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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 18, 1996
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EAGLE-PICHER INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
OHIO 1-1499 31-0268670
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
580 Walnut St., 13th Floor, P.O. Box 779, Cincinnati, Ohio 45201
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 513-721-7010
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(Not Applicable)
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(Former name or former address, if changed since last report)
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Item 3. Bankruptcy or Receivership.
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As previously reported, on January 7, 1991 (the "Petition Date"),
Eagle-Picher Industries, Inc. (the "Company") and seven of its domestic
subsidiaries (collectively, the "Debtors") each filed a voluntary petition for
relief under chapter 11 of title 11 of the United States Code (the "Bankruptcy
Code") with the United States Bankruptcy Court for the Southern District of
Ohio, Western Division (the "Bankruptcy Court"). Since the Petition Date, the
Debtors have operated their respective businesses as debtors in possession in
accordance with the provisions of the Bankruptcy Code.
On November 18, 1996, the United States District Court for the Southern
District of Ohio, Western Division (the "District Court"), and the Bankruptcy
Court entered an Order on Confirmation of Plan and Findings of Fact and
Conclusions of Law Re Confirmation of the Third Amended Consolidated Plan of
Reorganization of the Debtors, As Modified (collectively, the "Confirmation
Orders"), which confirmed the Company's Third Amended Consolidated Plan of
Reorganization, dated August 28, 1996, as modified (the "Plan"). The effective
date of the Plan occurred on November 29, 1996 (the "Effective Date"), and the
Plan was substantially consummated on such date.
The Plan was proposed jointly by the Debtors, the Injury Claimants'
Committee (the "ICC") and the Legal Representative for Future Claimants (the
"RFC"). The ICC and the RFC represented the interests of present and future
asbestos-related and lead-related personal injury claimants, respectively, in
the Debtors' chapter 11 cases. The Plan was also supported by the Unsecured
Creditors' Committee (the "UCC"), which also was appointed in the Debtors'
chapter 11 cases.
The Plan is based on a settlement of $2.0 billion for the Company's
liability for present and future asbestos-related personal injury claims.
Pursuant to the Plan, all present and future asbestos-related and lead-related
personal injury claims will be channeled to and resolved by an independently
administered claims trust (the "PI Trust"). Based on the settlement of $2.0
billion for the Company's liability with respect to present and future
asbestos-related personal injury claims, the Company's estimate that all other
allowed prepetition claims aggregate approximately $157 million, and the value
of the equity of the reorganized Company, each holder of a prepetition general
unsecured claim, including environmental claims but excluding asbestos-related
or lead-related personal injury claims and asbestos-related property damage
claims, will receive a distribution having a value equal to approximately 37% of
its claim. Such distribution will be paid 1/2 in cash and 1/2 in notes having a
three-year maturity.
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The Plan also provides for the resolution and discharge of all
asbestos-related property damage claims, which will be channeled to and resolved
by a second trust funded with $3 million in cash (the "PD Trust"). Claims
entitled to priority under the Bankruptcy Code and convenience claims
(prepetition general unsecured claims of $500 or less or claims that are reduced
to that amount) will be paid in full, in cash.
Pursuant to the Plan, on the Effective Date, the PI Trust received
consideration consisting of ten-year debentures of the reorganized Company in
the principal amount of $250 million, cash in the approximate amount of $51
million, three-year notes of the reorganized Company in the principal amount of
approximately $18 million, other notes of the reorganized Company in the
principal amount of approximately $69 million which mature in 1998, and all of
the common stock of the reorganized Company. The aggregate value of the
consideration distributed or to be distributed to the PI Trust is estimated to
equal approximately 37% of the $2.0 billion settlement amount for the Company's
liability for present and future asbestos-related personal injury claims.
Initial distributions under the Plan will be made to holders of allowed
prepetition claims within ten days after the Effective Date. A final
distribution will be made to all unsecured claimants and to the PI Trust when
all claims asserted in the Debtors' chapter 11 cases (other than those claims
channeled to the PI Trust and the PD Trust) are resolved.
The Disclosure Statement, dated August 28, 1996, relating to the Plan
(the "Disclosure Statement") is filed as Exhibit 99.0 hereto and incorporated
herein by reference. The Disclosure Statement is qualified in its entirety by
reference to the full text of the Plan, the exhibits to the Plan and to the
Disclosure Statement, the modifications to the Plan and the Confirmation Orders,
filed as Exhibits 2.0 through 2.8 hereto and incorporated herein by reference.
Immediately prior to the Effective Date, 11,040,932 shares of the
Company's common stock were issued and outstanding. On the Effective Date, all
of such shares were cancelled, and ten million shares of common stock of the
reorganized Company were issued to the PI Trust, which shares constitute all of
the issued and outstanding shares of the reorganized Company.
The information as to the assets and liabilities of the Company set
forth in the document entitled, "Eagle-Picher Industries, Inc. Significant
Assumptions for Financial Projections," filed as Exhibit 2.3 hereto, is
incorporated herein by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EAGLE-PICHER INDUSTRIES, INC.
(Registrant)
Date: December 3 , 1996 By: /s/ James A. Ralston
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James A. Ralston
Vice President, General
Counsel and Secretary
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EXHIBIT INDEX
Exhibit Number
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2.0 Third Amended Consolidated Plan of Reorganization, as
filed with the Bankruptcy Court on August 28, 1996
(incorporated by reference to Exhibit T3E.1 to the
Company's Form T-3 dated November 8, 1996).
2.1 Exhibits to the Third Amended Consolidated Plan of
Reorganization, as filed with the Bankruptcy Court on
October 24, 1996 (Exhibits 1.1.8, 1.1.9 and 1.1.56
are incorporated by reference to Exhibits T3A.2,
T3B.2 and T3C, respectively, to the Company's Form
T-3 dated November 8, 1996).
2.2 Modifications to the Third Amended Consolidated Plan
of Reorganization, as filed with the Bankruptcy Court
on November 13, 1996.
2.3 Certain exhibits filed in connection with the
confirmation hearing held on November 13, 1996.
2.4 Certificate of Reorganization and Certificate of
Amended and Restated Articles of Incorporation of
the reorganized Applicant, dated November 29,
1996.
2.5 Management Contracts, dated November 29, 1996.
2.6 Eagle-Picher Industries, Inc. Personal Injury
Settlement Trust Agreement, dated November 29,
1996.
2.7 Order on Confirmation of Plan, entered November
18, 1996.
2.8 Findings of Fact and Conclusions of Law Re
Confirmation of the Third Amended Consolidated Plan
of Reorganization of the Debtors, as Modified,
entered November 18, 1996.
99.0 Disclosure Statement for Third Amended Consolidated
Plan of Reorganization, dated August 28, 1996
(including the appendices and exhibits attached
thereto) (incorporated by reference to Exhibit T3E.1
to the Company's Form T-3 dated November 8, 1996).
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Exhibit 2.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re ) Consolidated Case No. 1-91-00100
)
)
EAGLE-PICHER INDUSTRIES, ) Chapter 11
INC., et al., )
) JUDGE PERLMAN
Debtors )
)
_________________________________ )
EXHIBIT 1.1.16
FORM OF ASBESTOS PD TRUST AGREEMENT
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EAGLE-PICHER INDUSTRIES, INC.
ASBESTOS PROPERTY DAMAGE SETTLEMENT TRUST AGREEMENT
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This Trust Agreement is among Eagle-Picher Industries, Inc., an Ohio
corporation and debtor in possession ("EAGLE-PICHER"), and its affiliates, Daisy
Parts, Inc., Transicoil Inc., Michigan Automotive Research Corp., EDI, Inc.,
Eagle-Picher Minerals, Inc., and Hillsdale Tool & Manufacturing Co. (the
"SETTLORS" or "DEBTORS"), and ______________, as Trustees ("TRUSTEES"), pursuant
to the Third Amended Consolidated Joint Plan of Reorganization of Eagle-Picher
and its affiliated debtors, dated August 28, 1996 (the "PLAN").
WHEREAS, at the time of the entry of the order for relief in the
Chapter 11 Cases (as such term is hereinafter defined), Eagle-Picher was named
as a defendant in property damage actions seeking recovery for damages allegedly
caused by the presence of asbestos or asbestos-containing products in buildings
and other facilities; and
WHEREAS, the Settlors have reorganized under the provisions of chapter
11 of the Bankruptcy Code (as hereinafter defined) in cases pending in the
Bankruptcy Court (as hereinafter defined) known as In re Eagle-Picher
Industries, Inc., et al., Consolidated Case No. 1-91-00100 (the "CHAPTER 11
CASES"); and
WHEREAS, the Plan, filed by the Debtors, the Legal Representative for
Future Claimants appointed by the Bankruptcy Court pursuant to its order of
October 31, 1991 ("FUTURE REPRESENTATIVE") and the Bankruptcy Court-appointed
committee composed of the representatives of certain tort claimants of the
Debtors (the "INJURY CLAIMANTS' COMMITTEE") has been confirmed; and
WHEREAS, the Plan provides, inter alia, for the creation of the
Eagle-Picher Industries, Inc. Asbestos Property Damage Settlement Trust (the
"ASBESTOS PD TRUST"); and
WHEREAS, pursuant to the Plan, the Asbestos PD Trust is to be funded in
whole in either debentures of Eagle-Picher or cash, depending upon whether Class
16 votes to accept the Plan; and
WHEREAS, the Plan provides, among other things, for the complete
settlement and satisfaction of all liabilities and obligations of the Debtors
with respect to Asbestos Property Damage Claims (as such term is hereinafter
defined); and
WHEREAS, the Asbestos PD Trust is intended to qualify as a "Qualified
Settlement Fund" within the meaning of Section 1.468B-1 of the Treasury
Regulations promulgated under Section 468B of the Internal Revenue Code;
NOW, THEREFORE, it is hereby agreed as follows:
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ARTICLE 1
DEFINITIONS
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As used herein, the following terms shall have the meanings specified
below:
1.1 Asbestos Property Damage Claim: Any Claim against any of the Debtors
under any theory of law, equity, admiralty, or otherwise, for damages arising
from the presence in buildings or other structures of asbestos or
asbestos-containing products that was or were manufactured, sold, supplied,
produced, distributed, or in any way marketed by any of the Debtors prior to the
Petition Date, or for which any of the Debtors is otherwise liable due to the
acts or omissions of any of the Debtors, including, without express or implied
limitation, all such Claims for compensatory damages (such as proximate,
consequential, general, and special damages) and punitive damages, but excluding
Asbestos Property Damage Contribution Claims.
1.2 Asbestos Property Damage Contribution Claim: Any Claim against any of
the Debtors that is (i) held by (A) any Entity (other than a director or officer
entitled to indemnification pursuant to section 8.6 of the Plan) who has been,
is, or may be a defendant in an action seeking damages arising from the presence
in buildings or other structures of asbestos or asbestos-containing products
that was or were manufactured, sold, supplied, produced, distributed, or in any
way marketed by any of the Debtors prior to the Petition Date, or for which any
of the Debtors is otherwise liable due to the acts or omissions of any of the
Debtors or (B) any assignee or transferee of such Entity, and (ii) on account of
alleged liability by any of the Debtors for reimbursement or contribution of any
portion of any damages such Entity has paid or may pay to the plaintiff in such
action.
1.3 Bankruptcy Code: The Bankruptcy Reform Act of 1978, as amended, and as
codified in title 11 of the United States Code, as applicable to the Chapter 11
Cases.
1.4 Bankruptcy Court: The United States District Court for the Southern
District of Ohio, Western Division, having jurisdiction over the Chapter 11
Cases and, to the extent of any reference made pursuant to section 157 of title
28 of the United States Code, the unit of such District Court constituted
pursuant to section 151 of title 28 of the United States Code.
1.5 Business Day: Any day on which commercial banks are required to be open
for business in Cincinnati, Ohio.
1.6 Claim: (a) A "claim," as defined in section 101(5) of the Bankruptcy
Code, against any of the Debtors or Debtors in Possession, whether or not
asserted, whether or not the facts of or legal bases therefor are known or
unknown, and specifically including, without express or implied limitation, any
rights under sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, any
claim of a derivative nature, any potential or unmatured contract claims, and
any other
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Contingent Claim, and (b) any Environmental Claim or Product Liability Tort
Claim, whether or not it constitutes a "claim," as defined in section 101(5) of
the Bankruptcy Code.
1.7 Confirmation Order: The order or orders of the Bankruptcy Court
confirming the Plan in accordance with the provisions of chapter 11 of the
Bankruptcy Code, which will contain, inter alia, the Asbestos and Lead PI
Permanent Channeling Injunction and the Claims Trading Injunction.
1.8 Debtors in Possession: The Debtors, each in its respective capacity as
a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy
Code.
1.9 Effective Date: The first Business Day after the date on which all of
the conditions precedent to the effectiveness of the Plan specified in section
7.10 of the Plan have been satisfied or waived or, if a stay of the Confirmation
Order is in effect on such date, the first Business Day after the expiration,
dissolution, or lifting of such stay.
1.10 Entity: An individual, corporation, partnership, association, joint
stock company, joint venture, estate, trust, unincorporated organization, or
government or any political subdivision thereof, or other person or entity.
1.11 Petition Date: January 7, 1991.
1.12 Reorganized Debtors: The Debtors, or any successors in interest
thereto, from and after the Effective Date.
1.13 Reorganized Eagle-Picher: Eagle-Picher, or any successor in interest
thereto, from and after the Effective Date.
All capitalized terms used herein and not defined in this Article 1 or in
another provision of this Trust Agreement shall have the meanings assigned to
them in the Plan and/or the Bankruptcy Code, which definitions are incorporated
by reference herein.
ARTICLE 2
AGREEMENT OF TRUST
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2.1 CREATION AND NAME. The Settlors hereby create a trust known as the
"Eagle-Picher Industries, Inc. Asbestos Property Damage Settlement Trust," which
is the Asbestos PD Trust provided for and referred to in the Plan. The Trustees
of the Asbestos PD Trust may transact the business and affairs of the Asbestos
PD Trust in the name, "Eagle-Picher Industries, Inc. Asbestos Property Damage
Settlement Trust."
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2.2 PURPOSE. The purpose of the Asbestos PD Trust is to assume any and all
liabilities of the Debtors, their successors in interest, or their affiliates,
with respect to any and all Asbestos Property Damage Claims and to use the
Asbestos PD Trust's assets and income to pay holders of valid Asbestos Property
Damage Claims in such a way that holders of similar Asbestos Property Damage
Claims are paid in substantially the same manner. This purpose shall be
fulfilled through the provisions of this Trust Agreement and either the Asbestos
Property Damage Claims Resolution Procedures annexed as Exhibit 1.1.6.5 to the
Plan (if Class 16 votes to reject the Plan) or such other claims resolution
procedures as may be adopted by the Trustees (if and only if Class 16 votes to
accept the Plan) (the "ASBESTOS PD CLAIMS PROCEDURES").
2.3 TRANSFER OF ASSETS. The Settlors hereby transfer and assign to the
Asbestos PD Trust the property set forth in Article 11 of the Plan (the
"ASSETS").
2.4 ACCEPTANCE OF ASSETS AND ASSUMPTION OF LIABILITIES.
(a) In furtherance of the purposes of the Asbestos PD Trust, the
Trustees, on behalf of the Asbestos PD Trust, hereby expressly accept the
transfer and assignment to the Asbestos PD Trust of the Assets.
(b) In furtherance of the purposes of the Asbestos PD Trust, and
subject to section 5.4 hereof, the Trustees, on behalf of the Asbestos PD Trust,
expressly assume all liability for all Asbestos Property Damage Claims as
provided for in Article 11 of the Plan. Except as otherwise provided in the
Asbestos PD Claims Procedures, the Asbestos PD Trust shall have all defenses,
cross-claims, offsets, and recoupments regarding Asbestos Property Damage Claims
that Eagle-Picher has or would have had under applicable law.
(c) Neither the Debtors nor their successors in interest or their
affiliates shall be entitled to any indemnification from the Asbestos PD Trust
for any expenses, costs, and fees (including attorneys' fees), judgments,
settlements, or other liabilities arising from or incurred in connection with,
any action related to an Asbestos Property Damage Claim, including, but not
limited to, indemnification or contribution for Asbestos Property Damage Claims
prosecuted against Reorganized Eagle-Picher. Nothing in this section or any
other section of this Trust Agreement shall be construed in any way to limit the
scope, enforceability, or effectiveness of the discharge and injunction arising
in favor of the Reorganized Debtors upon the Effective Date or the Asbestos PD
Trust's assumption of all liability with respect to Asbestos Property Damage
Claims.
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ARTICLE 3
POWERS AND TRUST ADMINISTRATION
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3.1 POWERS.
(a) Subject to the limitations set forth in this Trust Agreement, the
Trustees shall have the power to take any and all actions that, in the judgment
of the Trustees, are necessary or proper to fulfill the purposes of the Asbestos
PD Trust, including, without limitation, each power expressly granted in this
section 3.1, any power reasonably incidental thereto, and any trust power now or
hereafter permitted under the laws of the State of Ohio.
(b) Except as otherwise specified herein, the Trustees need not obtain
the order or approval of any court in the exercise of any power or discretion
conferred hereunder.
(c) Without limiting the generality of Article 3.1(a) above, the
Trustees shall have the power to:
(i) receive and hold the Assets, exercise all rights with respect
to, and sell any debentures issued by Reorganized Eagle-Picher that
are included in the Assets, subject to any restrictions set forth in
the articles of incorporation of Reorganized Eagle-Picher;
(ii) invest the monies held from time to time by the Asbestos PD
Trust;
(iii) sell, transfer or exchange any or all of the Assets at such
prices and upon such terms as they may consider proper, consistent
with the other terms of this Trust Agreement;
(iv) pay liabilities and expenses of the Asbestos PD Trust;
(v) change the state of domicile of the Asbestos PD Trust;
(vi) establish such funds, reserves and accounts within the
Asbestos PD Trust estate, as deemed by the Trustees to be useful in
carrying out the purposes of the Asbestos PD Trust;
(vii) sue and be sued and participate, as a party or otherwise,
in any judicial, administrative, arbitrative or other proceeding;
(viii) amend the Bylaws, a copy of which is annexed hereto as
Annex A (the "BYLAWS");
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(ix) appoint such officers and hire such employees and engage
such legal, financial, accounting, investment and other advisers,
alternative dispute resolution panelists, and agents as the business
of the Asbestos PD Trust requires, and to delegate to such persons
such powers and authorities as the fiduciary duties of the Trustees
permit and as the Trustees, in their discretion, deem advisable or
necessary in order to carry out the terms of this Asbestos PD Trust;
(x) pay employees, legal, financial, accounting, investment and
other advisers and agents reasonable compensation, including, without
limitation, compensation at rates approved by the Trustees for
services rendered prior to the execution hereof;
(xi) reimburse the Trustees, subject to section 5.5 hereof, and
reimburse such officers, employees, legal, financial, accounting,
investment and other advisers and agents all reasonable out-of-pocket
costs and expenses incurred by such persons in connection with the
performance of their duties hereunder, including, without limitation,
costs and expenses incurred prior to the execution hereof;
(xii) execute and deliver such deeds, leases and other
instruments as the Trustees consider proper in administering the
Asbestos PD Trust;
(xiii) enter into such other arrangements with third parties as
are deemed by the Trustees to be useful in carrying out the purposes
of the Asbestos PD Trust, provided such arrangements do not conflict
with any other provision of this Trust Agreement;
(xiv) in accordance with section 5.6 hereof, indemnify (and
purchase insurance indemnifying) the Trustees and officers, employees,
agents, advisers and representatives of the Asbestos PD Trust to the
fullest extent that a corporation or trust organized under the law of
the Asbestos PD Trust's domicile is from time to time entitled to
indemnify and/or insure its directors, trustees, officers, employees,
agents, advisers and representatives;
(xv) delegate any or all of the authority herein conferred with
respect to the investment of all or any portion of the Assets to any
one or more reputable individuals or recognized institutional
investment advisers or investment managers without liability for any
action taken or omission made because of any such delegation, except
as provided in section 5.4 hereof;
(xvi) consult with Reorganized Eagle-Picher at such times and
with respect to such issues relating to the conduct of the Asbestos PD
Trust as the Trustees consider desirable;
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(xvii) make, pursue (by litigation or otherwise), collect,
compromise or settle any claim, right, action or cause of action
included in the Assets; and
(xviii) merge or contract with other claims resolution facilities
that are not specifically created by this Trust Agreement or the
Asbestos PD Claims Procedures; provided that such merger or contract
shall not (a) subject the Reorganized Debtors or any successor in
interest to any risk of having any Asbestos Property Damage Claim
asserted against it or them; or (b) otherwise jeopardize the validity
or enforceability of the discharge and injunction arising in favor of
the Reorganized Debtors on the Effective Date.
(d) The Trustees shall not have the power to guaranty any debt of
other persons.
3.2 GENERAL ADMINISTRATION.
(a) The Trustees shall act in accordance with the Bylaws. To the
extent not inconsistent with the terms of this Trust Agreement, the Bylaws
govern the affairs of the Asbestos PD Trust.
(b) The Trustees shall timely file such income tax and other returns
and statements and comply with all withholding obligations, as required under
the applicable provisions of the Internal Revenue Code and of any state law and
the regulations promulgated thereunder.
(c)(i) The Trustees shall cause to be prepared and filed with the
Bankruptcy Court, as soon as available, and in any event within ninety
(90) days following the end of each fiscal year, an annual report
containing financial statements of the Asbestos PD Trust (including,
without limitation, a balance sheet of the Asbestos PD Trust as of the
end of such fiscal year and a statement of operations for such fiscal
year) audited by a firm of independent certified public accountants
selected by the Trustees and accompanied by an opinion of such firm as
to the fairness of the financial statements' presentation of the cash
and investments available for the payment of claims and as to the
conformity of the financial statements with generally accepted
accounting principles. The Trustees shall provide a copy of such
report to Reorganized Eagle-Picher.
(ii) Simultaneously with delivery of each set of financial
statements referred to in Article 3.2(c)(i) above, the Trustees shall
cause to be prepared and filed with the Bankruptcy Court a report
containing a summary regarding the number and type of claims disposed
of during the period covered by the financial statements.
(iii) All materials required to be filed with the Bankruptcy
Court by this Article 3.2 shall be available for inspection by the
public in accordance with procedures established by the Bankruptcy
Court.
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3.3 CLAIMS ADMINISTRATION.
(a) General Principles. The Trustees shall proceed quickly to
implement (and, if Class 16 votes to accept the Plan, develop) the Asbestos PD
Claims Procedures. The Asbestos PD Trust shall pay holders of valid Asbestos
Property Damage Claims in accordance with procedures developed by the Trustees
that are consistent with the Asbestos PD Claims Procedures and the terms of this
Trust Agreement.
