit Inc.
(Exact name of guarantor as specified in its charter)
Commonwealth of the Bahamas Not Applicable
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
Tradewinds Building, Sixth Floor
Bay Street, P.O. Box SS-6293 (Zip code)
Nassau, The Bahamas
(Address of principal executive offices)
-------------------------
<PAGE> 3
- 3 -
VSSI Appian Inc.
(Exact name of guarantor as specified in its charter)
Republic of Liberia Not Applicable
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
Tradewinds Building, Sixth Floor
Bay Street, P.O. Box SS-6293 (Zip code)
Nassau, The Bahamas
(Address of principal executive offices)
--------------------------
Exuma Spirit Inc.
(Exact name of guarantor as specified in its charter)
Commonwealth of the Bahamas Not Applicable
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
Tradewinds Building, Sixth Floor
Bay Street, P.O. Box SS-6293 (Zip code)
Nassau, The Bahamas
(Address of principal executive offices)
--------------------------
Nassau Spirit Inc.
(Exact name of guarantor as specified in its charter)
Commonwealth of the Bahamas Not Applicable
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
Tradewinds Building, Sixth Floor
Bay Street, P.O. Box SS-6293 (Zip code)
Nassau, The Bahamas
(Address of principal executive offices)
--------------------------
<PAGE> 4
- 4 -
Andros Spirit Inc.
(Exact name of guarantor as specified in its charter)
Commonwealth of the Bahamas Not Applicable
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
Tradewinds Building, Sixth Floor
Bay Street, P.O. Box SS-6293 (Zip code)
Nassau, The Bahamas
(Address of principal executive offices)
--------------------------
___% First Preferred Ship Mortgage Notes due 2008
(Title of the indenture securities)
================================================================================
<PAGE> 5
- 5 -
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System).
Federal Deposit Insurance Corporation, Washington, D. C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3,4,5,6,7,8,9,10,11,12,13,14 and 15.
Teekay Shipping Corporation is currently not in default under any of its
outstanding securities for which United States Trust Company of New York
is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11,
12, 13, 14 and 15 of Form T-1 are not required under General Instruction
B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
<PAGE> 6
- 5 -
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System).
Federal Deposit Insurance Corporation, Washington, D. C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3,4,5,6,7,8,9,10,11,12,13,14 and 15.
Teekay Shipping Corporation is currently not in default under any of its
outstanding securities for which United States Trust Company of New York
is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11,
12, 13, 14 and 15 of Form T-1 are not required under General Instruction
B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
<PAGE> 7
- 6 -
16. List of Exhibits
(cont'd)
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of December 15, 1995, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U. S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility, as to matters
peculiarly within the knowledge of the obligor or its directors, the
trustee has relied upon information furnished to it by the obligor and
will rely on information to be furnished by the obligor and the trustee
disclaims responsibility for the accuracy or completeness of such
information.
---------------------
<PAGE> 8
- 7 -
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, United States Trust Company of New York, a corporation organized
and existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New
York, on the 18th day of December, 1995.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By:
------------------------------------
<PAGE> 9
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) _______
--------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036
New York, New York (Zip Code)
(Address of principal
executive offices)
--------------------------
Lernout & Hauspie Speech Products N.V.
(Exact name of obligor as specified in its charter)
Belgium N/A
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
Sint-Krispijnstraat 7
8900 Ieper (Zip code)
Belgium
(Address of principal executive offices)
--------------------------
8% Convertible Subordinated Notes due 2001
(Title of the indenture securities)
================================================================================
<PAGE> 10
- 2 -
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System).
Federal Deposit Insurance Corporation, Washington, D. C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3,4,5,6,7,8,9,10,11,12,13,14 and 15.
Lernout & Hauspie Speech Products N.V. is currently not in default under
any of its outstanding securities for which United States Trust Company of
New York is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9,
10, 11, 12, 13, 14 and 15 of Form T-1 are not required under General
Instruction B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
<PAGE> 11
- 3 -
16. List of Exhibits
(cont'd)
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of June 3, 1997, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U. S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility, as to matters
peculiarly within the knowledge of the obligor or its directors, the
trustee has relied upon information furnished to it by the obligor and
will rely on information to be furnished by the obligor and the trustee
disclaims responsibility for the accuracy or completeness of such
information.