(b) Payment of Asbestos Property Damage Claims. The Trustees shall
employ mechanisms such as the review of estimates of the numbers and values of
Asbestos Property Damage Claims, or other comparable mechanisms, that provide
reasonable assurance the Asbestos PD Trust will value, and be in a financial
position to pay, similar Asbestos Property Damage Claims in substantially the
same manner.
(c) Bankruptcy Court Claims Bar Date Orders. The Trustees shall
enforce the Bankruptcy Court's claims' bar date orders that are applicable to
Asbestos Property Damage Claims.
ARTICLE 4
ACCOUNTS, INVESTMENTS, AND PAYMENTS
-----------------------------------
4.1 ACCOUNTS. The Trustees may, from time to time, create such accounts and
reserves within the Asbestos PD Trust estate as they may deem necessary, prudent
or useful in order to provide for the payment of expenses and valid Asbestos
Property Damage Claims and may, with respect to any such account or reserve,
restrict the use of monies therein.
4.2 INVESTMENTS. Investment of monies held in the Asbestos PD Trust shall
be administered in the manner in which individuals of ordinary prudence,
discretion and judgment would act in the management of their own affairs,
subject to the following limitations and provisions:
(a) The Asbestos PD Trust may acquire and hold any debentures issued
by Reorganized Eagle-Picher and included in the Assets without regard to any of
the limitations set forth in the other parts of this Article 4.
(b) Except with respect to entities owned and controlled by the
Asbestos PD Trust for purposes of carrying out provisions of this Trust
Agreement, the Asbestos PD Trust shall not acquire or hold any equity in any
Entity or business enterprise unless such equity is in the form of securities
that are traded on a national securities exchange or major international
securities exchange or over the National Association of Securities Dealers
Automated Quotation System.
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(c) The Asbestos PD Trust shall not acquire or hold any repurchase
obligations unless, in the opinion of the Trustees, they are adequately
collateralized.
4.3 SOURCE OF PAYMENTS. All Asbestos PD Trust expenses, payments
and all liabilities with respect to Asbestos Property Damage Claims shall be
payable solely out of the Asbestos PD Trust estate. Neither Eagle-Picher,
Reorganized Eagle-Picher, any Debtors, their subsidiaries, any successor in
interest or the present or former directors, officers, employees or agents of
Eagle-Picher, Reorganized Eagle-Picher, any Debtors or their subsidiaries, nor
the Trustees, or any of their officers, agents, advisers or employees shall be
liable for the payment of any Asbestos PD Trust expense or Asbestos Property
Damage Claim or any other liability of the Asbestos PD Trust.
ARTICLE 5
TRUSTEES
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5.1 NUMBER. There initially shall be between one (1) and four (4) Trustees,
the number being determined (a) by Reorganized Eagle-Picher if Class 16 votes to
reject the Plan or (b) pursuant to the Plan if Class 16 votes to accept the
Plan.
5.2 TERM OF SERVICE.
(a) Each of the initial Trustees shall serve until the earlier of (i)
his or her death, (ii) his, her, or its resignation pursuant to section 5.2(b)
hereof, (iii) his or her removal pursuant to section 5.2(c) hereof, or (iv) the
termination of the Asbestos PD Trust pursuant to section 6.2 hereof, at which
time the term shall terminate automatically.
(b) Any Trustee may resign at any time by written notice to each of
the remaining Trustees. Such notice shall specify a date when such resignation
shall take effect, which shall not be less than ninety (90) days after the date
such notice is given, where practicable.
(c) Any Trustee may be removed in the event that such Trustee becomes
unable to discharge his or her duties hereunder due to accident or physical or
mental deterioration, or for other good cause. Good cause shall be deemed to
include, without limitation, a consistent pattern of neglect and failure to
perform or participate in performing the duties of the Trustees hereunder, or
repeated nonattendance at scheduled meetings. Such removal shall require the
unanimous decision of the other Trustees. Such removal shall take effect at such
time as the other Trustees shall determine.
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5.3 APPOINTMENT OF SUCCESSOR TRUSTEE.
(a) In the event of a vacancy in the position of a Trustee, the
vacancy shall be filled by majority vote of the remaining Trustees who shall
refrain from making any appointment that may result in the appearance of
impropriety.
(b) Immediately upon the appointment of any successor Trustee, all
rights, titles, duties, powers and authority of the predecessor Trustee
hereunder shall be vested in, and undertaken by, the successor Trustee without
any further act. No successor Trustee shall be liable personally for any act or
omission of his or her predecessor Trustee.
5.4 LIABILITY OF TRUSTEES. No Trustee, officer, or employee of the Asbestos
PD Trust shall be liable to the Asbestos PD Trust, to any person holding an
Asbestos Property Damage Claim, or to any other Entity except for such
Trustee's, officer's or employee's own breach of trust committed in bad faith or
for willful misappropriation. No Trustee, officer, or employee of the Asbestos
PD Trust shall be liable for any act or omission of any other officer, agent, or
employee of the Asbestos PD Trust, unless the Trustee acted with bad faith or
willful misconduct in the selection or retention of such officer, agent, or
employee.
5.5 COMPENSATION AND EXPENSES OF TRUSTEES.
(a) Each of the Trustees, other than Reorganized Eagle-Picher if
Reorganized Eagle-Picher serves as a Trustee, shall receive compensation from
the Asbestos PD Trust for his or her services as Trustee in the amount of
$35,000 per annum, plus a per diem allowance for meetings attended in the amount
of $1,000, or some other amount as determined by the Trustees, payable as
determined by the Trustees. The Trustees shall determine the scope and duration
of activities that constitute a meeting and may provide for partial payment of
per diem amounts for activities of less than a full day's duration. The per
annum compensation payable to the Trustees hereunder shall be increased annually
by the Trustees proportionately with any increase in the Consumer Price Index --
All Cities (or any successor index) for the corresponding annual period. Any
increase in excess of that amount may be made only with the approval of the
Bankruptcy Court.
(b) The Asbestos PD Trust will promptly reimburse the Trustees for all
reasonable out-of-pocket costs and expenses incurred by the Trustees in
connection with the performance of their duties hereunder.
5.6 INDEMNIFICATION OF TRUSTEES AND OTHERS.
(a) The Asbestos PD Trust shall indemnify and defend the Trustees and
the Asbestos PD Trust's officers, agents, advisers, or employees, to the fullest
extent that a corporation or trust organized under the laws of the Asbestos PD
Trust's domicile is from time to time entitled to indemnify and defend its
directors, trustees, officers, employees, agents or
10
<PAGE> 12
advisers against any and all liabilities, expenses, claims, damages or losses
incurred by them in the performance of their duties hereunder. Notwithstanding
the foregoing, the Trustees shall not be indemnified or defended in any way for
any liability, expense, claim, damage or loss for which they are liable under
section 5.4 hereof.
(b) Reasonable expenses, costs and fees (including attorneys' fees)
incurred by or on behalf of a Trustee in connection with any action, suit, or
proceeding, whether civil, administrative or arbitrative, from which they are
indemnified by the Asbestos PD Trust pursuant to this section 5.6, may be paid
by the Asbestos PD Trust in advance of the final disposition thereof upon
receipt of an undertaking by or on behalf of such Trustee to repay such amount
unless it shall be determined ultimately that such Trustee is entitled to be
indemnified by the Asbestos PD Trust.
(c) The Trustees shall have the power, generally or in specific cases,
to cause the Asbestos PD Trust to indemnify the employees and agents of the
Asbestos PD Trust to the same extent as provided in this section 5.6 with
respect to the Trustees.
(d) Any indemnification under section 5.6(c) of this Trust Agreement
shall be made by the Asbestos PD Trust upon a determination that indemnification
of such Entity is proper in the circumstances. Such determination shall be made
by a majority vote of the Trustees who were not parties to such action, suit, or
proceeding, if at least two such Trustees were not parties; otherwise the
determination will be made by legal counsel to the Asbestos PD Trust.
(e) The Trustees may purchase and maintain reasonable amounts and
types of insurance on behalf of an individual who is or was a Trustee, officer,
employee, agent or representative of the Asbestos PD Trust against liability
asserted against or incurred by such individual in that capacity or arising from
his or her status as a Trustee, officer, employee, agent or representative.
5.7 TRUSTEES' LIEN. The Trustees shall have a prior lien upon the
Asbestos PD Trust corpus to secure the payment of any amounts payable to them
pursuant to sections 5.5 and 5.6.
5.8 TRUSTEES' EMPLOYMENT OF EXPERTS. The Trustees may, but shall not be
required to, consult with counsel, accountants, appraisers and other parties
deemed by the Trustees to be qualified as experts on the matters submitted to
them (regardless of whether any such party is affiliated with any of the
Trustees in any manner, except as otherwise expressly provided in this Trust
Agreement), and the opinion of any such parties on any matters submitted to them
by the Trustees shall be full and complete authorization and protection in
respect of any action taken or not taken by the Trustees hereunder in good faith
and in accordance with the written opinion of any such party.
5.9 TRUSTEES' SERVICE AS OFFICERS OR CONSULTANTS TO THE ASBESTOS PD TRUST.
The Trustees may, but are not required to, select any Trustee to serve as an
officer or manager of the
11
<PAGE> 13
Asbestos PD Trust or as a consultant to the Asbestos PD Trust. In the event any
Trustee serves the Asbestos PD Trust in such a capacity, the Asbestos PD Trust
shall compensate the Trustee in an amount determined by the Trustees.
Compensation for a Trustee's service as an officer or manager of the Asbestos PD
Trust or as a consultant to the Asbestos PD Trust shall be in addition to
compensation paid pursuant to section 5.5 hereof.
5.10 TRUSTEES' SERVICE AS DIRECTORS OF REORGANIZED EAGLE-PICHER. The
Trustees are not prohibited from serving as directors of Reorganized
Eagle-Picher. If any Trustee serves as a director of Reorganized Eagle-Picher,
he or she shall not receive for such service compensation over and above the
compensation received as Trustee under section 5.5 hereof, but he may receive
from Reorganized Eagle-Picher a per diem allowance in the amount that
Reorganized Eagle-Picher pays its directors for their attendance at meetings.
5.11 BOND. The Trustees shall not be required to post any bond or other
form of surety or security unless otherwise ordered by the Bankruptcy Court.
ARTICLE 6
GENERAL PROVISIONS
------------------
6.1 IRREVOCABILITY. The Asbestos PD Trust is irrevocable, but is subject to
amendment as provided in section 6.3 hereof.
6.2 TERMINATION.
(a) The Asbestos PD Trust shall automatically terminate on the date
(the "TERMINATION DATE") ninety (90) days after the first occurrence of any of
the following events:
(i) the Trustees in their sole discretion decide to terminate the
Asbestos PD Trust because all Asbestos Property Damage Claims duly
filed with the Asbestos PD Trust have been liquidated and satisfied;
(ii) if the Trustees have procured and have in place irrevocable
insurance policies and have established claims handling agreements and
other necessary arrangements with suitable third parties adequate to
discharge all expected remaining obligations and expenses of the
Asbestos PD Trust in a manner consistent with this Trust Agreement and
the Asbestos PD Claims Procedures, the date on which the Bankruptcy
Court enters an order approving such insurance and other arrangements
and such order becomes final;
(iii) if in the judgment of two-thirds of the Trustees, the
continued administration of the Asbestos PD Trust is uneconomic or
inimical to the best interests of the persons holding Asbestos
Property Damage Claims, and the termination of the Asbestos PD Trust
will not expose or subject Reorganized Eagle-Picher or any other
12
<PAGE> 14
Reorganized Debtor or any successor in interest to any increased or
undue risk of having any Asbestos Property Damage Claims asserted
against it or them or in any way jeopardize the validity or
enforceability of the discharge and injunction arising in favor of the
Reorganized Debtors upon the Effective Date; or
(iv) 21 years less 91 days pass after the death of the last
survivor of all the descendants of Joseph P. Kennedy, Sr. of
Massachusetts living on the date hereof.
(b) On the Termination Date, after payment of all the Asbestos PD
Trust's liabilities have been provided for, all monies remaining in the Asbestos
PD Trust estate shall be transferred to charitable organization(s) exempt from
federal income tax under Section 501(c)(3) of the Internal Revenue Code, which
tax-exempt organization(s) shall be selected by the Trustees using their
reasonable discretion; provided, however, that the tax-exempt organization(s)
shall not bear any relationship to Reorganized Eagle-Picher within the meaning
of Section 468(d)(3) of the Internal Revenue Code.
6.3 AMENDMENTS. The Trustees may modify or amend this Trust Agreement or
any document annexed to it, including, without limitation, the Bylaws, except
that Articles 2.2 (Purpose), 2.4 (Acceptance of Assets and Assumption of
Liabilities), 3.1(d) (precluding guaranty of others' debt), 3.3(a)-(c) (claims
administration), 5.2 (Term of Service), 5.3 (Appointment of Successor Trustees),
5.5 (Compensation and Expenses of Trustees), 5.6 (Indemnification of Trustees
and Others), 6.1 (Irrevocability), 6.2 (Termination) and 6.3 (Amendments)
herein, and, if Class 16 votes to reject the Plan, the Asbestos PD Claims
Resolution Procedures shall not be modified or amended in any respect. No
consent from the Settlors shall be required to make the modifications or
amendments permitted by the foregoing sentence. Any modification or amendment
made pursuant to this section must be done in writing.
6.4 MEETINGS. For purposes of section 5.5 of this Trust Agreement, a
Trustee shall be deemed to have attended a meeting in the event such person
spends a substantial portion of the day conferring, by phone or in person, on
Asbestos PD Trust matters with Trustees. The Trustees shall have complete
discretion to determine whether a meeting, as described herein, occurred for
purposes of section 5.5 hereof.
6.5 SEVERABILITY. Should any provision in this Trust Agreement be
determined to be unenforceable, such determination shall in no way limit or
affect the enforceability and operative effect of any and all other provisions
of this Trust Agreement.
6.6 NOTICES. Notices to persons asserting claims shall be given at the
address of such person, or, where applicable, such person's legal
representative, in each case as provided on such person's claim form submitted
to the Asbestos PD Trust with respect to his, her, or its Asbestos Property
Damage Claim. Any notices or other communications required or permitted
hereunder shall be in writing and delivered at the addresses designated below,
or sent by telecopy pursuant to the instructions listed below, or mailed by
registered or certified mail, return receipt requested,
13
<PAGE> 15
postage prepaid, addressed as follows, or to such other address or addresses as
may hereafter be furnished by any of Reorganized Eagle-Picher, or the Trustees
to the others in compliance with the terms hereof.
To the Asbestos PD Trust
or the Trustees:
---------------------------------------
---------------------------------------
---------------------------------------
To Reorganized
Eagle-Picher: Eagle-Picher Industries, Inc.
Attention: General Counsel
IF BY HAND OR OVERNIGHT DELIVERY:
Suite 1300, 580 Building
580 Walnut Street
Cincinnati, Ohio 45202
IF BY MAIL:
Post Office Box 779
Cincinnati, Ohio 45201
Telecopier: (513) 721-3404
Telephone Confirmation: (513) 629-2400
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Stephen Karotkin, Esq.
Telecopier: (212) 310-8007
Telephone Confirmation: (212) 310-8888
and
14
<PAGE> 16
Frost & Jacobs
2500 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202-4182
Attention: Edmund J. Adams, Esq.
Telecopier: (513) 651-6981
Telephone Confirmation: (513) 651-6800
All such notices and communications shall be effective when delivered at
the designated addresses or when the telecopy communication is received at the
designated addresses and confirmed by the recipient by return telecopy in
conformity with the provisions hereof.
6.7 COUNTERPARTS. This Trust Agreement may be executed in any number of
counterparts, each of which shall constitute an original, but such counterparts
shall together constitute but one and the same instrument.
6.8 SUCCESSORS AND ASSIGNS. The provisions of this Trust Agreement shall be
binding upon and inure to the benefit of the Settlors, the Asbestos PD Trust,
and the Trustees and their respective successors and assigns, except that
neither the Settlors nor the Asbestos PD Trust nor any Trustee may assign or
otherwise transfer any of its, or his or her rights or obligations under this
Trust Agreement except, in the case of the Asbestos PD Trust and the Trustees,
as contemplated by section 3.1.
6.9 LIMITATION ON CLAIM INTERESTS FOR SECURITIES LAWS PURPOSES. Asbestos
Property Damage Claims, and any interests therein, (a) shall not be assigned,
conveyed, hypothecated, pledged or otherwise transferred, voluntarily or
involuntarily, directly or indirectly, except by will or under the laws of
descent and distribution; (b) shall not be evidenced by a certificate or other
instrument; (c) shall not possess any voting rights; and (d) shall not be
entitled to receive any dividends or interest.
6.10 ENTIRE AGREEMENT; NO WAIVER. The entire agreement of the parties
relating to the subject matter of this Trust Agreement is contained herein and
in the documents referred to herein, and this Trust Agreement and such documents
supersede any prior oral or written agreements concerning the subject matter
hereof. No failure to exercise or delay in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any further
exercise thereof or of any other right, power or privilege. The rights and
remedies herein provided are cumulative and are not exclusive of rights under
law or in equity.
15
<PAGE> 17
6.11 HEADINGS. The headings used in this Trust Agreement are inserted for
convenience only and neither constitute a portion of this Trust Agreement nor in
any manner affect the construction of the provisions of this Trust Agreement.
6.12 GOVERNING LAW. This Trust Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
6.13 SETTLORS' REPRESENTATIVE. Reorganized Eagle-Picher is hereby
irrevocably designated as the representative of the Settlors, and it is hereby
authorized to take any action required of the Settlors in connection with the
Trust Agreement.
6.14 DISPUTE RESOLUTION. Any disputes that arise under this Trust Agreement
or under the annexes hereto shall be resolved by the Bankruptcy Court pursuant
to Article 9 of the Plan, except as otherwise provided herein or in the annexes
hereto. Notwithstanding anything else herein contained, to the extent any
provision of this Trust Agreement is inconsistent with any provision of the
Plan, the Plan shall control.
6.15 ENFORCEMENT AND ADMINISTRATION. The parties hereby acknowledge
the Bankruptcy Court's continuing exclusive jurisdiction to interpret and
enforce the terms of this Trust Agreement and the annexes hereto, pursuant to
Article 9 of the Plan.
6.16 EFFECTIVENESS. This Trust Agreement shall not become effective until
it has been executed and delivered by all the parties hereto and until the
Effective Date.
IN WITNESS WHEREOF, the parties have executed this Trust Agreement this
____ day of __________________, 1996.
SETTLORS:
EAGLE-PICHER INDUSTRIES, INC.
BY:____________________________
Name:__________________________
Title: ________________________
DAISY PARTS, INC.
BY:____________________________
Name:__________________________
Title: ________________________
16
<PAGE> 18
TRANSICOIL INC.
BY:____________________________
Name:__________________________
Title: ________________________
MICHIGAN AUTOMOTIVE RESEARCH
CORP.
BY:____________________________
Name:__________________________
Title: ________________________
EDI, INC.
BY:____________________________
Name:__________________________
Title: ________________________
EAGLE-PICHER MINERALS, INC.
BY:____________________________
Name:__________________________
Title: ________________________
HILLSDALE TOOL &
MANUFACTURING CO.
BY:____________________________
Name:__________________________
Title: ________________________
TRUSTEES:
17
<PAGE> 19
ANNEX A
EAGLE-PICHER INDUSTRIES, INC.
ASBESTOS PROPERTY DAMAGE SETTLEMENT TRUST BYLAWS
------------------------------------------------
ARTICLE I
OFFICES
-------
SECTION 1. PRINCIPAL OFFICE. The initial principal office of the
Eagle-Picher Industries, Inc. Asbestos Property Damage Settlement Trust (the
"Asbestos PD Trust") shall be in ____________________ or at such other place as
the Trustees shall from time to time select.
SECTION 2. OTHER OFFICES. The Asbestos PD Trust may have such other
offices at such other places as the Trustees may from time to time determine to
be necessary for the efficient and cost-effective administration of the Asbestos
PD Trust.
ARTICLE II
TRUSTEES
--------
SECTION 1. CONTROL OF PROPERTY, BUSINESS AND AFFAIRS. The property,
business and affairs of the Asbestos PD Trust shall be managed by or under the
direction of the Trustees.
SECTION 2. NUMBER, RESIGNATION AND REMOVAL. The number of Trustees and
the provisions governing the resignation and removal of a Trustee and the
appointment of a successor Trustee shall be governed by the provisions of
Article 5 of the Trust Agreement.
SECTION 3. QUORUM AND MANNER OF ACTING. The presence of a majority of
the Trustees shall constitute a quorum for the transaction of business. In the
absence of a quorum, the Trustee[s] present may adjourn the meeting from time to
time until a quorum shall be present. The vote, at a meeting at which a quorum
is present, of the majority of the Trustees present shall be an act of the
Trustees.
SECTION 4. REGULAR MEETINGS. Regular meetings of the Trustees may be
held at such time and place as shall from time to time be determined by the
Trustees.
SECTION 5. SPECIAL MEETING NOTICE. Special meetings of the Trustees
shall be held whenever called by one or more of the Trustees. Notice of each
such meeting shall be delivered by overnight courier to each Trustee, addressed
to him, her, or it at his, her, or its residence or usual place of business, at
least three (3) days before the date on which the meeting is to be held, or
shall be sent to him, her, or it at such place by personal delivery or by
telephone or telecopy
<PAGE> 20
not later than two (2) days before the day of which such meeting is to be held.
Such notice shall state the place, date and hour of the meeting and the purposes
for which it is called. In lieu of the notice to be given as set forth above, a
waiver thereof in writing, signed by the Trustee or Trustees entitled to receive
such notice, whether before or after the meeting, shall be deemed equivalent
thereto for purposes of this Section 5. No notice to or waiver by any Trustee
with respect to any special meeting shall be required if such Trustee shall be
present at said meeting.
SECTION 6. ACTION WITHOUT A MEETING; MEETING BY CONFERENCE CALL. Any
action required or permitted to be taken at any meeting of the Trustees may be
taken without a meeting if all Trustees consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Trustees.
The Trustees also may take any action required or permitted to be taken at any
meeting by means of conference telephone or similar communication equipment
provided that all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this paragraph shall constitute presence
in person at such meeting.
ARTICLE III
OFFICERS
--------
SECTION 1. PRINCIPAL OFFICERS. The principal officer of the Asbestos PD
Trust shall be an Executive Director. The Asbestos PD Trust may also have such
other principal officers, including one or more Assistant Directors, a
Secretary-Treasurer and a Controller, as the Trustees may in their discretion
appoint after determining that such appointment will promote the efficient and
cost-effective administration of the Asbestos PD Trust.
SECTION 2. ELECTION AND TERM OF OFFICE. The principal officer(s) of the
Asbestos PD Trust shall be chosen by the Trustees. Each such officer shall hold
office until his successor shall have been duly chosen and qualified or until
his earlier death, resignation or removal.
SECTION 3. SUBORDINATE OFFICERS. In addition to the principal officers
enumerated in Section 1 of this Article III, the Asbestos PD Trust may have such
other subordinate officers, agents and employees as the Trustees may deem
necessary for the efficient and cost-effective administration of the Asbestos PD
Trust, each of whom shall hold office for such period, have such authority, and
perform such duties as the Trustees may from time to time determine. The
Trustees may delegate to any principal officer the power to appoint and to
remove any such subordinate officers, agents, or employees.
SECTION 4. REMOVAL. The Executive Director or any other officer may be
removed with or without cause, at any time, by resolution adopted by the
Trustees at any regular meeting of the Trustees or at any special meeting of the
Trustees called for that purpose at which a quorum is present.
2
<PAGE> 21
SECTION 5. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Trustees. The resignation of any officer shall take effect
upon receipt of notice thereof or at such later time as shall be specified in
such notice and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 6. POWERS AND DUTIES. The officers of the Asbestos PD Trust
shall have such powers and perform such duties as may be conferred upon or
assigned to them by the Trustees.
ARTICLE IV
AMENDMENTS
----------
The Bylaws of the Asbestos PD Trust, other than Article II and this
Article IV, may be amended by the Trustees at any meeting of the Trustees,
provided that notice of the proposed amendment is contained in the notice of
such meeting.
3
<PAGE> 22
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re ) Consolidated Case No. 1-91-00100
)
)
EAGLE-PICHER INDUSTRIES, ) Chapter 11
INC., et al., )
) JUDGE PERLMAN
Debtors )
)
_________________________________ )
EXHIBIT 1.1.38
FORM OF CONNECTICUT MUTUAL NOTE
<PAGE> 23
[CONNECTICUT MUTUAL NOTE SECURED CLAIM]
SECURED NOTE AND SECURITY AGREEMENT
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED IN VIOLATION OF SUCH
ACT AND THE RULES AND REGULATIONS THEREUNDER.
10% Secured Installment Note
HILLSDALE TOOL & MANUFACTURING CO., a Michigan corporation
("Hillsdale"), and EAGLE-PICHER INDUSTRIES, INC., an Ohio corporation (the
"Company") (Hillsdale and the Company are sometimes referred to herein
individually as an "Obligor" and collectively as the "Obligors"), for value
received, hereby promise jointly and severally to pay to MASSACHUSETTS MUTUAL
LIFE INSURANCE COMPANY, or registered assigns (the "Payee"), on or before June
1, 2001 (the "Maturity Date"), as hereinafter provided, the principal sum of
[____________________________________ (____________)] and to pay interest on
the unpaid principal amount thereof from the date hereof to maturity at the
rate of 10% per annum computed as if each year consisted of 360 days and each
month consisted of 30 days. Such principal and interest shall be payable
without presentation of this Note, by bank wire transfer of Federal or other
immediately available funds (identifying each payment as Hillsdale Tool &
Manufacturing Co. and Eagle-Picher Industries, Inc. 10% Secured Installment
Note due 2001, principal or interest) to the Payee pursuant to instructions
provided by the Payee to the Company from time to time, in ___________
consecutive payments of principal and interest, in the respective amounts of
and payable on the dates indicated in the schedule annexed hereto as Schedule A
(collectively, the "Installment Payments"). The first of the Installment
Payments will be made on [the first Business Day of the second month following
the date of the issuance of the Note]. Whenever any Installment Payment is not
made when due and such default shall continue for more than ten (10) days, the
Obligors shall pay interest on such amount at a rate equal to the lesser of (a)
12% per annum or (b) the maximum rate allowed by law.
Each Installment Payment, when paid, shall be applied first to
the payment of all interest accrued and unpaid on this Note and then to payment
on account of the principal hereof.
SECTION 1. The following terms have the following meanings
when used in this Note:
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in Cincinnati, Ohio are
authorized or required by law to close.
"Collateral" shall have the meaning set forth in Section 3
hereof.
<PAGE> 24
"MATURITY DATE" shall have the meaning set forth in the
opening paragraph of this Note.
"NOTES" shall have the meaning set forth in Section 18 hereof.
"Payee" shall have the meaning set forth in the opening
paragraph of this Note.
SECTION 2. PRINCIPAL PAYMENTS. (a) SCHEDULED PAYMENT. On
the Maturity Date, the Obligors shall pay to the Payee, in cash or other
immediately available funds, the entire unpaid principal amount of this Note
plus all accrued and unpaid interest thereon.
(b) MANDATORY PREPAYMENT. In the event of condemnation or of
destruction by fire or other casualty of substantially all of the Collateral,
the Note shall be prepaid in full (but not in part) at a price equal to 100% of
the then outstanding principal amount of the Note, together with all interest
then accrued and unpaid thereon, but without any prepayment penalty or premium.
(c) Optional Prepayment. The Obligors may, at any time and
from time to time, without premium or penalty, prepay (in multiples of $1,000)
all or a portion of the unpaid principal amount of this Note or all or a
portion of accrued and unpaid interest, together with unpaid accrued interest
on the amount so prepaid to the date chosen for prepayment, payable in cash or
other immediately available funds. The Obligors shall give written notice of
prepayment of this Note or any portion hereof not less than 10 but not more
than 30 days prior to the date chosen for prepayment, which notice shall
specify the amount thereof to be prepaid and the date fixed for prepayment.
SECTION 3. Security. This Note is secured by the following
property (collectively, the "Collateral"):
(a) The equipment described in Schedule B hereto (whether
or not constituting fixtures) and all additions and accessions thereto and
substitutions therefor;
(b) All books and records of the Obligors relating to any
of the foregoing; and
(c) All proceeds and products of any of the foregoing,
including insurance payable by reason of loss or damage.
The Obligors herewith confirm the grant of a security interest in the
Collateral to the Payee.
-2-
<PAGE> 25
SECTION 4. AFFIRMATIVE COVENANTS. For as long as any
principal or interest remains unpaid under this Note:
(a) Financial Statements. The Company shall deliver to
the Payee:
(i) a balance sheet and income statement of the Company within
45 days after the close of each fiscal quarter other than the last fiscal
quarter for the fiscal year and (ii) a balance sheet and income statement of
the Company within 90 days after the close of each fiscal year. All such
financial statements will be prepared in accordance with generally accepted
accounting principles consistently applied. All statements will be in the same
form as those provided to creditors and shareholders of the Company generally.
The Company will also furnish to the Payee promptly copies of any Forms 10-Q,
10-K and 8-K that are filed with the Securities and Exchange Commission as well
as copies of any other special mailings to shareholders.
(b) Reporting Requirements. The Company or Hillsdale, as the
case may be, shall furnish to the Payee:
(i) as soon as possible and in any event within 10
days after becoming aware of the occurrence of any event of default as
defined in Section 10 hereof or any event that with notice or passage
of time or both would, if unremedied, constitute an event of default,
a written statement of the chief executive officer or chief financial
officer of the Company or Hillsdale, as the case may be, setting forth
details of such event of default or event, stating whether or not the
same is continuing and, if so, the action that the Company or
Hillsdale, as the case may be, proposes to take with respect thereto;
(ii) immediately after receiving knowledge thereof, notice
in writing of all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that directly affect or affects
Hillsdale based on financial exposure to Hillsdale of $10 million or
that directly affect or affects the Company based on financial exposure
to the Company of $25 million or more or that directly affect or
affects the Collateral or that seek or seeks injunctive relief that
will materially adversely affect the operations of either of the
Obligors or the Collateral;
(iii) as soon as possible and in any event within 5 days
after the Obligors become aware of the occurrence of a material
adverse change in the business, properties or the operations and
condition (financial or otherwise) of either of the Obligors, a
statement by the chief executive officer or chief financial officer of
the Company or Hillsdale, as the case may be, setting forth details of
such material adverse change and the action that the
-3-
<PAGE> 26
Company or Hillsdale, as the case may be, proposes to take with respect
thereto, except as otherwise disclosed in public announcements of the
Obligors issued in the ordinary course of business; and
(iv) such other information respecting the business,
properties, condition and operations (financial or otherwise) of the
Obligors as the Payee may from time to time reasonably request be
furnished to the Payee.
(c) FURTHER ASSURANCES.
(i) The Obligors agree that from time to time, at
their expense, they will promptly execute and deliver all further
instruments and documents, and take all further action that may be
reasonably necessary or desirable, or that the Payee may reasonably
request, in order to perfect and protect any security interest granted
or purported to be granted hereby and the priority thereof or to
enable the Payee to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, the Obligors will execute and file such
financing or continuation statements or amendments thereto and such
other instruments or notices as may be necessary or desirable or as
the Payee may request, in order to perfect and preserve the security
interests granted or purported to be granted hereby.
(ii) The Obligors hereby authorize the Payee to file
one or more financing or continuation statements and amendments
thereto relative to all or any part of the Collateral without the
signature of the Obligors where permitted by law. A carbon,
photographic or other reproduction of this Note or any part thereof
shall be sufficient as a financing statement where permitted by law.
(iii) The Obligors will furnish to the Payee from
time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Payee may reasonably request, all in reasonable
detail.
(d) INSURANCE.
The Obligors shall, at their own expense, maintain liability
and property insurance with respect to their respective businesses and
property, including the Collateral, with responsible and reputable insurance
companies or associations satisfactory to the Payee in such amounts and
covering such risks as are acceptable to or specified by the Payee, taking into
account, among other factors, such amounts and risks as are usually carried by
persons engaged in similar
-4-
<PAGE> 27
businesses and owning similar properties in the same general areas in which the
Obligors operate. Each policy for liability insurance and property damage
insurance shall provide for payment to or on behalf of the Obligors and the
Payee as their interests may appear. Each policy of property damage insurance
shall in addition (i) name the Payee as an insured party thereunder (without any
representation or warranty by or obligation upon the Payee), (ii) contain an
agreement by the insurer that any loss thereunder shall be payable to, or on
behalf of the Obligors or the Payee as their interests may appear, (iii) provide
that there shall be no recourse against the Payee for payment of premiums or
other amounts with respect thereto, and (iv) provide that at least 30 days'
prior written notice of cancellation or of lapse shall be given to the Payee by
the insurer. The Obligors shall deliver to the Payee certificates evidencing the
insurance maintained pursuant hereto.
(e) CERTAIN COVENANTS AS TO THE COLLATERAL. The Obligors
shall:
(i) Keep the Collateral at the places identified
therefor on Schedule B hereto or, upon 15 days' prior written notice
to the Payee, at such other places as shall be identified in such
notice (such notice to identify the record owner of the new location)
and which are in jurisdictions where all actions required by
subparagraph (c) above shall have been taken with respect to such
Collateral.
(ii) Cause the Collateral to be maintained and
preserved in the same condition, repair, and working order as when
new, ordinary wear and tear excepted, and, in the case of any loss or
damage to the Collateral, as quickly as practicable after the
occurrence thereof make or cause to be made all repairs, replacements,
and other improvements in connection therewith which are necessary or
desirable to such end, provided, however, that in the event of
condemnation or of the destruction by fire or other casualty of
substantially all the Collateral, have the option to repay the Note in
full (but not in part) as provided in Section 2(b) hereof.
(iii) Pay promptly when due all property and other
taxes, assessments, and governmental charges or levies imposed upon
it, and all claims (including claims for labor, materials and
supplies) against the Collateral.
(iv) After the occurrence and during the continuance
of an Event of Default (as defined in Section 10 hereof) receive in
trust for the benefit of the Payee hereunder all amounts and proceeds
received or collected by the Obligors in respect of the Collateral,
segregate such amounts and proceeds from other funds of Debtor, and
forthwith pay such amounts and proceeds over to the Payee in the same
form as so
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<PAGE> 28
received (with any necessary endorsement) to be held as cash collateral
and applied as provided in Section 10(c) hereof.
SECTION 5. Substitution of Collateral; Liens. During the
term of the Note:
(a) The Obligors may substitute other collateral for the
Collateral identified in Schedule B hereto, provided, however, that the value
of the Collateral, including any substituted Collateral, shall at the time of
such substitution be equal to or greater than the value of the Collateral
identified in Schedule B hereto, such value to be determined by an independent
appraisal provided at the Obligors' expense and satisfactory to the Payee.
(b) The Obligors shall not create or suffer to exist any
lien, security interest, or other charge or encumbrance upon or with respect to
any of the Collateral.
SECTION 6. Appointed Attorney-in-Fact. The Obligors hereby
irrevocably appoint Payee as their attorney-in-fact, with full authority in the
place and stead of the Obligors and in the name of the Obligors, the Payee, or
otherwise, to from time to time take any action which may be reasonably
necessary to protect the Payee's interest under this Note, including, without
limitation:
(a) to sign in the name and on behalf of the Obligors any
financing statements or other papers required under Section 4(c) hereof;
(b) to obtain and adjust insurance required to be paid to the
Payee pursuant to Section 4(d) hereof;
(c) to ask, demand, collect, sue for, recover, compound,
receive, and give acquittance and receipts for moneys due and to become due in
respect of any of the Collateral;
(d) to receive, endorse, and collect any drafts or other
instruments in connection with subsection (b) or (c) above; and
(e) to file any claims or take any action or institute any
proceedings which the Payee may deem necessary or desirable to enforce the
rights of the Payee with respect to any of the Collateral.
The Obligors hereby ratify and approve all acts of the Payee as such
attorney-in-fact. The Payee shall not, in its capacity as such attorney-
in-fact, be liable for any acts or omissions, nor for any error of judgment or
mistake of fact or law, but only for gross negligence or willful misconduct.
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<PAGE> 29
This power, being coupled with an interest, is irrevocable until the Note shall
have been fully satisfied. Any amounts received or collected by the Payee in
its capacity as such attorney-in-fact shall be held as cash collateral and
applied as provided in Section 10(c) hereof.
SECTION 7. THE PAYEE MAY PERFORM. If the Obligors fail to
perform any agreement contained herein, the Payee may itself perform, or cause
performance of, such agreement, and the expenses of the Payee incurred in
connection therewith shall be payable by the Obligors under Section 17(b)
hereof.
SECTION 8. THE PAYEE'S DUTIES. The powers conferred on the
Payee hereunder are solely to protect its interest in the Collateral and shall
not impose any duty to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Payee shall not have any duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral.
SECTION 9. INSPECTION RIGHTS. The Payee, upon 24 hours'
notice and during normal business hours, shall have access to inspect, audit,
and make extracts from all of the Obligors' records, files, and books of
account relating to the Collateral, and the Obligors shall deliver any document
or instrument necessary for the Payee to obtain records from any service bureau
maintaining records for the Obligors. The Payee may also, at all reasonable
times, examine and inspect the Collateral. The Obligors shall, at the Payee's
request, take all steps necessary to facilitate such inspection.
SECTION 10. EVENTS OF DEFAULT. (a) Each of the following
shall be an Event of Default:
(i) If default shall be made in the payment of
any installment of principal and interest due from the Obligors under
the Note when and as the same shall become due and payable, whether at
maturity or by acceleration or prepayment or otherwise, and such
default shall continue for more than ten (10) days;
(ii) If there shall be default in the due observance
or performance of any other provision of this Note and such default
shall continue for more than thirty (30) days after written notice
thereof shall have been given by the Payee to the Company and
Hillsdale, as the case may be;
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<PAGE> 30
(iii) If an event of default shall occur and
continue with respect to any borrowing in excess of $5,000,000 by the
Company or Hillsdale, exclusive of any alleged event of default that
is being contested in good faith by the Company or Hillsdale;
(iv) If at any time prior to payment in full of
the Note there are unsatisfied judgments against the Company and
Hillsdale which aggregate in excess of $5,000,000, exclusive of
judgments as to which the Company or Hillsdale has filed or is
preparing to file and is actively prosecuting timely appeals;
(v) If any representation or warranty of the
Company or Hillsdale made in this Note or in any writing delivered
pursuant hereto shall prove to be incorrect in any material respect as
of the time when the same shall have been made;
(vi) If either the Company or Hillsdale shall make
an assignment for the benefit of its creditors or file a petition in
bankruptcy or for reorganization or for an arrangement or any
composition, readjustment, liquidation, dissolution or similar relief
pursuant to the Bankruptcy Code or under any similar present or future
federal or state law or shall be adjudicated a bankrupt;
(vii) If a petition or answer shall be filed
proposing the adjudication of the Company or Hillsdale as a bankrupt
or the reorganization or arrangement of either of them or any
composition, readjustment, liquidation, dissolution or similar relief
with respect to either of them pursuant to the Bankruptcy Code or any
similar present or future federal or state law, and the Company or
Hillsdale, as the case may be, shall consent to the filing thereof, or
such petition or answer shall not be discharged or denied within sixty
(60) days after the filing thereof; or
(viii) If a receiver, trustee or liquidator (or other
similar official) of the Company or Hillsdale or of all or
substantially all of the assets of the Company or Hillsdale or any
portion thereof shall be appointed and shall not be discharged within
sixty (60) days thereafter, or if the Company or Hillsdale, as the case
may be, shall consent to or acquiesce in such appointment.
(b) Upon the occurrence and during the continuance of any
Event of Default described in Section 10(a) hereof other than in clause (vi),
(vii) or (viii) thereof, the holders of a majority of the outstanding principal
amount of the Notes may, by written notice to the Obligors, declare all or any
portion of the unpaid principal amount of the Notes and all interest accrued
thereon to be immediately due and payable. Upon the occurrence and during the
continuance of any Event of Default described in clauses (vi), (vii) or (viii)
of Section 10(a) hereof, the unpaid
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<PAGE> 31
principal amount of the Notes and all interest accrued thereon shall
automatically become due and payable, without any action or notice by the Payee.
Demand, presentment, protest and notice of non-payment are hereby waived by the
Obligors. All payments made following an Event of Default shall be applied first
to payment of all accrued and unpaid interest and then to principal.
(c) In addition, upon the occurrence and during the
continuance of an Event of Default described in Section 10(a), the Payee may
exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights and remedies
of a Secured Party on default under the Uniform Commercial Code (the "Code")
and other applicable laws and agreements and also may (i) require the Obligors
to, and the Obligors hereby agree that they will at their expense and upon
request of the Payee forthwith, assemble the Collateral as directed by the
Payee and make it available to the Payee at a place or places to be designated
by the Payee, which is or are reasonably convenient to the Payee and the
Obligors and (ii) without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or private sale, at any of
the Payee's offices or elsewhere, for cash, on credit or for future delivery
and upon such other terms as the Payee may deem commercially reasonable. The
Obligors agree that, to the extent notice of sale shall be required by law, at
least five days' notice to the Obligors of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. The Payee shall not be obligated to make any sale of
the Collateral regardless of notice of sale having been given. The Payee may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
All cash proceeds received by the Payee in respect of any sale
of, collection from or other realization upon all or any part of the Collateral
may, in the discretion of the Payee, be held by the Payee (without interest) as
collateral for and/or then or at any time thereafter applied in whole or in part
by the Payee against payment of the Note. Any surplus of such cash or cash
proceeds held by the Payee and remaining after payment in full of the Note shall
be paid over to the Obligors or to whosoever may be lawfully entitled to receive
such surplus.
SECTION 11. Continuing Security Interest; etc. This Note
shall create a continuing security interest in the Collateral. The execution
and delivery of this Note shall in no manner impair or affect any other
security (by endorsement or otherwise) for the payment or performance of the
Note and no security taken hereafter as security for payment or performance of
the Note shall impair in any manner or affect this Note or the security
interest granted hereby, all such present and future additional security to be
considered as one general, continuing security interest. Any of the Collateral
may be released from this Note without altering, varying, or diminishing in any
way this Note or the security interest granted hereby as to the Collateral not
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<PAGE> 32
expressly released, and this Note and such security interest shall continue in
full force and effect as to all of the Collateral not expressly released.
SECTION 12. Entire Agreement; No Oral Change. This Note
embodies the entire agreement and understanding between the Payee and the
Obligors relating to the subject matter hereof, and supersedes all prior
agreements and understandings relating thereto. None of the provisions hereof
may be waived, altered or amended, except by a written instrument signed by the
holders of a majority of the outstanding principal amount of the Notes and by
the Obligors. In the case of any waiver, the Obligors and the holders of a
majority of the outstanding principal amount of the Notes shall be restored to
their former respective positions and rights hereunder and any Event of Default
waived shall be deemed to be cured and not continuing, but no such waiver shall
extend to any subsequent or other Event of Default or impair any right
consequent thereon except to the extent expressly provided in such waiver.
SECTION 13. Remedies Cumulative. No failure to exercise or
delay in exercising any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
SECTION 14. NOTICES. Any notices or other communications
required or permitted hereunder shall be given in writing and personally
delivered with receipt acknowledged or mailed, postage prepaid, via registered
mail, return receipt requested, if to the Payee, at its address notified in
writing by the Payee to the Obligors, and if to the Obligors, at the address of
the Company, Attention: Treasurer, at P.O. Box 779, Cincinnati, Ohio 45201 (if
by mail) or 580 Walnut Street, Suite 1300, Cincinnati, Ohio 45202 (if
personally delivered), or any other address notified in writing by the Obligors
to the Payee. Any notice given in conformity with the foregoing shall be
deemed given when personally delivered or upon the date of delivery specified
in the registered mail receipt.
SECTION 15. Governing Law. This Note shall be governed by,
and construed and enforced in accordance with, the law of the State of Indiana.
SECTION 16. Consent To Jurisdiction. The parties hereto
irrevocably agree that any legal action or proceeding with respect to this Note
shall be brought in the courts of the State of Indiana in the County of Steuben
or in the courts of the United States of America sitting in Indiana. By the
execution and delivery of this Note, the parties hereto irrevocably submit to
the jurisdiction of such courts. The Obligors hereby waive to the fullest
extent permitted by law any
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<PAGE> 33
objection they may now or hereafter have to the laying of venue in any such
action or proceeding in any such court as well as any right they may now or
hereafter have to remove any such action or proceeding, once commenced, to
another court on the grounds of forum non conveniens or otherwise or to remove
an action brought in a state court to a court of the United States of America.
The Obligors hereby irrevocably agree that service of process in any such action
or proceeding may be made either by mailing or delivering a copy of the summons
and complaint in any such action or proceeding to the Obligors at the address
provided herein by certified mail, return receipt requested. Service of process
in any such action or proceeding, effected as aforesaid, shall be deemed
personal service upon the Obligors and shall be legal and binding upon the
Obligors for all purposes notwithstanding any failure on the part of the
Obligors to receive copies of such process mailed directly to the Obligors in
accordance with the provisions of this Section.
SECTION 17. INDEMNITY AND EXPENSES. (a) The Obligors agree
to indemnify the Payee from and against any and all claims, losses, and
liabilities growing out of or resulting from and after the date hereof from
this Note (including, without limitation, enforcement of this Note), except
claims, losses or liabilities resulting from the Payee's gross negligence or
willful misconduct.