---------------------
<PAGE> 12
- 4 -
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, United States Trust Company of New York, a corporation organized
and existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New
York, on the 3rd day of June, 1997.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By:
--------------------------------------
/S/Gerard F. Ganey
Senior Vice President
<PAGE> 13
Exhibit T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By:
---------------------------
/S/Gerard F. Ganey
Senior Vice President
<PAGE> 14
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
DECEMBER 31, 1996
(IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 75,754
Short-Term Investments 276,399
Securities, Available for Sale 925,886
Loans 1,638,516
Less: Allowance for Credit Losses 13,168
----------
Net Loans 1,625,348
Premises and Equipment 61,278
Other Assets 120,903
----------
Total Assets $3,085,568
==========
LIABILITIES
Deposits:
Non-Interest Bearing $ 645,424
Interest Bearing 1,694,581
----------
Total Deposits 2,340,005
Short-Term Credit Facilities 449,183
Accounts Payable and Accrued Liabilities 139,261
----------
Total Liabilities $2,928,449
==========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 98,926
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes 804
----------
Total Stockholder's Equity 157,119
----------
Total Liabilities and
Stockholder's Equity $3,085,568
==========
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
April 9, 1997
<PAGE> 15
- 4 -
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, United States Trust Company of New York, a corporation organized
and existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New
York, on the 3rd day of June, 1997.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By:
------------------------------------
Gerard F. Ganey
Senior Vice President
<PAGE> 16
FORM T-1
===============================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) _______
------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
Neenah Corporation
(Exact name of obligor as specified in its charter)
Wisconsin 39-1580331
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2121 Brooks Avenue, Box 729
Neenah, Wisconsin 54927
(Address of principal executive offices) (Zip Code)
------------------
<PAGE> 17
- 2 -
Neenah Foundry Company
(Exact name of guarantor as specified in its charter)
Wisconsin 39-0496210
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2121 Brooks Avenue, Box 729
Neenah, Wisconsin 54927
(Address of principal executive offices) (Zip Code)
------------------
Hartley Controls Corporation
(Exact name of guarantor as specified in its charter)
Wisconsin 39-0842568
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2121 Brooks Avenue, Box 729
Neenah, Wisconsin 54927
(Address of principal executive offices) (Zip Code)
------------------
Neenah Transport, Inc.
(Exact name of guarantor as specified in its charter)
Wisconsin 39-1378433
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2121 Brooks Avenue, Box 729
Neenah, Wisconsin 54927
(Address of principal executive offices) (Zip Code)
------------------
Neenah Corporation's 11 1/8% Senior Subordinated Notes due 2007, Series B
(Title of the indenture securities)
=====================================================
<PAGE> 18
- 3 -
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Neenah Corporation, Neenah Foundry Company, Hartley Controls Corporation
and Neenah Transport, Inc. currently is not in default under any of its
outstanding securities for which United States Trust Company of New York
is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11,
12, 13, 14 and 15 of Form T-1 are not required under General Instruction
B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE> 19
- 4 -
16. List of Exhibits
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of June 24, 1997, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 24th day
of June, 1997.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By:
-------------------------------
<PAGE> 20
Exhibit T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By:
------------------------------
/S/Gerard F. Ganey
Senior Vice President
<PAGE> 21
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1997
(IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 59,856
Short-Term Investments 213,333
Securities, Available for Sale 968,413
Loans 1,370,272
Less: Allowance for Credit Losses 13,614
-----------
Net Loans 1,356,658
Premises and Equipment 61,183
Other Assets 125,938
-----------
Total Assets $ 2,785,381
===========
LIABILITIES
Deposits:
Non-Interest Bearing $ 480,539
Interest Bearing 1,738,130
-----------
Total Deposits 2,218,669
Short-Term Credit Facilities 271,567
Accounts Payable and Accrued Liabilities 131,642
-----------
Total Liabilities $ 2,621,878
===========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 42,541
Retained Earnings 101,577
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes (2,610)
-----------
Total Stockholder's Equity 163,503
-----------
Total Liabilities and
Stockholder's Equity $ 2,785,381
===========
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
June 22, 1997
<PAGE> 22
FORM T-1
===============================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) _______
------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
Neenah Corporation
(Exact name of obligor as specified in its charter)
Wisconsin 39-1580331
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2121 Brooks Avenue, Box 729
Neenah, Wisconsin 54927
(Address of principal executive offices) (Zip Code)
------------------
<PAGE> 23
- 2 -
Neenah Foundry Company
(Exact name of guarantor as specified in its charter)
Wisconsin 39-0496210
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2121 Brooks Avenue, Box 729
Neenah, Wisconsin 54927
(Address of principal executive offices) (Zip Code)
------------------
Hartley Controls Corporation
(Exact name of guarantor as specified in its charter)
Wisconsin 39-0842568
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2121 Brooks Avenue, Box 729
Neenah, Wisconsin 54927
(Address of principal executive offices) (Zip Code)
------------------
Neenah Transport, Inc.