(b) The Obligors will upon demand pay to the Payee the amount
of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Payee may
incur from and after the date hereof in connection with (i) the administration
of this Note, (ii) the custody, preservation, use, or operation 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 Payee, or (iv) the
failure by the Obligors to perform or observe any of the provisions hereof.
SECTION 18. Successors and Assigns; Transferability. This
Note shall be binding upon and inure to the benefit of the Payee and the
Obligors and their respective transferees, successors and assigns; PROVIDED,
HOWEVER, that the Obligors may not transfer or assign any of their rights or
obligations hereunder without the prior written consent of the Payee. Within
five (5) Business Days after receipt of notice of any assignment by the Payee
to any person or entity (an "Assignee") of all or any part of this Note, the
Obligors shall execute and deliver to such Assignee, in exchange for the
surrendered Note, a new Note to the order of such Assignee in an amount equal
to the amount of this Note assigned to it, and if the Payee has retained any
amount owing to it hereunder, a new Note to the order of the Payee in an amount
equal to the amount retained by it hereunder, which new Note shall be dated the
same date as the surrendered Note and be in substantially the form of this
Note, and such Assignee will be deemed the Payee
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<PAGE> 34
under the Note issued to it. References herein to "Notes" shall include all
outstanding Notes issued in substitution for or upon any assignment of this
Note.
SECTION 19. No Set-Off. The obligations of the Obligors
under this Note are absolute and not subject to any right of set-off,
counterclaim, recoupment or defenses against the Payee of any kind whatsoever.
SECTION 20. Miscellaneous. The headings of the sections of
this Note have been inserted for convenience and shall not modify, define,
limit or expand the express provisions of this Note.
IN WITNESS WHEREOF, the Obligors have duly executed this
Note this ____ day of __________________, 1996.
EAGLE-PICHER INDUSTRIES, INC.
By: ______________________________
HILLSDALE TOOL & MANUFACTURING CO.
By: _____________________________
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<PAGE> 35
SCHEDULE A
Installment Payment Schedule
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<PAGE> 36
SCHEDULE B
Collateral
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<PAGE> 37
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re ) Consolidated Case No. 1-91-00100
)
)
EAGLE-PICHER INDUSTRIES, ) Chapter 11
INC., et al., )
) JUDGE PERLMAN
Debtors )
)
_________________________________ )
EXHIBIT 1.1.82
FORM OF INTER-MARKET NOTE
<PAGE> 38
[INTER-MARKET NOTE SECURED CLAIM]
SECURED NOTE AND SECURITY AGREEMENT
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED IN VIOLATION OF SUCH
ACT AND THE RULES AND REGULATIONS THEREUNDER.
10% Secured Installment Note
EAGLE-PICHER INDUSTRIES, INC., an Ohio corporation (the "Company"), for
value received, hereby promises to pay to COMAC PARTNERS, L.P. AND COMAC
INTERNATIONAL N.V. or registered assigns (collectively, the "Payee"), on or
before June 1, 2001 (the "Maturity Date"), as hereinafter provided, the
principal sum of [___________________________________ (_____________)] and to
pay interest on the unpaid principal amount thereof from the date hereof to
maturity at the rate of 10% per annum computed as if each year consisted of 360
days and each month consisted of 30 days. Such principal and interest shall be
payable without presentation of this Note, by bank wire transfer of Federal or
other immediately available funds (identifying each payment as Eagle-Picher
Industries, Inc. 10% Secured Installment Note due 2001, principal or interest)
to the Payee pursuant to instructions provided by the Payee to the Company from
time to time in _________ (__) consecutive payments of principal and interest,
in the respective amounts of and payable on the dates indicated in the schedule
annexed hereto as Schedule A (collectively, the "Installment Payments"). The
first of the Installment Payments will be made on [the first Business Day of the
second month following the date of the issuance of the Note]. Whenever any
Installment Payment is not made when due and such default shall continue for
more than ten (10) days, the Company shall pay interest on such amount at a rate
equal to th e lesser of (a) 12% per annum or (b) the maximum rate allowed by
law.
Each Installment Payment, when paid, shall be applied first to the payment
of all interest accrued and unpaid on this Note and then to payment on account
of the principal hereof.
SECTION 1. The following terms have the following meanings when used in
this Note:
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banks in Cincinnati, Ohio are authorized or required by
law to close.
"COLLATERAL" shall have the meaning set forth in Section 3 hereof.
"Company" shall have the meaning set forth in the opening paragraph of this
Note.
<PAGE> 39
"CONSOLIDATED NET WORTH" of any corporation shall mean, at any date, the
sum of the capital stock (excluding treasury stock and capital stock subscribed
and unissued) and surplus (including retained earnings, additional paid-in
capital and the balance of the current profit and loss account not transferred
to surplus) of such corporation and its Subsidiaries, consolidated in accordance
with generally accepted accounting principles.
"MATURITY DATE" shall have the meaning set forth in the
opening paragraph of this Note.
"NOTES" shall have the meaning set forth in Section 12 hereof.
"Officers' Certificate" shall mean a certificate signed on behalf of the
Company by its President or one of its Vice Presidents and its Treasurer or one
of its Assistant Treasurers.
"Payee" shall have the meaning set forth in the opening paragraph of this
Note.
"PERSON" shall mean an individual or corporation, a partnership or joint
venture, a business, a trust, an unincorporated organization or a government or
any agency or political subdivision thereof.
"PREPAYMENT OFFER" shall have the meaning specified in Section 2.
"Subsidiary" of any corporation shall mean any Person a majority (by number
of votes) of the Voting Stock of which is owned by such corporation or by one or
more Subsidiaries or by such corporation and one or more Subsidiaries.
"Voting Stock", when used with reference to any corporation, shall mean
shares (however designated) of such corporation having ordinary voting power for
the election of a majority of the members of the board of directors (or other
governing body) of such corporation other than shares having such power only by
reason of the happening of a contingency.
SECTION 2. Principal Payments. (a) Scheduled Payment. On the Maturity Date,
the Company shall pay to the Payee, in cash or other immediately available
funds, the entire unpaid principal amount of this Note plus all accrued and
unpaid interest thereon.
(b) Mandatory Prepayment. In the event of condemnation or of destruction by
fire or other casualty of substantially all of the Collateral, the Note shall be
prepaid in full (but not in part) at a price equal to 100% of the then
outstanding principal amount of the Note, together
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<PAGE> 40
with all interest then accrued and unpaid thereon, but without any prepayment
penalty or premium.
(c) Optional Prepayment. The Company may, at any time and from time to
time, without premium or penalty, prepay (in multiples of $1,000) all or a
portion of the unpaid principal amount of this Note or all or a portion of
accrued and unpaid interest, together with unpaid accrued interest on the amount
so prepaid to the date chosen for prepayment, payable in cash or other
immediately available funds. The Company shall give written notice of prepayment
of this Note or any portion hereof not less than 10 but not more than 30 days
prior to the date chosen for prepayment, which notice shall specify the amount
thereof to be prepaid and the date fixed for prepayment.
(d) OFFER TO PREPAY IN THE EVENT OF CERTAIN TRANSACTIONS. In the event
that: (a) the Company shall take any action looking to any merger, consolidation
or other reorganization of the Company or any sale of all or substantially all
of its assets; or (b) any Person or any group of Persons acting together, other
than the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust, shall
acquire twenty percent or more of the outstanding Voting Stock of the Company;
and the effect of such transaction described in the foregoing clause (a) or (b)
either in and of itself or together with any other transactions effected in
connection therewith or in response thereto, is or would be to reduce the
Consolidated Net Worth of the Company to an amount which is less than 66 2/3% of
the amount of the Consolidated Net Worth of the Company as of the end of the
fiscal year of the Company next preceding such transaction, as shown on the
financial statements for such fiscal year, the Company shall offer to prepay the
Note without premium (any such offer being hereinafter referred to as a
"Prepayment Offer"). Such Prepayment Offer shall be made in writing to the
holder of the Note not less than 30 nor more than 60 days prior to the date of
such proposed transaction. In the event that the holder of the Note has not
accepted such Prepayment Offer in writing within 20 days after such Prepayment
Offer is made, the holder of the Note shall be deemed to have declined such
Prepayment Offer. Each prepayment under this section shall be made concurrently
with the consummation of such proposed transaction.
SECTION 3. Security. This Note is secured by the following property
(collectively, the "Collateral"):
(a) The equipment described in Schedule B hereto (whether or not
constituting fixtures) and all additions and accessions thereto and
substitutions therefor;
(b) All books and records of the Company relating to any of the foregoing;
and
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<PAGE> 41
(c) All proceeds and products of any of the foregoing, including insurance
payable by reason of loss or damage.
The Company herewith confirms the grant of a security interest in the
Collateral to the Payee.
SECTION 4. Affirmative Covenants. For as long as any principal or interest
remains unpaid under this Note:
(a) FINANCIAL STATEMENTS. The Company shall deliver to the Payee promptly
after the same are available, copies of (i) all such notices, proxy statements,
financial statements, reports and documents as the Company shall send or make
available generally to its stockholders and (ii) all periodic and special
reports, documents and registration statements (other than on Form S-8) which
the Company may furnish to or file with the Securities and Exchange Commission
(or any governmental authority succeeding to any or all of its functions) or any
securities exchange;
(b) REPORTING REQUIREMENTS. The Company shall deliver to the Payee as
promptly as practicable (but in any event not later than 5 days) after any
officer of the Company obtains knowledge of the occurrence of any condition or
event which (i) in the operation or management of the Company would have a
material adverse effect on the business, condition (financial or otherwise),
operations, management or prospects of the Company and its Subsidiaries taken as
a whole (other than any condition or event described in this paragraph,
disclosure regarding which has been made in information previously provided to
the Payee pursuant to paragraph (a) above) or (ii) constitutes or, after notice
or lapse of time or both, would constitute an Event of Default, an Officers'
Certificate specifying the nature of such condition or event, the period of
existence thereof, what action the Company has taken and is taking and proposes
to take with respect thereto and the date, if any, on which it is estimated the
same will be remedied; and (c) such other information relating to the Company
and its Subsidiaries as shall be furnished to any other institutional lender or
as from time to time may reasonably be requested.
(c) Special Covenants of Company. The Company hereby covenants to the Payee
that:
(i) The Company will not change its principal place
of business or the location of the Collateral. The Company will not
change its principal place of business or the location of the
Collateral from those shown on Schedule B hereto, without at least
thirty (30) days' prior written notice to the Payee.
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<PAGE> 42
(ii) The Company will defend its ownership of the
Collateral free from any lien, security interest or encumbrance except
for the security interest hereunder against all claims and demands of
all persons at any time claiming the same or any interest therein.
(iii) The Company will not sell or otherwise dispose
of the Collateral or any interest therein nor will the Company create,
incur or permit to exist any mortgage, lien, charge, encumbrance or
security interest whatsoever with respect to the Collateral.
(iv) The Company will keep the Collateral in good
order and repair and adequately insured at all times against loss or
damage of the kinds customarily insured against by corporations of
established reputation engaged in the same or similar business and
similarly situated. Each insurance policy pertaining to any of the
Collateral shall: (a) name the Payee as insured pursuant to a
so-called "standard mortgagee clause"; (b) provide that no action of
the Company or any tenant or sub-tenant shall void such policy as to
the Payee; and (c) provide that the Payee shall be notified of any
proposed cancellation of such policy at least 30 days in advance of
such proposed cancellation and will have sufficient time to correct
any deficiencies justifying such proposed cancellation. All such
policies shall be delivered to the Payee upon request. The Company
will pay promptly when due all taxes and assessments on the Collateral
or for its use or operation. The Payee may at its option discharge
any taxes, liens, security interests or other encumbrances to which
any Collateral is at any time subject, and may, upon the failure of
the Company so to do, purchase insurance on any Collateral and pay for
the repair, maintenance or preservation thereof, and the Company
agrees to reimburse the Payee on demand for any payments or expenses
incurred by the Payee pursuant to the foregoing authorization, and any
unreimbursed amounts shall constitute secured obligations for all
purposes hereof.
(d) Further Assurances.
(i) The Company will promptly execute and deliver to
the Payee such financing statements, certificates and other documents
or instruments as may be necessary to enable the Payee to perfect or
from time to time renew the security interest granted hereby,
including, without limitation, such financing statements, certificates
and other documents as may be necessary to perfect a security interest
in any additional Collateral hereafter acquired by the Company or in
any replacements or proceeds thereof. The Company authorizes and
appoints the Payee, in case of need, to execute such financing
statements, certificates and other documents in its stead, with full
power or substitution, as the Company's attorney in fact. The Company
further agrees that a carbon, photographic
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<PAGE> 43
or other reproduction of a security agreement or financing statement
is sufficient as a financing statement under this Agreement.
(ii) The Company will take all such reasonable
action or actions as may be necessary to prevent any of the Collateral
from becoming fixtures. Without limiting the generality of the
foregoing, the Company will use its best efforts to obtain waivers of
lien, in form satisfactory to the Payee, from each lessor of real
property on which any of the Collateral is to be located.
SECTION 5. EVENTS OF DEFAULT. (a) Each of the following shall be an Event
of Default:
(i) If default shall be made in the payment of any
installment of principal and interest due from the Company under the
Note when and as the same shall become due and payable, whether at
maturity or by acceleration or prepayment or otherwise, and such
default shall continue for more than five (5) days;
(ii) If there shall be default in the due observance
or performance of any other provision of this Note and such default
shall continue for more than thirty (30) days after the earlier to
occur of (i) the Company's obtaining actual knowledge of such default
or (ii) the Company's receipt of written notice of such default;
(iii) If the Company attempts to remove, sell,
transfer, encumber, sublet or part with possession of the Collateral
or any part thereof, or permits any other Person to take any such
action, except as expressly permitted herein;
(iv) If, unless specifically permitted by the terms
hereof, the Company ceases doing business as a going concern, makes an
assignment for the benefit of creditors, admits in writing its
inability to pay its debts as they become due, files a voluntary
petition in bankruptcy, is adjudicated a bankrupt or an insolvent,
files a petition seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
arrangement under any present or future statute, law or regulation, or
files an answer admitting the material allegations of a petition filed
against it in any such proceeding, consents to, or acquiesces in the
appointment of, a trustee, receiver, or liquidator of it or of all or
any substantial part of its assets or properties, or if it or its
shareholders shall take any action looking to its dissolution or
liquidation; or
(v) If within sixty (60) days after the commencement
of any proceedings against the Company seeking reorganization,
arrangement, readjustment, liquidation,
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dissolution or similar relief under any present or future statute, law
or regulation, such proceedings shall not have been dismissed, or if
within sixty (60) days after the appointment without the consent or
acquiescence of the Company of any trustee, receiver or liquidator of
either of them or of all or any substantial part of their respective
assets and properties, such appointment shall not be vacated.
(b) Upon the occurrence and during the continuance of any Event of Default
described in Section 5(a) hereof other than in clause (iv) or (v) thereof, the
holders of a majority of the outstanding principal amount of the Notes may, by
written notice to the Company, declare all or any portion of the unpaid
principal amount of the Notes and all interest accrued thereon to be immediately
due and payable. Upon the occurrence and during the continuance of any Event of
Default described in clauses (iv) or (v) of Section 5(a) hereof, the unpaid
principal amount of the Notes and all interest accrued thereon, shall
automatically become due and payable, without any action or notice by the Payee.
Demand, presentment, protest and notice of non-payment are hereby waived by the
Company. All payments made following an Event of Default shall be applied first
to payment of all accrued and unpaid interest and then to principal.
(c) In addition, upon the occurrence and during the continuance of an Event
of Default described in Section 5(a), the Payee may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a Secured Party on
default under the Uniform Commercial Code (the "Code") and other applicable laws
and agreements and also shall have the right to take possession of the
Collateral and, in addition thereto, the right to enter upon any premises on
which the Collateral or any part thereof may be situated and remove the same
therefrom. The Payee may require the Company to make the Collateral (to the
extent the same is moveable) available to the Payee at a place to be designated
by the Payee which is reasonably convenient to both parties. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Payee will give the Company at
least ten (10) days' prior written notice at the address of the Company set
forth below (or at such other address or addresses as the Company shall specify
in writing to the Payee) of the time and place of any public sale thereof or of
the time after which any private sale or any other intended disposition thereof
is to be made. Any such notice shall be deemed to meet any requirement hereunder
or under any applicable law (including the Uniform Commercial Code) that
reasonable notification be given of the time and place of such sale or other
disposition. After deducting all costs and expenses of collection, storage,
custody, sale or other disposition and delivery (including legal costs and
attorneys' fees) and all other charges against the Collateral, the residue of
the proceeds of any such sale or disposition shall be applied to the payment of
the Note and, unless otherwise provided by law or by a court of competent
jurisdiction, any surplus shall be returned to the Company or to any person or
party lawfully entitled thereto (including, if applicable, any subordinated
creditors of the
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<PAGE> 45
Company). In the event the proceeds of any sale, lease or other disposition of
the Collateral hereunder are insufficient to pay the Note in full, the Company
will be liable for the deficiency, together with interest thereon at the maximum
rate provided in the Note, and the cost and expenses of collection of such
deficiency, including (to the extent permitted by law), without limitation,
reasonable attorneys' fees, expenses and disbursements. The Payee, may, at its
option, take control of any and all proceeds to which it is entitled under
Section 9-306 of the Uniform Commercial Code, and the Company agrees to
cooperate fully in executing any commercially reasonable direction made in the
exercise of this right.
SECTION 6. ENTIRE AGREEMENT; NO ORAL CHANGE. This Note embodies the entire
agreement and understanding between the Payee and the Company relating to the
subject matter hereof, and supersedes all prior agreements and understandings
relating thereto. None of the provisions hereof may be waived, altered or
amended, except by a written instrument signed by the holders of a majority of
the outstanding principal amount of the Notes and by the Company. In the case of
any waiver, the Company and the holders of a majority of the outstanding
principal amount of the Notes shall be restored to their former respective
positions and rights hereunder and any Event of Default waived shall be deemed
to be cured and not continuing, but no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent thereon
except to the extent expressly provided in such waiver.
SECTION 7. REMEDIES CUMULATIVE. No failure to exercise or delay in
exercising any right, remedy, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
SECTION 8. Notices. Any notices or other communications required or
permitted hereunder shall be given in writing and personally delivered with
receipt acknowledged or mailed, postage prepaid, via registered mail, return
receipt requested, if to the Payee, at its address notified in writing by the
Payee to the Company, and if to the Company, addressed to the Treasurer of the
Company at the Company's address at P.O. Box 779, Cincinnati, Ohio 45201 (if by
mail) or 580 Walnut Street, Suite 1300, Cincinnati, Ohio 45202 (if personally
delivered), or any other address notified in writing by the Company to the
Payee. Any notice given in conformity with the foregoing shall be deemed given
when personally delivered or upon the date of delivery specified in the
registered mail receipt.
SECTION 9. GOVERNING LAW. This Note shall be governed by, and construed and
enforced in accordance with, the law of the State of Connecticut.
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<PAGE> 46
SECTION 10. CONSENT TO JURISDICTION. Any legal action or proceeding with
respect to this Note shall be brought in the courts of the State of Connecticut
or in the courts of the United States of America sitting in the State of
Connecticut. The Company hereby waives to the fullest extent permitted by law
any objection it may now or hereafter have to the laying of venue in any such
action or proceeding in any such court as well as any right it may now or
hereafter have to remove any such action or proceeding, once commenced, to
another court on the grounds of forum non conveniens or otherwise or to remove
an action brought in a state court to a court of the United States of America.
The Company hereby irrevocably agrees that service of process in any such action
or proceeding may be made either by mailing or delivering a copy of the summons
and complaint in any such action or proceeding to the Company at the address
provided herein by certified mail, return receipt requested. Service of process
in any such action or proceeding, effected as aforesaid, shall be deemed
personal service upon the Company and shall be legal and binding upon the
Company for all purposes notwithstanding any failure on the part of the Company
to receive copies of such process mailed directly to the Company in accordance
with the provisions of this Section.
SECTION 11. COSTS OF COLLECTION. If the Payee is required to commence suit
to recover any amount due under this Note following an Event of Default, the
Payee shall be entitled to collect from the Company reimbursement of such
reasonable attorneys' fees and expenses of counsel selected by the Payee.
SECTION 12. SUCCESSORS AND ASSIGNS; TRANSFERABILITY. This Note shall be
binding upon and inure to the benefit of the Payee and the Company and their
respective transferees, successors and assigns; provided, however, that the
Company may not transfer or assign any of its rights or obligations hereunder
without the prior written consent of the Payee. Within five (5) Business Days
after receipt of notice of any assignment by the Payee to any person or entity
(an "Assignee") of all or any part of this Note, the Company shall execute and
deliver to such Assignee, in exchange for the surrendered Note, a new Note to
the order of such Assignee in an amount equal to the amount of this Note
assigned to it, and if the Payee has retained any amount owing to it hereunder,
a new Note to the order of the Payee in an amount equal to the amount retained
by it hereunder, which new Note shall be dated the same date as the surrendered
Note and be in substantially the form of this Note, and such Assignee will be
deemed the Payee under the Note issued to it. References herein to "Notes" shall
include all outstanding Notes issued in substitution for or upon any assignment
of this Note.
SECTION 13. No Set-Off. The obligations of the Company under this Note are
absolute and not subject to any right of set-off, counterclaim, recoupment or
defenses against the Payee of any kind whatsoever.
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<PAGE> 47
SECTION 14. MISCELLANEOUS. The headings of the sections of this Note have
been inserted for convenience and shall not modify, define, limit or expand the
express provisions of this Note.
IN WITNESS WHEREOF, the Company has duly executed this Note this ____ day
of __________________, 1996.
EAGLE-PICHER INDUSTRIES, INC.
By: ______________________________
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SCHEDULE A
Installment Payment Schedule
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SCHEDULE B
Collateral
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<PAGE> 50
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re ) Consolidated Case No. 1-91-00100
)
)
EAGLE-PICHER INDUSTRIES, ) Chapter 11
INC., et al., )
) JUDGE PERLMAN
Debtors )
)
_________________________________ )
EXHIBIT 1.1.94
FORM OF NORTHWESTERN GROUP NOTE
<PAGE> 51
[NORTHWESTERN GROUP SECURED CLAIMS]
SECURED NOTE AND SECURITY AGREEMENT
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED IN VIOLATION OF SUCH
ACT AND THE RULES AND REGULATIONS THEREUNDER.
10% Secured Installment Note
EAGLE-PICHER INDUSTRIES, INC., an Ohio corporation (the "Company"), for
value received, hereby promises to pay to COMAC PARTNERS L.P. and COMAC
INTERNATIONAL N.V., or registered assigns (collectively, the "Payee"), on or
before May 1, 2001 (the "Maturity Date"), as hereinafter provided, the principal
sum of [__________________________________ (_____________)] and to pay interest
on the unpaid principal amount thereof from the date hereof to maturity at the
rate of 10% per annum computed as if each year consisted of 360 days and each
month consisted of 30 days. Such principal and interest shall be payable without
presentation of this Note, by bank wire transfer of Federal or other immediately
available funds (identifying each payment as Eagle-Picher Industries, Inc. 10%
Secured Installment Note due 2001, principal or interest) to the Payee pursuant
to instructions provided by the Payee to the Company from time to time, in
___________________ (___) consecutive payments of principal and interest, in the
respective amounts of and payable on the dates indicated in the schedule annexed
hereto as Schedule A (collectively, the "Installment Payments"). The first of
the Installment Payments will be made on [the first Business Day of the second
month following issuance of the Note]. Whenever any Installment Payment is not
made when due and such default shall continue for more than ten (10) days, the
Company shall pay interest on such amount at a rate equal to the lesser of (a)
12% per annum or (b) the maximum rate allowed by law.
Each Installment Payment, when paid, shall be applied first to the payment
of all interest accrued and unpaid on this Note and then to payment on account
of the principal hereof.
SECTION 1. The following terms have the following meanings when used in
this Note:
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banks in Cincinnati, Ohio are authorized or required by
law to close.
"COLLATERAL" shall have the meaning set forth in Section 3 hereof.
"Company" shall have the meaning set forth in the opening paragraph of this
Note.
<PAGE> 52
"MATURITY DATE" shall have the meaning set forth in the opening paragraph
of this Note.
"Payee" shall have the meaning set forth in the opening paragraph of this
Note.
SECTION 2 PRINCIPAL PAYMENTS. (a) SCHEDULED PAYMENT. On the Maturity
Date, the Company shall pay to the Payee, in cash or other immediately available
funds, the entire unpaid principal amount of this Note plus all accrued and
unpaid interest thereon.
(b) PREPAYMENT UPON CONDEMNATION OR DESTRUCTION. In the event of
condemnation or of destruction by fire or other casualty of the Collateral, the
Note may be prepaid in an amount equal to the value of the Collateral so
condemned or destroyed, together with all interest then accrued and unpaid
thereon, but without any prepayment penalty or premium.
(c) Optional Prepayment. This Note may be prepaid at any time in full (but
not in part) at a price equal to 100% of the then outstanding principal amount
of this Note, together with all interest then accrued and unpaid thereon, but
without any prepayment penalty or premium.
SECTION 3. SECURITY. This Note is secured by the following property
(collectively, the "Collateral"):
(a) The equipment described in Schedule B hereto (whether or not
constituting fixtures) and all additions and accessions thereto and
substitutions therefor;
(b) All books and records of the Company relating to any of the foregoing;
and
(c) All proceeds and products of any of the foregoing, including insurance
payable by reason of loss or damage.
The Company herewith confirms the grant of a security interest in the Collateral
to the Payee. As security for this Note, the Company will maintain an existing
first lien in favor of the Payee on the Collateral.
SECTION 4. Affirmative Covenants. For as long as any principal or interest
remains unpaid under this Note, the Company hereby covenants that, unless the
Payee shall otherwise consent in writing:
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(a) The Company shall deliver to the Payee (i) a consolidated balance
sheet, income statement, and cash flow statement of the Company within 60 days
after the close of each fiscal quarter other than the last fiscal quarter of the
fiscal year and (ii) an audited consolidated balance sheet, income statement,
and cash flow statement of the Company certified by an independent certified
public accountant of recognized standing and suitable to the Payee within 90
days after the close of each fiscal year. All such financial statements will be
prepared in accordance with generally accepted accounting principles
consistently applied. All statements will be in the same form as those provided
to creditors and shareholders of the Company generally. The Company will also
furnish to the Payee promptly copies of any Forms 10-Q, 10-K and 8-K that are
filed with the Securities and Exchange Commission as well as copies of any other
special mailings to shareholders.
(b) The Company will not dispose of all or substantially all of its assets
or such other portion of its assets as to materially adversely affect the
Company's ability to conduct its business as presently conducted.
(c) The Company shall not enter into any merger or consolidation with any
other entity nor may any subsidiary of the Company enter into any merger or
consolidation with the Company unless (i) the Company is the survivor and (ii)
there exists no event which with or without the passing of time or giving of
notice, or both, would constitute an event of default hereunder.
(d) The Company shall furnish to the Payee:
(i) as soon as possible and in any event within 10
days after becoming aware of the occurrence of any event of default as
defined in Section 13 hereof, or any event that with notice or passage
of time or both would, if unremedied, constitute an event of default, a
written statement of the chief executive officer, chief financial
officer, or treasurer of the Company, setting forth details of such
event of default or event, stating whether or not the same is
continuing and, if so, the action that the Company proposes to take
with respect thereto;
(ii) immediately after receiving knowledge thereof,
notice in writing of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that directly affect or affects
the Company based on financial exposure to the Company of $25 million,
or that directly affect or affects the Collateral or that seek or seeks
injunctive relief that will materially adversely affect the operations
of the Company or the Collateral;
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(iii) as soon as possible and in any event within 30
days after the Company knows or has reason to know that any Reportable
Event has occurred with respect to any Plan (as such terms are used in
the Employee Retirement Income Security Act of 1974), a written
statement by the chief executive officer, chief financial officer, or
treasurer of the Company setting forth details of the Reportable Event
and indicating what action, if any, the Company proposes to take with
respect thereto, together with a copy of any required notice of such
Reportable Event to the Pension Benefit Guaranty Corporation;
(iv) as soon as possible and in any event within 5
days after the Company becomes aware of the occurrence of a material
adverse change in the business, properties or the operations and
condition (financial or otherwise) of the Company, a statement by the
chief executive officer, chief financial officer, or treasurer of the
Company, setting forth details of such material adverse change and the
action that the Company proposes to take with respect thereto, except
as otherwise disclosed in public announcements of the Company issued in
the ordinary course of business; and
(v) such other information respecting the business,
properties, condition and operations (financial or otherwise) of the
Company as the Payee may from time to time reasonably request be
furnished to the Payee.
(e) The Company shall not enter into, or permit any subsidiary to enter
into, any agreement containing any provision that would be violated or breached
by this Note or by the performance by the Company of its obligations in
connection herewith.
SECTION 5. FURTHER ASSURANCES. (a) The Company agrees that from time to
time, at its expense, it will promptly execute and deliver all further
instruments and documents, and take all further action that may be reasonably
necessary or desirable, or that the Payee may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby and the priority thereof or to enable the Payee to exercise and enforce
its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, the Company will execute and file such
financing or continuation statements or amendments thereto and such other
instruments or notices as may be necessary or desirable or as the Payee may
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby.
(b) The Company hereby authorizes the Payee to file one or more financing
or continuation statements and amendments thereto relative to all or any part of
the Collateral without the signature of the Company where permitted by law. A
carbon, photographic or other
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<PAGE> 55
reproduction of this Note or any part thereof shall be sufficient as a financing
statement where permitted by law.
(c) The Company will furnish to the Payee from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Payee may reasonably request,
all in reasonable detail.
SECTION 6. Insurance. The Company shall, at its own expense, maintain
liability and property insurance with respect to its business and property,
including the Collateral, with responsible and reputable insurance companies or
associations satisfactory to the Payee in such amounts and covering such risks
as are acceptable to or specified by the Payee, taking into account, among other
factors, such amounts and risks as are usually carried by persons engaged in
similar businesses and owning similar properties in the same general areas in
which the Company operates. Each policy for liability insurance and property
damage insurance shall provide for payment to or on behalf of the Company and
the payee as their interests may appear. Each policy of property damage
insurance shall in addition (ii) name the Payee as an insured party thereunder
(without any representation or warranty by or obligation upon the Payee), (iii)
contain an agreement by the insurer that any loss thereunder shall be payable to
or on behalf of the Company or the Payee as their interests may appear, (iv)
provide that there shall be no recourse against the Payee for payment of
premiums or other amounts with respect thereto, and (v) provide that at least 30
days' prior written notice of cancellation or of lapse shall be given to the
Payee by the insurer. The Company shall deliver to the Payee certificates
evidencing the insurance maintained pursuant hereto.
SECTION 7. CERTAIN COVENANTS AS TO THE COLLATERAL. The Company shall:
(a) Keep the Collateral at the places identified therefor on Schedule B
hereto or, upon 15 days' prior written notice to the Payee, at such other places
as shall be identified in such notice (such notice to identify the record owner
of the new location) and which are in jurisdictions where all actions required
by Section hereof shall have been taken with respect to such Collateral.
(b) Cause the Collateral to be maintained and preserved in the same
condition, repair, and working order as when new, ordinary wear and tear
excepted, and, in the case of any loss or damage to the Collateral, as quickly
as practicable after the occurrence thereof make or cause to be made all
repairs, replacements, and other improvements in connection therewith which are
necessary or desirable to such end, provided, however, that in the event of
condemnation or of the destruction by fire or other casualty of the Collateral,
the Company shall have the option to
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<PAGE> 56
prepay the Note to the extent of the value of the Collateral so condemned or
destroyed as provided in Section 2(b) hereof.
(c) Pay promptly when due all property and other taxes, assessments, and
governmental charges or levies imposed upon it, and all claims (including claims
for labor, materials and supplies) against the Collateral.
(d) After the occurrence and during the continuance of an Event of Default
(as hereinafter defined), receive in trust for the benefit of the Payee all
amounts and proceeds received or collected by the Company in respect of the
Collateral, segregate such amounts and proceeds from other funds of the Company,
and forthwith pay such amounts and proceeds over to the Payee in the same form
as so received (with any necessary endorsement) to be held as cash collateral
and applied as provided in Section 13(b)(iii) hereof.
SECTION 8. Substitution of Collateral; Liens. During the term of this Note:
(a) The Company may substitute other equipment for the Collateral
identified in Schedule B hereto provided, however, that the aggregate value of
the Collateral remaining subject to the lien hereunder shall at all times be
equal to or greater than the value of the Collateral identified in Schedule B as
of the date of such substitution, such value to be determined by an independent
appraisal provided at the Company's expense and satisfactory to the Payee.
(b) The Company shall not create or suffer to exist any lien, security
interest, or other charge or encumbrance upon or with respect to any of the
Collateral.
SECTION 9. PAYEE APPOINTED ATTORNEY-IN-FACT. The Company hereby irrevocably
appoints the Payee as its attorney-in-fact, with full authority in the place and
stead of the Company and in the name of the Company, the Payee, or otherwise,
from time to time to take any action which may be reasonably necessary to
protect the Payee's interest under this Note, including, without limitation:
(a) to sign in the name and on behalf of the Company any financing
statements or other papers required under Section hereof;
(b) to obtain and adjust insurance required to be paid to the Payee
pursuant to Section hereof;
(c) to ask, demand, collect, sue for, recover, compound, receive, and give
acquittance and receipts for moneys due and to become due in respect of any of
the Collateral;
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<PAGE> 57
(d) to receive, endorse, and collect any drafts or other instruments in
connection with subsection (b) or (c) above; and
(e) to file any claims or take any action or institute any proceedings that
the Payee may deem necessary or desirable to enforce the respective rights of
the Payee with respect to any of the Collateral.
The Company hereby ratifies and approves all acts of the Payee as such
attorney-in-fact. The Payee shall not, in its capacity as such attorney-in-fact,
be liable for any acts or omissions, nor for any error of judgment or mistake of
fact or law, but only for gross negligence or willful misconduct. This power,
being coupled with an interest, is irrevocable until the Note shall have been
fully satisfied. Any amounts received or collected by the Payee in its capacity
as such attorney-in-fact shall be held as cash collateral and applied as
provided in Section 13(b)(iii).
SECTION 10. Payee May Perform. If the Company fails to perform any
agreement contained herein, the Payee may itself perform, or cause performance
of, such agreement, and the expenses of the Payee incurred in connection
therewith shall be payable by the Company under Section hereof.
SECTION 11. Payee's Duties. The powers conferred on the Payee hereunder are
solely to protect its interests in the Collateral and shall not impose any duty
to exercise any such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by the Payee
hereunder, the Payee shall not have any duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to any Collateral.
SECTION 12. Inspection Rights. The Payee, upon 24 hours' notice and during
normal business hours, shall have access to inspect, audit, and make extracts
from all of the Company's records, files, and books of account relating to the
Collateral, and the Company shall deliver any document or instrument necessary
for the Payee to obtain records from any service bureau maintaining records for
the Company. The Payee may also, at all reasonable times, examine and inspect
the Collateral. The Company shall, at the Payee's request, take all steps
necessary to facilitate such inspection.
SECTION 13 Events of Default. (a) Any of the following occurrences or acts
shall constitute an Event of Default hereunder:
(i) If default shall be made in the payment of any installment of
principal and interest due from the Company under the Note when and as the
same shall
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<PAGE> 58
become due and payable, whether at maturity or by acceleration or
prepayment or otherwise, and such default shall continue for more than ten
(10) days;
(ii) If there shall be default in the due observance or performance
of any other provision of this Note and such default shall continue for
more than thirty (30) days after written notice thereof shall have been
given by the Payee to the Company;
(iii) If an event of default shall occur and continue with respect to
any borrowing in excess of $5,000,000 by the Company, exclusive of any
alleged event of default that is being contested in good faith by the
Company;
(iv) If the Company shall make an assignment for the benefit of its
creditors or file a petition in bankruptcy or for reorganization or for an
arrangement or any composition, readjustment, liquidation, dissolution or
similar relief pursuant to the Bankruptcy Code or under any similar present
or future federal or state law, or shall be adjudicated a bankrupt;
(v) If a petition or answer shall be filed proposing the adjudication
of the Company as a bankrupt or the reorganization or arrangement of it, or
any composition, readjustment, liquidation, dissolution or similar relief
with respect to it pursuant to the Bankruptcy Code or any similar present
or future federal or state law, and the Company shall consent to the filing
thereof, or such petition or answer shall not be discharged or denied
within sixty (60) days after the filing thereof; or
(vi) If a receiver, trustee or liquidator (or other similar official)
of the Company, or of all or substantially all of the assets of the Company
or any portion thereof shall be appointed and shall not be discharged
within sixty (60) days thereafter, or if the Company shall consent to or
acquiesce in such appointment.
(b) If an Event of Default shall have occurred and be continuing:
(i) The Payee may give notice to the Company declaring the entire
unpaid principal amount of the Notes, together with all accrued interest
accrued and other sums then owing under this Note, to be forthwith payable,
and demanding that the same be paid, and thereupon all such amounts shall
be forthwith payable, together with all costs and expenses of collection,
notwithstanding any contrary provision contained in this Note, and
institute proceedings for the collection of all amounts then payable on
this Note, whether by declaration or otherwise, enforce any judgment
obtained, and exercise such lawful
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remedies as may be necessary or desirable for the enforcement of each of
the Payee's rights hereunder.
(ii) The Payee may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a Secured Party on default under the
Uniform Commercial Code (the "Code") and other applicable laws and
agreements and also may (i) require the Company to, and the Company hereby
agrees that it will at its expense and upon request of the Payee forthwith,
assemble the Collateral as directed by the Payee and make it available to
the Payee at a place or places to be designated by the Payee, which is or
are reasonably convenient to the Payee and the Company and (ii) without
notice except as specified below, sell the Collateral or any part thereof
in one or more parcels at public or private sale, at any of the Payee's
offices or elsewhere, for cash, on credit or for future delivery and upon
such other terms as the Payee may deem commercially reasonable. The Company
agrees that, to the extent notice of sale shall be required by law, at
least five days' notice to the Company of the time and place of any public
sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Payee shall not be obligated to
make any sale of the Collateral regardless of notice of sale having been
given. The Payee may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(iii) All cash proceeds received by the Payee in respect of any sale
of, collection from or other realization upon all or any part of the
Collateral may, in the discretion of the Payee, be held by the Payee
(without interest) as collateral for and/or then or at any time thereafter
applied in whole or in part by the Payee against payment of this Note. Any
surplus of such cash or cash proceeds held by the Payee and remaining after
payment in full of this Note shall be paid over to the Company or to
whosoever may be lawfully entitled to receive such surplus.
SECTION 14. Entire Agreement; No Oral Change. This Note embodies the entire
agreement and understanding between the Payee and the Company relating to the
subject matter hereof, and supersedes all prior agreements and understandings
relating thereto. This Note may not be changed orally, but only by an instrument
in writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
SECTION 15. NOTICES. Any notices or other communications required or
permitted hereunder shall be given in writing and personally delivered with
receipt acknowledged or mailed, postage prepaid, via registered mail, return
receipt requested, if to the Payee, at its
9
<PAGE> 60
address notified in writing by the Payee to the Company, and if to the Company,
Attention: Treasurer, at the Company's address at P.O. Box 779, Cincinnati, Ohio
45201 (if by mail) or 580 Walnut Street, Suite 1300, Cincinnati, Ohio 45202 (if
personally delivered), or any other address notified in writing by the Company
to the Payee. Any notice given in conformity with the foregoing shall be deemed
given when personally delivered or upon the date of delivery specified in the
registered mail receipt.
SECTION 16. Continuing Security Interest; Etc. This Note confirms the grant
of a continuing security interest in the Collateral and shall (a) be binding
upon the Company, its heirs, administrators, successors, and assigns and (b)
inure to the benefit of the Payee and its respective successors, transferees,
and assigns. No security taken hereafter as security for the payment or
performance of this Note shall impair in any manner or affect this Note or the
security interest confirmed hereby, all present and future additional security
to be considered as one general, continuing security interest. Any of the
Collateral may be released from this Note without altering, varying, or
diminishing in any way this Note or the security interest confirmed hereby as to
the Collateral not expressly released, and this Note and such security interest
shall continue in full force and effect as to all of the Collateral not
expressly released.
SECTION 17. Governing Law. This Note shall be governed by, and construed
and enforced in accordance with, the law of the State of Connecticut applicable
to contracts made and wholly performed in that state (without giving effect to
principles relating to conflict of laws).
SECTION 18. Consent To Jurisdiction. The parties hereto irrevocably agree
that any legal action or proceeding with respect to this Note shall be brought
in the courts of the State of Connecticut or in the courts of the United States
of America sitting in Connecticut. The Company hereby waives to the fullest
extent permitted by law any objection it may now or hereafter have to the laying
of venue in any such action or proceeding in any such court as well as any right
it may now or hereafter have to remove any such action or proceeding, once
commenced, to another court on the grounds of FORUM NON CONVENIENS or otherwise
or to remove an action brought in a state court to a court of the United States
of America. The Company hereby irrevocably agrees that service of process in any
such action or proceeding may be made either by mailing or delivering a copy of
the summons and complaint in any such action or proceeding to the Company at the
address provided herein by certified mail, return receipt requested. Service of
process in any such action or proceeding, effected as aforesaid, shall be deemed
personal service upon the Company and shall be legal and binding upon the
Company for all purposes notwithstanding any failure on the part of the Company
to receive copies of such process mailed directly to the Company in accordance
with the provisions of this Section.
10
<PAGE> 61
SECTION 19 Indemnity and Expenses. (a) The Company agrees to indemnify the
Payee from and against any and all claims, losses, and liabilities growing out
of or resulting from this Note (including, without limitation, enforcement of
this Note), except claims, losses, or liabilities resulting from the Payee's
gross negligence or willful misconduct.
(b) The Company will upon demand pay to the Payee the amount of any and all
reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, that the Payee may after the date hereof
incur in connection with (i) the custody, preservation, use, or operation of, or
the sale of, collection from, or other realization upon, any of the Collateral,
(ii) the exercise or enforcement of any of the rights of the Payee, or (iii) the
failure by the Company to perform or observe any of the provisions hereof.
SECTION 20. SEVERABILITY. The provisions of this Note are independent of
and separable from each other, and no such provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any reason any
other such provision may be invalid or unenforceable in whole or in part.
SECTION 21. MISCELLANEOUS. The headings of the sections of this Note have
been inserted for convenience and shall not modify, define, limit or expand the
express provisions of this Note.
IN WITNESS WHEREOF, the Company has duly executed this Note this ____ day
of __________________, 1996.
EAGLE-PICHER INDUSTRIES, INC.
By: ______________________________
11
<PAGE> 62
SCHEDULE A
Installment Payment Schedule
12
<PAGE> 63
SCHEDULE B
Collateral
13
<PAGE> 64
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re ) Consolidated Case No. 1-91-00100
)
)
EAGLE-PICHER INDUSTRIES, ) Chapter 11
INC., et al., )
) JUDGE PERLMAN
Debtors )
)
_________________________________ )
EXHIBIT 1.1.114
SENIOR UNSECURED SINKING FUND DEBENTURES
<PAGE> 65
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE
OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED
FOR SALE, OR OTHERWISE TRANSFERRED UNLESS REGISTERED
OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.
[____]% SENIOR UNSECURED SINKING FUND DEBENTURES DUE _____
U.S. $250,000,000 Cincinnati, Ohio
[Effective Date]
FOR VALUE RECEIVED, the undersigned, EAGLE-PICHER INDUSTRIES,
INC., an Ohio corporation (the "Company"), hereby promises to pay to the order
of [ ] or to any other holder of this Debenture (such holder being the "Payee")
the principal amount of TWO HUNDRED FIFTY MILLION DOLLARS ($250,000,000) on
[date that is 10 years from the Effective Date] (the "Maturity Date") and
interest thereon as hereinafter provided. Both principal and interest hereunder
are payable in lawful money of the United States of America to the Payee at such
place as the Payee may designate from time to time in writing in cash or other
immediately available funds.
This Debenture is one of an issue of [____]% Senior Unsecured
Sinking Fund Debentures Due [ten years from the Effective Date] of the Company
issued in an aggregate principal amount limited to $250,000,000 (the
"Debentures") and the holder hereof is entitled equally and ratably with the
holders of all other Debentures outstanding to the benefits provided for hereby.
SECTION 1. (a) The following terms have the following
meanings when used in this Debenture:
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in Cincinnati, Ohio are authorized
or required by law to close.
"COMPANY" shall have the meaning set forth in the opening
paragraph of this Debenture.
"EVENT OF DEFAULT" shall mean any of the events set forth in
Section 4(a).
<PAGE> 66
"MATURITY DATE" shall have the meaning set forth in the
opening paragraph of this Debenture.
"PAYEE" shall have the meaning set forth in the opening
paragraph of this Debenture.
(b) Unless otherwise provided herein, (i) the word "from"
shall mean from and including, and (ii) the words "to" or "until" shall mean to
and until but excluding.
SECTION 2. INTEREST. The Company will pay interest at a rate
of [____]% per annum semiannually on ___________ and _____________ of each
year, commencing six months after ___________ (the "Effective Date") or if
any such day is not a Business Day on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Debentures will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from _____________. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
SECTION 3. PAYMENTS. (a) SCHEDULED PAYMENTS. On the Maturity
Date, the Company shall pay to the Payee, in cash or other immediately available
funds, the entire unpaid principal amount of this Debenture plus all accrued and
unpaid interest thereon. Holders must surrender Debentures to the Company to
collect principal payments.