(Exact name of guarantor as specified in its charter)
Wisconsin 39-1378433
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2121 Brooks Avenue, Box 729
Neenah, Wisconsin 54927
(Address of principal executive offices) (Zip Code)
------------------
Neenah Corporation's 11 1/8% Senior Subordinated Notes due 2007, Series B
(Title of the indenture securities)
=====================================================
<PAGE> 24
- 3 -
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Neenah Corporation, Neenah Foundry Company, Hartley Controls Corporation
and Neenah Transport, Inc. currently is not in default under any of its
outstanding securities for which United States Trust Company of New York
is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11,
12, 13, 14 and 15 of Form T-1 are not required under General Instruction
B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE> 25
- 4 -
16. List of Exhibits
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of June 24, 1997, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 24th day
of June, 1997.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By:
-------------------------------
<PAGE> 26
Exhibit T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By:
------------------------------
/S/Gerard F. Ganey
Senior Vice President
<PAGE> 27
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1997
(IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 59,856
Short-Term Investments 213,333
Securities, Available for Sale 968,413
Loans 1,370,272
Less: Allowance for Credit Losses 13,614
-----------
Net Loans 1,356,658
Premises and Equipment 61,183
Other Assets 125,938
-----------
Total Assets $ 2,785,381
===========
LIABILITIES
Deposits:
Non-Interest Bearing $ 480,539
Interest Bearing 1,738,130
-----------
Total Deposits 2,218,669
Short-Term Credit Facilities 271,567
Accounts Payable and Accrued Liabilities 131,642
-----------
Total Liabilities $ 2,621,878
===========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 42,541
Retained Earnings 101,577
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes (2,610)
-----------
Total Stockholder's Equity 163,503
-----------
Total Liabilities and
Stockholder's Equity $ 2,785,381
===========
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
June 22, 1997
<PAGE> 1
EXHIBIT 99.3
INSTRUCTIONS
TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
NEENAH FOUNDRY COMPANY
11 1/8% SERIES A SENIOR SUBORDINATED NOTES DUE 2007
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated
_________ __, 1997 (the "Prospectus") of Neenah Foundry Company, a Wisconsin
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer"). Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to action to be taken by you relating to the Exchange
Offer with respect to the 11 1/8% Series A Senior Subordinated Notes due 2007
(the "Notes") held by you for the account of the undersigned.
The aggregate face amount of the Notes held by you for the account of the
undersigned is (fill in amount):
$ of the 11 1/8% Series A Senior Subordinated Notes due 2007
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
[ ] TO TENDER the following Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF NOTES TO BE TENDERED, IF ANY): $
[ ] NOT TO TENDER any Notes held by you for the account of the undersigned..
If the undersigned instruct you to tender the Notes held by you for the
account of the undersigned, it is understood that you are (a) to make, on behalf
of the undersigned (and the undersigned, by its signature below, hereby makes to
you), the representations and warranties contained in the Letter of Transmittal
that are to be made with respect to the undersigned as a beneficial owner,
including but not limited to the representations that the undersigned's
principal residence is in the state of ________ [FILL IN THE NAME OF THE STATE],
(i) the undersigned is acquiring the New Notes in the ordinary course of
business of the undersigned, (ii) the undersigned is not participating, does not
participate, and has no arrangement or understanding with any person to
participate in the distribution of the New Notes, (iii) the undersigned
acknowledges that any person participating in the Exchange Offer for the purpose
of distributing the New Notes must comply with the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the "Act"), in
connection with a secondary resale transaction of the New Notes acquired by such
person and cannot rely on the position of the Staff of the Securities and
Exchange Commission set forth in no-action letters that are discussed in the
section of the Prospectus entitled "The Exchange Offer--Resale of the New
Notes," and the undersigned is not an "affiliate," as defined in Rule 405 under
the Act, of the Company; to agree, on behalf of the undersigned, as set forth in
the Letter of Transmittal; and to take such other action as necessary under the
Prospectus or the Letter of Transmittal to effect the valid tender of such
Notes.
<PAGE> 2
[ ] Check this box if the Beneficial Owner of the Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes for
its own account as a result of market-making activities or other trading
activities.
SIGN HERE
Name of beneficial owner(s):____________________________________________________
Signature(s):___________________________________________________________________
Name (please print):____________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Telephone number:_______________________________________________________________
Taxpayer Identification or Social Security Number:______________________________
Date:___________________________________________________________________________
-2-