(b) SINKING FUND. The Company will redeem $20,000,000 of the
aggregate principal amount of the original issuance of the Debentures on each of
the third through ninth anniversaries of the Effective Date, in each case at
100% of the principal amount to be redeemed plus accrued interest to the
redemption date, by paying such amounts as a sinking fund payment, before each
such anniversary of the Effective Date. The Company may reduce the principal
amount of Debentures to be redeemed by subtracting 100% of the principal amount
of any Debenture that the Company redeemed or repurchased otherwise than
pursuant to this Section. The Company may so subtract the same Debenture only
once.
(c) OPTIONAL REDEMPTION. The Company at its option may on
each date it is required to redeem Debentures pursuant to paragraph (b) above
redeem up to an additional $20,000,000 of the outstanding aggregate principal
amount of the Debentures by paying the principal amount to be redeemed plus
accrued and unpaid interest thereon to the applicable redemption date. In
addition, the Company at its option may redeem after [date that is three years
from the Effective Date] all or, from time to time, part of the Debentures at
the following redemption prices (expressed as a percentage of the principal
amount thereof) plus accrued interest to the redemption date (the "Redemption
Price"):
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<PAGE> 67
If redeemed during the If redeemed during the
twelve month period twelve month period
beginning [Month and date Redemption beginning [Month and date Redemption
of Effective Date], Price of Effective Date], Price
- -------------------------------------------------------------------------------
[3 years from 105.25% [7 years from 101.25%
Effective Date] Effective Date]
[4 years from 104.25% [8 years from 100.25%
Effective Date] Effective Date]
[5 years from 103.25% [9 years from
Effective Date] Effective Date] and
[6 years from 102.25% thereafter 100%
Effective Date]
(d) NOTICE OF REDEMPTION. A notice of redemption will be
mailed at least 20 days but not more than 60 days before the redemption date to
each holder of Debentures to be redeemed at its registered address. Debentures
in denominations larger than $1,000 may be redeemed in part, but only in whole
multiples of $1,000. If any Debenture is to be redeemed in part only, a new
Debenture in principal amount equal to the unredeemed portion thereof will be
issued in the name of the holder thereof upon cancellation of the original
Debenture. If less than all of the Debentures outstanding are to be redeemed,
the Debentures to be redeemed will be selected on a pro rata basis (with such
adjustments as may be deemed appropriate so that only Debentures in
denominations of $1,000, or integral multiples thereof, shall be redeemed). Once
notice of redemption is given, Debentures called for redemption become due and
payable on the redemption date at the redemption price.
SECTION 4. EVENTS OF DEFAULT. (a) Each of the following shall
be an Event of Default:
(i) any failure by the Company for ninety days to pay all or
any portion of principal under the Debentures when the same
shall be due and payable in accordance with the terms hereof,
whether on the Maturity Date, by acceleration or otherwise;
(ii) any failure by the Company for ninety days to pay (by
delivery of cash or other immediately available funds) all or
any portion of any interest under the Debentures when the same
shall be due and payable.
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<PAGE> 68
(ii) any default by the Company for ninety days after notice
to it in the due and punctual performance or observance of any
of the agreements of the Company contained in the Debentures;
(iii) (A) the filing by the Company of a voluntary petition
seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under title 11 of the
United States Code (or corresponding provisions of future
laws) or any other applicable bankruptcy, insolvency or
similar law, (B) the making by the Company of any assignment
for the benefit of its creditors, or the admission by the
Company in writing of its inability to pay its debts as they
become due, (C) the filing of (x) an involuntary petition
against the Company under title 11 of the United States Code,
or any other applicable bankruptcy, insolvency or similar law
(or corresponding provisions of future laws), (y) an
application for the appointment of a custodian, receiver,
trustee or other similar official for the Company for all or a
substantial part of the assets of the Company or (z) an
involuntary petition against the Company seeking liquidation,
winding up, reorganization, arrangement, adjustment,
protection, relief or composition of the Company or any of the
Company's debts under any other federal or state insolvency
law, provided that any such filing under (x), (y) or (z) above
shall not have been vacated, set aside or stayed within a
60-day period from the date thereof unless the Company shall
have filed an answer consenting to or acquiescing therein, or
(D) the entry against the Company of a final and nonappealable
order for relief under any bankruptcy, insolvency or similar
law now or hereafter in effect;
(b) Upon the occurrence and during the continuance of any
Event of Default described in paragraph (a) above, the holders of a majority of
the outstanding principal amount of the Debentures may, by written notice to the
Company, declare all or any portion of the unpaid principal amount of the
Debentures and all interest accrued thereon to be immediately due and payable.
Demand, presentment, protest and notice of non-payment are hereby waived by the
Company. All payments made following an Event of Default shall be applied first
to payment of all accrued and unpaid interest and then to principal.
SECTION 5. WAIVER OR ALTERATION. Without the consent of the
Company and each holder affected, an amendment to the Debentures may not: reduce
the amount of Debentures whose holders must consent to an amendment; reduce the
rate of or change the time for payment of interest on any Debenture; reduce the
principal of or change the fixed maturity of any Debenture; or make any
Debenture payable in money other than that stated in the Debenture. Subject to
the exceptions listed in the preceding sentence, the Debentures may be amended
by a written instrument signed by the Company and the holders of a majority of
the
4
<PAGE> 69
outstanding principal amount of the Debentures. In the case of any waiver, the
Company and the holders of a majority of the outstanding principal amount of the
Debentures shall be restored to their former respective positions and rights
hereunder, and any Event of Default waived shall be deemed to be cured and not
continuing, but no such waiver shall extend to any subsequent or other Event of
Default or impair any right consequent thereon except to the extent expressly
provided in such waiver. Without the consent of any holder, the Debentures may
be amended to cure any ambiguity, defect or inconsistency, to provide for
assumption of Company obligations to holders or to make any change that does not
adversely affect the rights of any holder.
SECTION 6. REMEDIES CUMULATIVE. No failure to exercise or
delay in exercising any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
SECTION 7. NOTICES. Any notices or other communications
required or permitted hereunder shall be given in writing and personally
delivered with receipt acknowledged or mailed, postage prepaid, via registered
mail, return receipt requested, if to the Payee, at its address notified in
writing by the Payee to the Company, and if to the Company, Attention:
Treasurer, at the Company's address at Post Office Box 779, Cincinnati, Ohio
45201 (if by mail) or 580 Walnut Street, 13th Floor, Cincinnati, Ohio 45202 (if
personally delivered), or any other address notified in writing by the Company
to the Payee. Any notice given in conformity with the foregoing shall be deemed
given when personally delivered or upon the date of delivery specified in the
registered mail receipt.
SECTION 8. NO RECOURSE AGAINST OTHERS. A director, officer,
employee or a stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Debentures or for any claim based
on, in respect of or by reason of such obligations or their creation. Each
holder by accepting a Debenture waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the
Debentures.
SECTION 9. GOVERNING LAW. The Debentures shall be governed
by, and construed and enforced in accordance with, the law of the State of Ohio.
SECTION 10. COSTS OF COLLECTION. If the Payee is required to
commence suit to recover any amount due under the Debentures following an Event
of Default, the Payee shall be entitled to collect from the Company
reimbursement of such reasonable attorneys' fees and expenses of counsel
selected by the Payee.
5
<PAGE> 70
SECTION 11. SUCCESSORS AND ASSIGNS; TRANSFERABILITY. The
Debentures shall be binding upon and inure to the benefit of the Payee and the
Company and their respective transferees, successors and assigns; PROVIDED,
HOWEVER, that the Company may not transfer or assign any of its rights or
obligations hereunder without the prior written consent of the Payee. Within
five Business Days after receipt of notice of any assignment by the Payee to any
person or entity (an "Assignee") of all or any part of a Debenture, the Company
shall execute and deliver to such Assignee, in exchange for the surrendered
Debenture, a new Debenture to the order of such Assignee in an amount equal to
the amount of the Debenture assigned to it, and if the Payee has retained any
amount owing to it hereunder, a new Debenture to the order of the Payee in an
amount equal to the amount retained by it hereunder, which new Debenture shall
be dated the same date as the surrendered Debenture and be in substantially the
form of this Debenture, and such Assignee will be deemed the Payee under the
Debenture issued to it. In the event that the Payee proposes to transfer the
Debentures in a transaction that would require qualification of an indenture
under the Trust Indenture Act of 1939, the Company shall cooperate with the
Payee in the preparation and qualification of such indenture and the replacement
of the Debentures with a comparable instrument evidencing the indebtedness
represented hereby and providing the holder thereof with substantially
comparable terms. References herein to "Debentures" shall include all
outstanding Debentures issued in substitution for or upon any assignment of this
Debenture.
SECTION 12. REPLACEMENT OF DEBENTURE. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a Debenture, and the Company's receipt of an indemnity agreement
of the Payee reasonably satisfactory to the Company, the Company will, at the
expense of the Payee, execute and deliver, in lieu thereof, a new Debenture of
like terms.
SECTION 13. NO SET-OFF. The obligations of the Company under
the Debentures are absolute and not subject to any right of set-off,
counterclaim, recoupment or defenses against the Payee of any kind whatsoever.
SECTION 14. DESCRIPTIVE HEADINGS. The descriptive headings of
the Debentures are inserted for convenience only and do not constitute a part of
this Debenture.
6
<PAGE> 71
IN WITNESS WHEREOF, the Company has caused this Debenture to
be executed by its duly authorized officer as of the day and year first written
above.
EAGLE-PICHER INDUSTRIES, INC.
By: ________________________
Name:
Title:
7
<PAGE> 72
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re ) Consolidated Case No. 1-91-00100
)
)
EAGLE-PICHER INDUSTRIES, ) Chapter 11
INC., et al., )
) JUDGE PERLMAN
Debtors )
)
_________________________________ )
EXHIBIT 1.1.119
FORM OF TAX REFUND NOTES
<PAGE> 73
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE
OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED
FOR SALE, OR OTHERWISE TRANSFERRED UNLESS REGISTERED
OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.
[__]% TAX REFUND NOTE DUE _____
U.S. $[___________] Cincinnati, Ohio
[Effective Date]
FOR VALUE RECEIVED, the undersigned, EAGLE-PICHER INDUSTRIES,
INC., an Ohio corporation (the "Company"), hereby promises to pay to the
order of the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust or
to any other holder (such holder being the "Payee") of this note (the "Note")
the principal amount of [_______________________] on June 1, 1998 (the
"Maturity Date") and interest thereon as hereinafter provided. Both principal
and interest hereunder are payable in lawful money of the United States of
America to the Payee at such place as the Payee may designate from time to time
in writing in cash or other immediately available funds.
SECTION 1. (a) The following terms have the following meanings
when used in this Note:
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in Cincinnati, Ohio are authorized
or required by law to close.
"COMPANY" shall have the meaning set forth in the opening
paragraph of this Note.
"EVENT OF DEFAULT" shall mean any of the events set forth in
Section 5(a).
"MATURITY DATE" shall have the meaning set forth in the
opening paragraph of this Note.
"PAYEE" shall have the meaning set forth in the opening
paragraph of this Note.
(b) Unless otherwise provided herein, (i) the word "from"
shall mean from and including, and (ii) the words "to" or "until" shall mean to
and until but excluding.
<PAGE> 74
SECTION 2. INTEREST. The Company will pay interest at a rate
of [__]% per annum semiannually on __________ and ___________ of each year,
commencing six months after _______________ (the "Effective Date") or if
any such day is not a Business Day on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Note will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
_____________________. Interest will be computed on the basis of a 360- day
year of twelve 30-day months.
SECTION 3. PAYMENTS. (a) SCHEDULED PAYMENTS. On the Maturity
Date, the Company shall pay to the Payee, in cash or other immediately available
funds, the entire unpaid principal amount of this Note plus all accrued and
unpaid interest thereon. The Payee must surrender the Note to the Company to
collect principal payments.
(b) MANDATORY REDEMPTION. The Company will redeem all of the
aggregate principal amount of the Note outstanding plus accrued interest to the
redemption date as soon as practicable after its receipt of its federal income
tax refund (the "Tax Refund") for the fiscal year ending _______ (in the
aggregate principal amount of such tax refunds).
(c) OPTIONAL PREPAYMENT. The Company may, at any time and from
time to time, without premium or penalty, prepay (in multiples of $1,000) all or
a portion of the unpaid principal amount of the Note or all or a portion of
accrued and unpaid interest, together with unpaid accrued interest on the amount
so prepaid to the date chosen for prepayment, payable in cash or other
immediately available funds. A notice of redemption under this subsection will
be mailed at least 20 days but not more than 60 days before the redemption date
to the Payee at its registered address. The Note may be redeemed in part, but
only in whole multiples of $1,000. Once notice of redemption is given, the Note
becomes due and payable on the redemption date at the redemption price.
SECTION 4. LIENS. The Company shall not create or suffer to
exist any lien, security interest, or other charge or encumbrance upon or with
respect to, or grant any right to a party other than the Eagle-Picher
Industries, Inc. Personal Injury Settlement Trust in, the Tax Refund.
SECTION 5. EVENTS OF DEFAULT. (a) Each of the following shall
be an Event of Default:
(i) any failure by the Company for ninety days to pay all or
any portion of principal under the Note when the same shall be
due and payable in accordance with the terms hereof, whether
on the Maturity Date, by acceleration or otherwise;
2
<PAGE> 75
(ii) any failure by the Company for ninety days to pay (by
delivery of cash or other immediately available funds) all or
any portion of any interest under the Note when the same shall
be due and payable;
(ii) any default by the Company for ninety days after notice
to it in the due and punctual performance or observance of any
of the agreements of the Company contained in the Note;
(iii) (A) the filing by the Company of a voluntary petition
seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under title 11 of the
United States Code (or corresponding provisions of future
laws) or any other applicable bankruptcy, insolvency or
similar law, (B) the making by the Company of any assignment
for the benefit of its creditors, or the admission by the
Company in writing of its inability to pay its debts as they
become due, (C) the filing of (x) an involuntary petition
against the Company under title 11 of the United States Code,
or any other applicable bankruptcy, insolvency or similar law
(or corresponding provisions of future laws), (y) an
application for the appointment of a custodian, receiver,
trustee or other similar official for the Company for all or a
substantial part of the assets of the Company or (z) an
involuntary petition against the Company seeking liquidation,
winding up, reorganization, arrangement, adjustment,
protection, relief or composition of the Company or any of the
Company's debts under any other federal or state insolvency
law, provided that any such filing under (x), (y) or (z) above
shall not have been vacated, set aside or stayed within a
60-day period from the date thereof unless the Company shall
have filed an answer consenting to or acquiescing therein, or
(D) the entry against the Company of a final and nonappealable
order for relief under any bankruptcy, insolvency or similar
law now or hereafter in effect;
(b) Upon the occurrence and during the continuance of any
Event of Default described in paragraph (a) above, the Payee may, by written
notice to the Company, declare all or any portion of the unpaid principal amount
of the Note and all interest accrued thereon to be immediately due and payable.
Demand, presentment, protest and notice of non-payment are hereby waived by the
Company. All payments made following an Event of Default shall be applied first
to payment of all accrued and unpaid interest and then to principal.
SECTION 6. REMEDIES CUMULATIVE. No failure to exercise or
delay in exercising any right, remedy, power or privilege hereunder shall
operate as a waiver thereof,
3
<PAGE> 76
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
SECTION 7. NOTICES. Any notices or other communications
required or permitted hereunder shall be given in writing and personally
delivered with receipt acknowledged or mailed, postage prepaid, via registered
mail, return receipt requested, if to the Payee, at its address notified in
writing by the Payee to the Company, and if to the Company, Attention:
Treasurer, at the Company's address at Post Office Box 779, Cincinnati, Ohio
45201 (if by mail) or 580 Walnut Street, 13th Floor, Cincinnati, Ohio 45202 (if
personally delivered), or any other address notified in writing by the Company
to the Payee. Any notice given in conformity with the foregoing shall be deemed
given when personally delivered or upon the date of delivery specified in the
registered mail receipt.
SECTION 8. NO RECOURSE AGAINST OTHERS. A director, officer,
employee or a stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Note or for any claim based on, in
respect of or by reason of such obligations or their creation. The Payee by
accepting the Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Note.
SECTION 9. GOVERNING LAW. The Note shall be governed by, and
construed and enforced in accordance with the law of the State of Ohio.
SECTION 10. COSTS OF COLLECTION. If the Payee is required to
commence suit to recover any amount due under the Note following an Event of
Default, the Payee shall be entitled to collect from the Company reimbursement
of such reasonable attorneys' fees and expenses of counsel selected by the
Payee.
SECTION 11. SUCCESSORS AND ASSIGNS; TRANSFERABILITY. The Note
shall be binding upon and inure to the benefit of the Payee and the Company and
their respective transferees, successors and assigns; PROVIDED, HOWEVER, that
the Company may not transfer or assign any of its rights or obligations
hereunder without the prior written consent of the Payee. Within five Business
Days after receipt of notice of any assignment by the Payee to any person or
entity (an "Assignee") of all or any part of the Note, the Company shall execute
and deliver to such Assignee, in exchange for the surrendered Note, a new Note
to the order of such Assignee in an amount equal to the amount of the Note
assigned to it, and if the Payee has retained any amount owing to it hereunder,
a new Note to the order of the Payee in an amount equal to the amount retained
by it hereunder, which new Note shall be dated the same date as the surrendered
Note and be in substantially the form of this Note, and such Assignee will be
deemed the Payee under the Note issued to it. References herein
4
<PAGE> 77
to "Notes" shall include all outstanding Notes issued in substitution for or
upon any assignment of this Note.
SECTION 12. REPLACEMENT OF NOTE. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Note, and the Company's receipt of an indemnity agreement of
the Payee reasonably satisfactory to the Company, the Company will, at the
expense of the Payee, execute and deliver, in lieu thereof, a new Note of like
terms.
SECTION 13. NO SET-OFF. The obligations of the Company under
the Note are absolute and not subject to any right of set-off, counterclaim,
recoupment or defenses against the Payee of any kind whatsoever.
SECTION 14. DESCRIPTIVE HEADINGS. The descriptive headings of
the Note are inserted for convenience only and do not constitute a part of the
Note.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed by its duly authorized officer as of the day and year first written
above.
EAGLE-PICHER INDUSTRIES, INC.
By: ________________________
Name:
Title:
5
<PAGE> 78
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re ) Consolidated Case No. 1-91-00100
)
)
EAGLE-PICHER INDUSTRIES, ) Chapter 11
INC., et al., )
) JUDGE PERLMAN
Debtors )
)
_________________________________ )
EXHIBIT 5.2
FORM OF AMENDED CLAIMS SETTLEMENT GUIDELINES
<PAGE> 79
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re )
) CONSOLIDATED CASE NO.
EAGLE-PICHER INDUSTRIES, INC., ) 1-91-00100
et al., ) Chapter 11-- Judge Perlman
)
Debtors. )
AMENDED GUIDELINES FOR THE
COMPROMISE AND SETTLEMENT
OF CLAIMS AND CONTROVERSIES
---------------------------
Notwithstanding any requirements that may be imposed pursuant to Bankruptcy Rule
9019, Eagle-Picher Industries, Inc., Daisy Parts, Inc., Transicoil Inc.,
Michigan Automotive Research Corporation, EDI, Inc., Eagle-Picher Minerals,
Inc., and Hillsdale Tool and Manufacturing Co. (the "Debtors") may compromise or
settle as allowed claims (i) all claims asserted against the Debtors as to which
the Debtors have the power and authority to file and prosecute objections
pursuant to section 5.1 of the Third Amended Consolidated Plan of
Reorganization, dated August 28, 1996 and (ii) all claims that the Debtors have
asserted against other parties prior to [insert Effective Date of Plan]
("Claims") according to the following procedures:
1. Subject to section 2(b) hereof, the following settlements or
compromises do not require the review or approval of the United States
Bankruptcy Court for the Southern District of Ohio (the "Bankruptcy
Court") or any other party in interest:
(a) The settlement or compromise of a Claim against the Debtors or
their estates pursuant to which such Claim is allowed in an
amount of $1,000,000 or less;
<PAGE> 80
(b) The settlement or compromise of a Claim against the Debtors or
their estates where the difference between the amount of the
Claim listed on the Debtors' schedules and the amount of the
Claim proposed to be allowed under the settlement is
$1,000,000 or less; and
(c) The settlement or compromise of a Claim asserted by one or
more of the Debtors against a party, where the difference
between the amount sought to be recovered by the Debtors and
the amount to be paid to the Debtors under the proposed
settlement is $1,000,000 or less.
2. The following settlements or compromises shall be submitted to the
Bankruptcy Court for approval:
(a) Any settlement or compromise not described in section 1
hereof; and
(b) Any settlement or compromise of Claims that involve an
"insider," as defined in 11 U.S.C. Section 101(3).
2
<PAGE> 81
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re ) Consolidated Case No. 1-91-00100
)
)
EAGLE-PICHER INDUSTRIES, ) Chapter 11
INC., et al., )
) JUDGE PERLMAN
Debtors )
)
_________________________________ )
EXHIBIT 7.11
FORM OF MANAGEMENT CONTRACTS
<PAGE> 82
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of ________________, 1995, between
EAGLE-PICHER INDUSTRIES, INC. (the "Company"), having its principal executive
offices at 580 Walnut Street, Cincinnati, Ohio 45201, and
_____________________________ (the "Executive"), residing at
________________________.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Executive is employed on a full-time basis by the
Company and is currently serving as __________ ________________ of the Company;
and
WHEREAS, on January 7, 1991, the Company and certain of its
affiliates (collectively, the "Debtors") each filed a petition for relief under
chapter 11, title 11 of the United States Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Southern District of Ohio, Western
Division (the "Bankruptcy Court"); and
WHEREAS, by order dated __________ __, 1995 (the "Confirmation
Order") the Bankruptcy Court confirmed the Consolidated Plan of Reorganization,
dated _________ __, 1995 (the "Plan"), in the Debtors' chapter 11 cases; and
WHEREAS, the Plan contemplates that the Company and the
Executive will enter into this Agreement which is to become effective on the
Effective Date (as such term is defined in the Plan).
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT; EFFECTIVENESS OF AGREEMENT. The obligation of
the Company to employ the Executive, and of the Executive to serve the Company,
pursuant to this Agreement shall become effective automatically on the
Effective Date.
2. TERM. The term of Executive's employment hereunder
(hereinafter referred to as the "Term") shall commence on the Effective Date and
shall continue thereafter until the date which is thirty (30) months from and
after the date on which the Confirmation Order was entered by the Bankruptcy
Court, unless terminated earlier as hereinafter provided.
<PAGE> 83
3. Duties and Extent of Services. During the Term, Executive
agrees to continue to serve as the _______ _______________ of the Company
faithfully and to the best of his ability under the direction of the [Chief
Executive Officer and the] Board of Directors of the Company (the "Board"), and
agrees to devote substantially all of his business time, energy and skill to
such employment. Executive agrees to perform the duties commensurate with the
position of ___________ of the Company, which shall include,without
limitation, the duties set forth on Annex A hereto. Executive agrees also to
perform such specific duties and services of a senior executive nature as the
[Chief Executive Officer of the Company or the] Board shall reasonably request
consistent with Executive's position as ___________. The principal place of
employment of Executive shall be Cincinnati, Ohio and, subject to such
reasonable travel as the performance of his duties may require, such principal
place of employment shall not be changed unless the Executive otherwise
consents.
4. COMPENSATION.
4.1 BASE SALARY. The Company agrees to pay or cause to be
paid to Executive during the Term, a base salary equal to the amount of his base
salary as at the date immediately preceding the Effective Date, subject to
adjustment as provided below (as so adjusted, the "Base Salary"). The Base
Salary shall be payable in accordance with the regular payroll policies of the
Company from time to time in effect, less such deductions as shall be required
to be withheld by applicable law and regulations. On each December 1 during the
Term, the Board or a committee thereof, shall review Executive's Base Salary as
then in effect and may, but shall not be obligated to, increase such salary by
such amount as the Board (or such committee), in its sole discretion,
shall determine.
[4.2 DISCRETIONARY BONUS. In addition to Base Salary, the
Executive shall be entitled to receive an annual cash bonus based on the
performance of the Company and of the Executive, the amount of which, if any,
shall be determined by the Board (or a committee thereof). Determinations made
by the Board (or such committee) with respect to the amount, if any, of annual
bonuses to be paid to Executive under this Agreement shall be final and
conclusive.]
4.3 BENEFITS AND PERQUISITES. During the Term, the Company
shall provide Executive with and Executive shall be entitled to the following
benefits and perquisites:
(a) participation in and the receipt of benefits under (i) all
of the Company's employee benefit plans and arrangements in effect from time to
time applicable to salaried employees of the Company, (ii) all short-term and
long-term incentive plans of the Company as in effect from time to time, (iii) a
supplemental executive retirement plan
2
<PAGE> 84
(the "SERP") substantially in accordance with and no less favorable to Executive
than the terms, provisions and benefits under the supplemental executive
retirement plan currently provided by the Company, and (iv) any life insurance,
health and accident plan or arrangement made available by the Company, now or in
the future, to its executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements.
(b) four (4) weeks of paid vacation in each calendar year.
(c) an automobile paid for by the Company for use in the
performance of his services under this Agreement, in a manner substantially
consistent with past practices.
(d) membership fees paid for by the Company with respect to
any of the Executive's business-related club memberships (it being understood
that such membership fees shall not include any fees for country clubs or other
similar, primarily social, clubs).
The Company also shall implement, as soon as reasonably
practicable after the Effective Date, a long-term incentive plan. Although the
ability to receive stock of the Company may not be available for such plan, the
plan nevertheless shall provide the Executive with opportunities and incentives
reasonably economically equivalent to those provided by similar companies, many
of which do provide stock options and/or other types of stock grants as
components of their long-term incentive plans.
4.4 Expenses. Subject to such policies as may from time to
time be established by the Board, the Company shall pay or reimburse Executive
for all reasonable expenses actually incurred or paid by Executive during the
Term in the performance of his services under this Agreement, upon presentation
of expense statements or vouchers or such other supporting information as the
Company may require.
5. TERMINATION.
5.1 Cause. The Company may terminate Executive's employment
hereunder for Cause. For the purposes of this Agreement, the Company shall have
"Cause" to terminate Executive's employment hereunder only by reason of any one
or more of the following:
(i) Executive's conviction, by a
court of competent and final jurisdiction, of any
crime (whether or not involving the
3
<PAGE> 85
Company or any of its subsidiaries) which constitutes
a felony in the jurisdiction involved; or
(ii) Executive's commission of an
act of fraud upon the Company or any or its
subsidiaries; or
(iii) Executive's repeated willful
failure to perform in all material respects his
duties hereunder in accordance with the terms of this
Agreement which failure (other than by reason of
death or disability) continues uncorrected for a
period of ten (10) days after Executive shall have
received written notice from the Board stating with
specificity the nature of such failure or refusal.
5.2 TERMINATION BY THE EXECUTIVE. Executive may
terminate his employment hereunder upon [thirty (30)] days' prior written notice
to the Company for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean (i) the material diminution of the nature or scope of the duties
assigned to Executive from that contemplated by Section 3 hereof, (ii) a
reduction in Executive's Base Salary, or a material reduction in Executive's
fringe benefits or any other material failure by the Company to comply with
Section 4 hereof, other than any such reduction or failure as shall apply to all
executive officers of the Company generally, (iii) ceased participation by
Executive, for any reason other than as a result of any action by Executive, in
any employee benefit plan of the Company with respect to which Executive is or
was, prior to such time, eligible to participate, (iv) the relocation of
Executive's principal place of employment more than twenty (20) miles from the
location specified in Section 3 hereof without Executive's consent, (v) the
requirement that Executive engage in a substantial amount of additional travel
(as compared to Executive's past practices) in the performance of his
duties hereunder without Executive's consent, or (vi) any other material breach
by the Company of its obligations under this Agreement. Good Reason shall not
exist in the event of a sale or disposition of a subsidiary or division of the
Company and Executive either (a) voluntarily agrees to be employed by such
subsidiary or division, or (b) is offered a comparable position with the
Company. For purposes hereof, comparable shall encompass such items as salary,
benefits, duties and geographic location.
5.3 NOTICE OF TERMINATION. Any termination by the
Company pursuant to Section 5.1 above or by Executive pursuant to Section 5.2
above shall be communicated by written notice (the "Notice of Termination"),
which notice shall indicate the specific termination provision in this Agreement
relied upon for such termination.
5.4 DATE OF TERMINATION. "Date of Termination"
shall mean (i) if Executive's employment is terminated pursuant to Section 5.1
or 5.2 hereof, the date
4
<PAGE> 86
specified in the Notice of Termination, and (ii) if Executive's employment is
terminated by the Company other than for Cause or by Executive other than for
Good Reason, the date on which a Notice of Termination is given.
5.5 PAYMENTS UPON TERMINATION. (a) If the
employment of Executive with the Company is terminated (i)by the Company other
than for Cause or (ii) by the Executive for Good Reason, then Executive shall be
entitled to receive from the Company, and the Company shall pay to Executive, a
lump sum severance payment equal to the greater of (x) the aggregate Base Salary
(at the rate in effect at the Date of Termination) that Executive would have
received for the remainder of the Term if his employment had not been
terminated, and (y) the aggregate amount of the Base Salary (at the rate in
effect at the Date of Termination) which would be paid for a period of
twenty-four (24) months, plus, in either case, such other benefits or
reimbursement of expenses payable to the Executive pursuant to Sections 4.3 and
4.4 hereof (including, without limitation, the SERP), and less such amounts as
shall be required to be withheld by the Company pursuant to applicable laws and
regulations (the "Severance Amount"). The Severance Amount shall not be
present-valued and shall be payable by the Company to Executive within thirty
(30) days after Executive's termination. Executive shall not be required to
mitigate the Company's obligation to pay the full Severance Amount by seeking
employment or otherwise and the Severance Amount shall not be decreased or
otherwise offset as a result of any compensation received by Executive from
employment in any capacity. The Severance Amount shall be deemed compensation
payable to Executive for the purpose of determining the total amount due
Executive pursuant to the SERP.
(b) If the employment of Executive with the Company is
terminated (i) by the Company for Cause, or (ii) by the Executive other than for
Good Reason, then the Executive shall be entitled to receive, and the Company
shall pay to Executive, (x) all accrued and unpaid Base Salary and amounts due
Executive in respect of perquisites provided him hereunder through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
(y) Base Salary payable in lieu of accrued and unused vacation days in
accordance with the policies of the Company from time to time in effect, and (z)
all accrued and unpaid benefits payable to Executive pursuant to any benefit
plan or otherwise through the Date of Termination. Upon the payment of the
foregoing amounts, the Company shall have no further obligations to Executive
under this Agreement.
6. Death or Disability.
6.1 DEATH. If Executive dies during the Term, this
Employment Agreement, other than the provisions of Section 6.3 hereof, shall
terminate.
5
<PAGE> 87
6.2 Disability. If, during the Term, Executive
becomes physically or mentally disabled, whether totally or partially, so that
he is unable substantially to perform his services hereunder for (i) a period of
six (6) consecutive months or (ii) for shorter periods aggregating six (6)
months during any eighteen (18) month period, the Company may at any time after
the last day of the six (6) consecutive months of disability or the day on which
the shorter periods of disability equal an aggregate of six (6) months, by
written notice to Executive (the "Disability Notice"), terminate the Term of the
Executive's employment hereunder.
6.3 Payments upon Death or Disability. Upon a
termination due to the death or disability of Executive, Executive (or, in the
event of a termination as a result of the death of Executive, Executive's estate
(or a designated beneficiary thereof)) shall be entitled to receive from the
Company, and the Company shall pay to Executive (or Executive's estate, if
applicable) the amount of any accrued and unpaid Base Salary and other benefits
and reimbursement of expenses payable to the Executive hereunder pursuant to
Sections 4.3 and 4.4 hereof as of the date of Executive's death or the date of
the Disability Notice, as applicable. In addition, for a period of thirty (30)
months following the date of such termination, the Company shall continue to pay
and provide to Executive and Executive's dependents at the Date of Termination
all medical benefits pursuant to any plans and programs in which Executive was
entitled to participate immediately prior to the Date of Termination as if
Executive were still employed by the Company pursuant hereto. If Executive's
participation in any plan or program pursuant to which such medical benefits are
provided to Executive is barred as a result of such termination, the Company
shall arrange to provide Executive and Executive's dependents with benefits
substantially similar on an after tax basis to those which Executive was
entitled to receive under such plan or program.
7. Non-Competition; Confidentiality.
---------------------------------
7.1 NON-COMPETITION. Executive agrees that, during
the Term and for a period of [two years] following the date of termination of
Executive's employment hereunder (the "Restricted Period"), he will not,
directly or indirectly, own, manage, operate or control, or participate in the
ownership, management, operation or control of, or be connected as an officer,
employee, partner, director or otherwise with, or have any financial interest
in, or aid or assist anyone else in the conduct of, any entity or business which
competes with any material business conducted by the Company or by any group,
division or subsidiary of the Company, in any area where such business is being
conducted, or for which negotiations to conduct business are pending, at the
date of such termination (a "Competitive Operation"); PROVIDED, HOWEVER, that
Executive may acquire, solely as an investment and through market purchases,
securities of any corporation that are traded on any national securities
exchange or listed on the National Association of
6
<PAGE> 88
Securities Dealers Automated Quotation System ("NASDAQ"), if Executive is not a
controlling person of, or a member of a group which controls, such corporation;
and Executive does not, directly or indirectly, own more than [one percent (1%)]
of any class of securities of such corporation.
7.2 Confidential Information; Personal
Relationships. Executive agrees that, during the Term and thereafter, he shall
keep secret and retain in strictest confidence, and shall not use for his
benefit or the benefit of others, any and all confidential information relating
to the Company, including, without limitation, trade secrets, customer lists,
financial plans or projections, pricing policies, marketing plans or strategies,
business acquisition or divestiture plans, new personnel acquisition plans,
technical processes, inventions and other research projects heretofore or
hereafter learned by Executive, and he shall not disclose any such information
to anyone outside the Company or any of its subsidiaries, except as required by
law in connection with any judicial or administrative proceeding or inquiry
(provided prior written notice thereof is given by Executive to the Company) or
except with the Company's prior written consent, unless such information is
known generally to the public or the trade through sources other than
Executive's unauthorized disclosure.
7.3 PROPERTY OF THE COMPANY. All memoranda,
notes, lists, records and other documents or papers (and all copies thereof),
including such items stored in computer memories, or microfiche or by any other
means, made or compiled by or on behalf of Executive, or made available to
Executive, relating to the Company or any successors thereto, are and shall be
the property of the Company or any such successor and shall be delivered to the
Company or any such successor promptly at any time on request.
7.4 EMPLOYEES OF THE COMPANY. During the
Restricted Period, the Executive shall not, directly or indirectly, hire,
solicit or encourage to leave the employment of the Company, any of its
employees or hire any such employee who has left the employment of the Company.
7.5 RIGHTS AND REMEDIES UPON BREACH. If
Executive breaches, or threatens to commit a breach of, any of the provisions of
this Section 7 (the "Restrictive Covenants"), the Company and any successor
thereto shall have the following rights and remedies, each of which shall be
independent of the other and severally enforceable, and all of which shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or in equity.
(a) SPECIFIC PERFORMANCE. The right and
remedy to have the Restrictive Covenants specifically enforced by any arbitrator
or any court having equity
7
<PAGE> 89
jurisdiction, it being acknowledged and agreed by Executive that any such breach
or threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company.
(b) Accounting. The right and remedy to
require Executive to account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits (collectively,
"Benefits") derived or received by Executive as the result of any transactions
constituting a breach of any of the Restrictive Covenants, and Executive shall
account for and pay over such Benefits to the Company.
7.6 SEVERABILITY OF COVENANTS. Executive
acknowledges and agrees that the Restrictive Covenants are reasonable and
valid in geographical and temporal scope and in all other respects.
Notwithstanding the foregoing, if any arbitrator or court determines that any of
the Restrictive Covenants, or any part thereof, is invalid or unenforceable or
should be reduced, the remainder of the Restrictive Covenants shall not thereby
be affected and shall be given full effect without regard to the invalid
Restrictive Covenants or portions thereof.
8. INSURANCE. The Company may, from time to time, apply for
and take out, in its own name and at its own expense, naming itself or others as
the designated beneficiary (which it may change from time to time), policies for
health, accident, disability or other insurance upon Executive in any amount
that it may deem necessary or appropriate to protect its interest. Executive
agrees to aid the Company in procuring such insurance by submitting to
reasonable medical examinations and by filling out, executing and delivering
such applications and other instruments in writing as may reasonably be required
by any insurance company to which the Company may apply for insurance.
9. INDEMNIFICATION. To the fullest extent permitted or
required by the laws of the State of Ohio, the Company shall indemnify and hold
harmless Executive, in accordance with the terms of such laws, if Executive is
made a party, or threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Executive is or was an officer or
director of the Company, or any subsidiary or affiliate of the Company in which
capacity Executive is or was serving at the Company's request, against expenses
(including reasonable attorneys' fees), judgments, fines and amounts paid in
settlement, all as actually and reasonably incurred by him in connection with
such action, suit or proceeding. In the event it becomes necessary for Executive
to take any action to enforce the indemnity provided herein, Executive shall be
promptly reimbursed by the Company for all costs and expenses associated
therewith (including reasonable attorneys' fees).
8
<PAGE> 90
10. Arbitration. All disputes arising under or related to this
Agreement shall be resolved by arbitration. Such arbitration shall be conducted
by an arbitrator mutually selected by the Company and Executive (or, if the
Company and Executive are unable to agree upon an arbitrator within ten (10)
days, then the Company and Executive shall each select an arbitrator, and the
arbitrators so selected shall mutually select a third arbitrator, who shall
resolve such dispute). Such arbitration shall be conducted in accordance with
the applicable rules of the American Arbitration Association. Any decision
rendered by an arbitrator pursuant hereto may be enforced by a court of
competent jurisdiction without review of such decision by such court. The
Company shall pay all of the fees and expenses of the arbitrators and the other
costs of arbitration. The Company also shall pay Executive's reasonable legal
fees and expenses incurred in connection with any successful enforcement by
Executive of his rights hereunder.
11. Miscellaneous.
11.1 NOTICES. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, telecopied or sent by certified or registered mail, postage prepaid,
or by Federal Express or similar overnight courier. Any such notice shall be
deemed given when delivered:
(i) if to the Company, to:
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Attn:
Telecopy No.:
(ii) if to Executive, to:
----------------------------------
----------------------------------
----------------------------------
11.2 WAIVERS AND AMENDMENTS. This Agreement
may not be amended, modified, superseded or cancelled except by a written
instrument signed by the Company and Executive. No delay on the part of any
party in exercising any right or remedy hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any such right or
remedy, nor any single or partial exercise of any such right or remedy preclude
any other or further exercise thereof or the exercise of any other right or
remedy.
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<PAGE> 91
11.3 Survival. The provisions of Sections 7 and 9
hereof shall survive the Term, irrespective of the reasons for termination of
Executive's employment hereunder.
11.4 Governing Law. This Agreement shall be
governed by and construed in accordance with the law of the State of Ohio
applicable to agreements made and to be performed entirely within such State.
11.5 Entire Agreement. This Agreement (including
the schedules, annexes and exhibits hereto) contain the entire agreement between
the parties with respect to the subject matter hereof and supersede all prior
agreements, proposals or representations, arrangements or understandings,
written or oral, with respect thereto.
11.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by any party hereto without the prior
written consent of the other party.
11.7 Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EAGLE-PICHER INDUSTRIES, INC.
By __________________________
Name:
Title:
-----------------------------
[Executive]
10
<PAGE> 92
ANNEX A
TO EMPLOYMENT AGREEMENT OF
THOMAS E. PETRY
---------------
POSITION: Chairman and Chief Executive Officer
- --------
DUTIES: Serves as presiding officer of the Board of
- ------ Directors. In that capacity guides the
deliberations and activities of that group.
Responsible for directing the Company toward the
objective of providing maximum profit and return on
invested capital. Establishes short-term and long-
range objectives, plans, and policies, subject to
the approval of the Board of Directors. Represents
the Company before all of its constituencies,
including, without limitation, major customers, the
financial community, the Company's operations and
host communities, and the public.
<PAGE> 93
ANNEX A
TO EMPLOYMENT AGREEMENT OF
ANDRIES RUIJSSENAARS
--------------------
POSITION: President and Chief Operating Officer
- --------
DUTIES: Directs, administers and coordinates the activities
- ------ of the Company in accordance with policies, goals
and objectives established by the Chief Executive
Officer and the Board of Directors. Assists the
Chief Executive Officer in the development of
Company policies and goals for, among others,
operations, personnel, financial performance and
growth. Has direct line responsibility for all
operating units.
<PAGE> 94
ANNEX A
TO EMPLOYMENT AGREEMENT OF
WAYNE R. WICKENS
----------------
POSITION: Senior Vice President and Group Executive
- --------
DUTIES: Plans, directs and controls all activities in
- ------ certain profit centers (currently ten Automotive
Divisions) through the general managers of those
entities. Those general managers are in turn
responsible for production, research, engineering,
marketing/sales, purchasing and human resources in
their operations.
<PAGE> 95
ANNEX A
TO EMPLOYMENT AGREEMENT OF
DAVID N. HALL
-------------
POSITION: Senior Vice President and Chief Financial Officer
- ---------
DUTIES: Plans, directs and controls the Company's overall
- ------ financial plans and policies, and its accounting
practices, and conducts the Company's relationship
with lending institutions and the financial
community. Directs treasury, budgeting, audit,
tax, accounting, information management, insurance
and certain administrative functions. Develops and
coordinates necessary and appropriate accounting
and statistical data for all departments.
<PAGE> 96
ANNEX A
TO EMPLOYMENT AGREEMENT OF
CARROLL D. CURLESS
------------------
POSITION: Vice President and Controller
- --------
DUTIES: Directs and has responsibility for the Company's
- ------ accounting practices, the maintenance of its fiscal
records, and the preparation of its financial
reports. Directs and has overall supervisory
responsibility for general and property accounting,
internal auditing, cost accounting, and budgetary
controls. Appraises operating results in terms of
costs, budgets, policies of operations, trends and
increased profit opportunities.
<PAGE> 97
ANNEX A
TO EMPLOYMENT AGREEMENT OF
JAMES A. RALSTON
----------------
POSITION: Vice President, General Counsel and Secretary
- --------
DUTIES: As chief legal officer directs the legal affairs of
- ------ the Company. Provides legal counsel and guidance
in the ordinary and special activities of the
Company to insure maximum protection of its legal
rights utilizing broad familiarity with most legal
disciplines. Participates in senior management
policy deliberations. Directs the defense of suits
or claims and manages the prosecution of the
Company's claims against others. Supervises the
legal aspects of Company transactions and the
preparation of reports and statements of a legal
nature. Supervises the environmental compliance
function within the Company. Serves as Secretary
in accordance with the charter, by-laws, and other
legal requirements. Coordinates meetings of the
Board of Directors and keeps minutes of such
meetings. Attends to Company notices and
correspondence, and conducts relations with
shareholders on matters concerning meetings of
shareholders or share holdings.
<PAGE> 98
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re ) Consolidated Case No. 1-91-00100
)
)
EAGLE-PICHER INDUSTRIES, ) Chapter 11
INC., et al., )
) JUDGE PERLMAN
Debtors )
)
_________________________________ )
EXHIBIT 7.12
FORM OF AMENDMENTS TO SUPPLEMENTAL SEVERANCE PROGRAM
<PAGE> 99
AMENDMENT AND RESTATEMENT OF THE
EAGLE-PICHER INDUSTRIES, INC. SEVERANCE PLAN
EFFECTIVE ___________
SECTION 1. THE AMENDMENT
1.1 THE AMENDMENT. Effective upon entry of an order confirming the
Third Amended Consolidated Plan of Reorganization, Eagle-Picher
Industries, Inc. ("Company") amends the severance plan (the
"Plan"), adopted effective May 13, 1991, to read as follows:
SECTION 2. DEFINITIONS
2.1 DEFINITIONS. Whenever used in the Plan, the following terms shall
mean:
(a) "ADMINISTRATOR" means the Company's Director of Taxes or his
designee. The Administrator shall be a named fiduciary under the
Plan.
(b) "AFFILIATES" means Daisy Parts, Inc., Transicoil Inc., Michigan
Automotive Research Corporation, Eagle-Picher Fluid Systems,
Inc., Eagle-Picher Minerals, Inc. and Hillsdale Tool &
Manufacturing Company.
(c) "ANNUAL COMPENSATION" means the total of all compensation,
including wages, salary, and any other benefit of monetary value,
whether paid in the form of cash or otherwise, which was paid as
consideration for the participant's service during the 12-month
period preceding the participant's severance, or the total which
would have been so paid at the participant's usual rate of
compensation for any participant who did not work for the Company
or an Affiliate for the full 12-month period preceding the
participant's severance.
(d) "BASE PAY" means the participant's base annual pay rate at the
date of his termination of employment.
(e) "BUSINESS DAY" means any day on which commercial banks are
required to be open for business in Cincinnati, Ohio.
(f) "COMPANY" means Eagle-Picher Industries, Inc., or any successor
thereto.
<PAGE> 100
(g) "CONFIRMATION DATE" means the date of entry of an order
confirming the Reorganization Plan.
(h) "CONFIRMATION ORDER" means the order or orders of the court
confirming the Reorganization Plan.
(i) "EFFECTIVE DATE" means May 13, 1991 pursuant to Judge Burton
Perlman's order entered that date.
(j) "ELIGIBLE EMPLOYEES" means division presidents (including the
presidents of wholly-owned subsidiaries), all persons employed in
the Cincinnati, Ohio General Office as salaried employees except
Officers, and those employees designated by the Chief Executive
Officer of the Company as key division employees.
(k) "OFFICERS" means officers of Eagle-Picher Industries, Inc.
(l) "REORGANIZATION EFFECTIVE DATE" means the first Business Day
after the date on which all of the conditions precedent to the
effectiveness of the Reorganization Plan specified in Section 7.9
of the Reorganization Plan have been satisfied or waived, or if a
stay of the Confirmation Order is in effect on such date, the
first Business Day after the expiration, dissolution, or lifting
of such stay.
(m) "REORGANIZATION PLAN" means the Third Amended Consolidated Plan
of Reorganization of the Company and its affiliated debtors,
either in its present form or as it may be amended, supplemented,
or otherwise modified from time to time, and the exhibits and
schedules to the foregoing, as the same may be in effect at the
time such reference becomes operative.
(n) "SERVICE" means Vesting Service as defined in the Eagle-Picher
Retirement Income Plan for Salaried Employees.
(o) "WEEK'S PAY" means a participant's Base Pay divided by 52.
2.2 GENDER REFERENCE. Any words in this Plan document (or amendments
to it) which are used in one gender shall be read and construed
to mean or include the other gender wherever they would so apply.
SECTION 3. PARTICIPATION
3.1 PARTICIPANTS. Eligible Employees employed on the Effective Date
shall become participants on that date.
3.2 NEW PARTICIPANTS. Anyone meeting the definition of Eligible
Employee hired or designated by the Chief Executive Officer after
the Effective Date shall become a participant after completion of
three months of Service. The Company's Chief Executive Officer
can waive any service period required of a new participant by a
written letter to the participant with a copy to the
Administrator.
<PAGE> 101
SECTION 4. BENEFITS
4.1 SEVERANCE BENEFIT. Participants terminated by the Company or an
Affiliate after the Effective Date other than for cause will
receive a Base Severance Benefit, a Supplemental Severance
Benefit and Group Medical and Life Insurance Benefits as
described herein. The eligibility for, and the level of, benefits
will be determined by the employee's status as a division
president or key employee at the date of the employee's
termination of employment. If the operation for which a
participant is working is sold and the participant continues to
work with the operation, or another entity affiliated with the
buyer, after the sale, the participant will not be eligible for
the Base Severance Benefit, the Supplemental Severance Benefit,
or the Group Medical and Insurance Benefits.
4.2 BASE SEVERANCE BENEFIT. The Base Severance Benefit will provide
one Week's Pay for each completed year of Service and, for any
partial year of Service, one-twelfth Week's Pay for each
completed month of Service. Payments shall be reduced dollar for
dollar by compensation earned for services rendered by a
participant for a subsequent employer during the period Base
Severance Benefits are being paid. The minimum Base Severance
Benefit shall be two Week's Pay. Payments under the Base
Severance Benefit will be made under the general payroll practice
for the unit in which the participant was employed.
4.3 SUPPLEMENTAL SEVERANCE BENEFIT. The Supplemental Severance
Benefit will provide one year's Base Pay for division presidents;
six months' Base Pay for salaried General Office and division
employees designated as key employees by the Chief Executive
Officer; and three months' Base Pay for all other salaried
General Office employees. The Supplemental Severance Benefit for
a salaried employee employed in the Cincinnati, Ohio, General
Office who becomes entitled to a benefit under Section 4.1 after
age 50 and before the first anniversary of the Reorganization
Effective Date will be twice the Supplemental Severance Benefit
otherwise provided under this Section. The Supplemental Severance
Benefit shall be paid in a lump sum on termination of employment.
4.4 GROUP MEDICAL AND LIFE INSURANCE BENEFITS. The Group Medical and
Life Insurance Benefits will provide continued participation in
the medical indemnity benefits, self-funded medical benefits,
health maintenance organizations, and group term life insurance
benefits (including the additional group term life insurance
available at employee cost) as if the participant were an active
employee of the Company or an Affiliate. These benefits will
continue for one week for each year of Service unless similar
coverage is obtained from a subsequent employer. Any period for
which medical benefits are provided hereunder shall reduce the
period for which COBRA benefits are available. These benefits
shall continue under the participant's election in force when his
severance occurs, subject to any new election that would be
available to him as an active employee. If the HMO or medical
indemnity provider refuses to continue coverage for the
participant, the participant will receive
<PAGE> 102
coverage under the self-funded medical benefit program available
to employees at his location.
4.5 VACATION PAY. Any existing practices of the Company or Affiliates
with respect to payment for unused vacation time at termination
of employment shall not be affected by this Plan.
4.6 MAXIMUM SEVERANCE BENEFITS. Payments under the Plan shall not
exceed twice the participant's Annual Compensation.
4.7 DEATH OF PARTICIPANT. No benefits shall be payable upon the death
of a participant except for any payment which may have been due
prior to his date of death.
SECTION 5. ADMINISTRATION
5.1 POWERS AND DUTIES. The Administrator shall have the power and the
duty to take all action, and to make all decisions necessary or
proper to carry out the Plan, including, without limitation, the
following:
(a) To interpret the Plan, which interpretations shall be final
and conclusive;
(b) To compute the benefit to be paid to any person under the
Plan;
(c) To provide procedures for withholding of any income or
employment taxes from benefits payable hereunder.
5.2 CLAIMS PROCEDURE.
(a) CLAIM, DENIAL AND NOTICE: Any participant who disagrees with
the Administrator's determination of his right to benefits
or the amount of the benefits shall file a written claim for
the benefits he believes he is entitled to. If the
Administrator denies the claim, in whole or in part, he
shall furnish the participant with written notice of the
denial of his claim within sixty (60) days of receipt of the
claim. Such notice shall be written in a manner calculated
to be understood by the participant and shall contain the
specific reasons for such denial, specific references to
pertinent Plan provisions on which the denial is based, a
description of additional material or information which is
needed to complete the claim and why such is necessary, and
an explanation of the Plan's appeal procedure.
(b) APPEAL: Within sixty (60) days after the receipt of a notice
that his claim was denied, the claimant may appeal the
denial of his claim to the Administrator in writing stating
the reason for his appeal and submitting any issues or
comments for the Administrator's review.
(c) DECISION ON APPEAL: Within sixty (60) days of receipt of an
<PAGE> 103
appeal, the Administrator shall mail to the applicant a
written notice of his decision setting forth, in a manner
calculated to be understood by the applicant, the specific
reasons for his decision and the specific references to the
pertinent Plan provisions on which his decision was based.
5.3 INDEMNITY FOR LIABILITY. The Company shall indemnify the
Administrator against any and all claims, losses, damages,
expenses, including counsel fees, incurred by the Administrator
and any liability, including any amounts paid in settlement with
the Company's approval, arising from the Administrator's action
or failure to act, except when the same is judicially determined
to be attributable to the gross negligence or willful misconduct
of the Administrator.
SECTION 6. MISCELLANEOUS
6.1 PLAN YEAR. The plan year shall be the calendar year.
6.2 AMENDMENT OR TERMINATION. The Company reserves the right to
amend, extend or terminate this Plan at any time. However, the
benefits provided in Section 4.1 shall remain in effect for at
least one year subsequent to the Reorganization Effective Date. A
participant whose employment terminates after the termination or
amendment of this Plan shall be entitled only to the benefits
available under the Plan, if any, in existence at his termination
of employment.
In Witness Whereof, Eagle-Picher Industries, Inc. has caused this
amendment and restatement of the plan to be executed by its duly authorized
corporate officers this _________ day of November, 1996.
EAGLE-PICHER INDUSTRIES, INC.
By: _______________________
Attest: Thomas E. Petry
Chairman of the Board and
Chief Executive Officer
- ---------------------------
<PAGE> 104
EAGLE-PICHER INDUSTRIES, INC. OFFICERS' SEVERANCE PLAN
SECTION 1. THE PLAN
1.1 THE PLAN. Effective upon entry of an order confirming the Third
Amended Consolidated Plan of Reorganization, Eagle-Picher
Industries, Inc. ("Company") adopts the following severance plan
(the "Plan"). The Plan is intended to be an employee welfare
benefit plan under Section 201(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). To the extent
it may be determined to be a pension plan, it is an unfunded plan
maintained to provide benefits to certain individuals described
in Section 201(2) of ERISA.
SECTION 2. DEFINITIONS
2.1 DEFINITIONS. Whenever used in the Plan, the following terms shall
mean:
(a) "ADMINISTRATOR" means the Company's Director of Taxes or his
designee. The Administrator shall be a named fiduciary under
the Plan.
(b) "BASE PAY" means the participant's base annual pay rate at the
date of his termination of employment.
(c) "BUSINESS DAY" means any day on which commercial banks are
required to be open for business in Cincinnati, Ohio.
(d) "COMPANY" means Eagle-Picher Industries, Inc., or any successor
thereto.
(e) "CONFIRMATION DATE" means the date of entry of an order
confirming the Reorganization Plan.
(f) "CONFIRMATION ORDER" means the order or orders of the court
confirming the Reorganization Plan.
(g) "ELIGIBLE EMPLOYEES" means Officers of the Company employed in
the Cincinnati, Ohio General Office.
(h) "EXECUTIVE OFFICERS" means Thomas E. Petry, Andries Ruijssenaars,
David N. Hall, Wayne R. Wickens, Carroll D. Curless and James
A.Ralston.
(i) "OFFICERS" means officers of Eagle-Picher Industries, Inc.
<PAGE> 105
(j) "REORGANIZATION EFFECTIVE DATE" means the first Business Day
after the date on which all of the conditions precedent to the
effectiveness of the Reorganization Plan specified in Section 7.9
of the Reorganization Plan have been satisfied or waived, or if a
stay of the Confirmation Order is in effect on such date, the
first Business Day after the expiration, dissolution, or lifting
of such stay.
(k) "REORGANIZATION PLAN" means the Third Amended Consolidated Plan
of Reorganization of the Company and its affiliated debtors,
either in its present form or as it may be amended, supplemented,
or otherwise modified from time to time, and the exhibits and
schedules to the foregoing, as the same may be in effect at the
time such reference becomes operative.
(l) "SERVICE" means Vesting Service as defined in the Eagle-Picher
Retirement Income Plan for Salaried Employees.
(m) "WEEK'S PAY" means a participant's Base Pay divided by 52.
2.2 GENDER REFERENCE. Any words in this Plan document (or amendments
to it) which are used in one gender shall be read and construed
to mean or include the other gender wherever they would so apply.
SECTION 3. PARTICIPATION
3.1 PARTICIPANTS. Eligible Employees employed on the Confirmation
Date shall become participants on that date. Participation by the
Executive Officers shall cease upon the effective date of the
employment contracts described in Section 7.11 of the
Reorganization Plan.
3.2 NEW PARTICIPANTS. Anyone meeting the definition of Eligible
Employee after the Confirmation Date shall become a participant
after completion of three months of Service. The Company's Chief
Executive Officer can waive any service period required of a new
participant by a written letter to the participant with a copy to
the Administrator.
SECTION 4. BENEFITS
4.1 SEVERANCE BENEFIT. Participants terminated by the Company on or
after the Confirmation Date other than for cause will receive a
Base Severance Benefit, a Supplemental Severance Benefit and
Group Medical and Life Insurance Benefits as described herein.
4.2 BASE SEVERANCE BENEFIT. The Base Severance Benefit will provide
one Week's Pay for each completed year of Service and, for any
partial year of Service, one-twelfth Week's Pay for each
completed month of Service. Payments shall be reduced dollar for
dollar by compensation earned for services rendered by a
participant for a subsequent employer during the period Base
Severance Benefits are being paid. The minimum Base Severance
Benefit shall be two Week's Pay. Payments under the Base
Severance Benefit will be made under
<PAGE> 106
the general payroll practice for the unit in which the
participant was employed.
4.3 SUPPLEMENTAL SEVERANCE BENEFIT. The Supplemental Severance
Benefit will provide one year's Base Pay. The Supplemental
Severance Benefit will provide two years' Base Pay for an Officer
employed in the Cincinnati, Ohio, General Office who becomes
entitled to a benefit under Section 4.1
(i) before the first anniversary of the Reorganization
Effective Date, and
(ii) after the Officer reaches age 50.
The Supplemental Severance Benefit shall be paid in a lump sum
on termination of employment.
4.4 GROUP MEDICAL AND LIFE INSURANCE BENEFITS. The Group Medical and
Life Insurance Benefits will provide continued participation in
the medical indemnity benefits, self-funded medical benefits,
health maintenance organizations, and group term life insurance
benefits (including the additional group term life insurance
available at employee cost) as if the participant were an active
employee of the Company or an Affiliate. These benefits will
continue for one week for each year of Service unless similar
coverage is obtained from a subsequent employer. Any period for
which medical benefits are provided hereunder shall reduce the
period for which COBRA benefits are available. These benefits
shall continue under the participant's election in force when his
severance occurs, subject to any new election that would be
available to him as an active employee. If the HMO or medical
indemnity provider refuses to continue coverage for the
participant, the participant will receive coverage under the
self-funded medical benefit program available to employees at his
location.
4.5 VACATION PAY. Any existing practices of the Company or Affiliates
with respect to payment for unused vacation time at termination
of employment shall not be affected by this Plan.
4.6 DEATH OF PARTICIPANT. No benefits shall be payable upon the death
of a participant except for any payment which may have been due
prior to his date of death.
SECTION 5. ADMINISTRATION
5.1 POWERS AND DUTIES. The Administrator shall have the power and the
duty to take all action, and to make all decisions necessary or
proper to carry out the Plan, including, without limitation, the
following:
(a) To interpret the Plan, which interpretations shall be final
and conclusive;
(b) To compute the benefit to be paid to any person under the
<PAGE> 107
Plan;
(c) To provide procedures for withholding of any income or
employment taxes from benefits payable hereunder.
5.2 CLAIMS PROCEDURE.
(a) CLAIM, DENIAL AND NOTICE: Any participant who disagrees
with the Administrator's determination of his right to
benefits or the amount of the benefits shall file a written
claim for the benefits he believes he is entitled to. If
the Administrator denies the claim, in whole or in part, he
shall furnish the participant with written notice of the
denial of his claim within sixty (60) days of receipt of
the claim. Such notice shall be written in a manner
calculated to be understood by the participant and shall
contain the specific reasons for such denial, specific
references to pertinent Plan provisions on which the denial
is based, a description of additional material or
information which is needed to complete the claim and why
such is necessary, and an explanation of the Plan's appeal
procedure.
(b) APPEAL: Within sixty (60) days after the receipt of a
notice that his claim was denied, the claimant may appeal
the denial of his claim to the Administrator in writing
stating the reason for his appeal and submitting any issues
or comments for the Administrator's review.
(c) DECISION ON APPEAL: Within sixty (60) days of receipt of an
appeal, the Administrator shall mail to the applicant a
written notice of his decision setting forth, in a manner
calculated to be understood by the applicant, the specific
reasons for his decision and the specific references to the
pertinent Plan provisions on which his decision was based.
5.3 INDEMNITY FOR LIABILITY. The Company shall indemnify the
Administrator against any and all claims, losses, damages,
expenses, including counsel fees, incurred by the Administrator
and any liability, including any amounts paid in settlement with
the Company's approval, arising from the Administrator's action
or failure to act, except when the same is judicially determined
to be attributable to the gross negligence or willful misconduct
of the Administrator.
SECTION 6. MISCELLANEOUS
6.1 PLAN YEAR. The plan year shall be the calendar year.
6.2 AMENDMENT OR TERMINATION. The Company reserves the right to
amend, extend or terminate this Plan at any time. However, the
benefits provided in Section 4.1 shall remain in effect for at
least one year subsequent to the Reorganization Effective Date. A
participant whose employment terminates after the termination or
amendment of this Plan shall be entitled only to the benefits
<PAGE> 108
available under the Plan, if any, in existence at his termination
of employment.
6.3 UNFUNDED PLAN. The Plan shall be unfunded and all benefit
payments shall be made from the general assets of Eagle-Picher
Industries, Inc.
In Witness Whereof, Eagle-Picher Industries, Inc. has caused this plan
to be executed by its duly authorized corporate officers this _________ day
of November, 1996.
EAGLE-PICHER INDUSTRIES, INC.
By: __________________________
Attest: Thomas E. Petry
Chairman of the Board and
Chief Executive Officer
- ----------------------
<PAGE> 1
Exhibit 2.2
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re ) Consolidated Case No. 1-91-00100
)
)
EAGLE-PICHER INDUSTRIES, ) Chapter 11
INC., et al., )
)
Debtors. )
)
__________________________________ )
MODIFICATIONS TO THIRD AMENDED
CONSOLIDATED PLAN OF REORGANIZATION
-----------------------------------
Eagle-Picher Industries, Inc., Daisy Parts, Inc., Transicoil
Inc., Michigan Automotive Research Corporation, EDI, Inc., Eagle-Picher
Minerals, and Hillsdale Tool and Manufacturing Co. (collectively, the
"Debtors"), together with the Injury Claimants' Committee appointed in the
above-captioned chapter 11 cases (the "ICC") and the James J. McMonagle, the
Legal Representative for Future Claimants in the above-captioned chapter 11
cases (the "Future Claimants' Representative"; the Debtors, the ICC, and the
Future Claimants' Representative being collectively referred to herein as the
"Plan Proponents") hereby propose the following modifications to that certain
Third Amended Consolidated Plan of Reorganization for the Debtors, dated August
28, 1996 (the "Plan"):
1. Section 1.1.6.6 of the Plan is modified to change the
phrase "With respect to any Other Product Liability Tort Claim" to the phrase
"With respect to any Product Liability Tort Claim other than an Asbestos
Personal Injury Claim or a Lead Personal Injury Claim."
2. Section 1.1.58 of the Plan is modified to delete the phrase
"after the date."
3. Section 1.1.106 of the Plan is modified to change the
phrase "by exposure
<PAGE> 2
to any products or byproducts that were manufactured, sold, supplied, produced,
released, distributed, or in any way marketed by any of the Debtors prior to the
Petition Date" to "by exposure to or injuries caused by any products or
byproducts that were manufactured, sold, supplied, produced, released,
distributed, or in any way marketed by any of the Debtors prior to the Petition
Date."
4. The last sentence in subsection 2. of section 3.2.17 of the
Plan is amended in its entirety to read as follows: "Nothing contained herein
shall constitute or be deemed a waiver of any claim, right, or cause of action
that the Debtors, the Reorganized Debtors, or the PI Trust may have against any
Entity in connection with or arising out of an Asbestos Personal Injury Claim or
Lead Personal Injury Claim, and the injunction shall not apply to the assertion
of any such claim, right, or cause of action by the Debtors, the Reorganized
Debtors, or the PI Trust."
Dated: Cincinnati, Ohio
November 12, 1996
Respectfully submitted,
EAGLE-PICHER INDUSTRIES, INC.
By: /s/ Thomas E. Petry
---------------------------------------------
Name: Thomas E. Petry
Title: Chairman of the Board and Chief Executive
Officer
DAISY PARTS, INC.
By: /s/ James A. Ralston
---------------------------------------------
Name: James A. Ralston
Title: Secretary
2
<PAGE> 3
TRANSICOIL INC.
By: /s/ James A. Ralston
---------------------------------------------
Name: James A. Ralston
Title: Assistant Secretary
MICHIGAN AUTOMOTIVE RESEARCH
CORPORATION
By: /s/ James A. Ralston
---------------------------------------------
Name: James A. Ralston
Title: Assistant Secretary
EDI, INC.
By: /s/ James A. Ralston
---------------------------------------------
Name: James A. Ralston
Title: Assistant Secretary
EAGLE-PICHER MINERALS, INC.
By: /s/ James A. Ralston
---------------------------------------------
Name: James A. Ralston
Title: Secretary
HILLSDALE TOOL & MANUFACTURING CO.
By: /s/ James A. Ralston
---------------------------------------------
Name: James A. Ralston
Title: Secretary
3
<PAGE> 4
WEIL, GOTSHAL & MANGES LLP
Co-Attorneys for Eagle-Picher
Industries, Inc., et al.
Chapter 11 Debtors in Possession
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
and
FROST & JACOBS
Co-Attorneys for Eagle-Picher
Industries, Inc., et al.
Chapter 11 Debtors in Possession
2500 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202-4182
(513) 651-6800
JAMES J.G. McMONAGLE,
THE FUTURE CLAIMANTS'
REPRESENTATIVE
/s/ James J. G. McMonagle
---------------------------------------------
McCarthy, Lebit, Crystal &
Haiman Co., LPA
Attorneys for the Future
Claimants' Representative
1800 Midland Building
101 Prospect Avenue, West
Cleveland, Ohio 44115
(216) 696-1422
4
<PAGE> 5
THE INJURY CLAIMANTS' COMMITTEE
By: /s/ Robert E. Sweeney
---------------------------------------------
Name: Robert E. Sweeney
Title: Chairperson
Keating, Muething & Klekamp LLP
Attorneys for the Injury
Claimants' Committee
1800 Provident Tower
One East Fourth Street
P.O. Box 1800
Cincinnati, Ohio 45202
(513) 579-6400
5
<PAGE> 1
Exhibit 2.3
EAGLE-PICHER INDUSTRIES, INC.
SIGNIFICANT ASSUMPTIONS FOR FINANCIAL PROJECTIONS
For purposes of developing the Plan of Reorganization (the "Plan") and
evaluating its feasibility, the following financial projections were prepared.
These financial projections reflect the Debtors' estimate of their expected
consolidated financial position, results of operations and cash flows.
Accordingly, the projections reflect Management's judgment, as of the date of
this Disclosure Statement, of expected future operating and business conditions,
which are subject to change.
All estimates and assumptions shown within the projections were developed by
Management. The assumptions disclosed herein are those that Management believes
to be significant to the projections. Although the Debtors are of the opinion
that these assumptions are reasonable in the circumstances, such assumptions are
subject to significant uncertainties, such as the cyclical nature of the
automotive industry. There will be differences between projected and actual
results because events and circumstances frequently do not occur as expected.
Further, such assumptions may be affected by other events and circumstances
outside of the Debtors' control. Consequently, actual financial results could
vary significantly from projected results.
THE PROJECTIONS SHOULD NOT BE REGARDED AS A REPRESENTATION OR WARRANTY BY THE
DEBTORS OR ANY OTHER PERSON AS TO THE ACCURACY OF THE PROJECTIONS OR THAT THE
PROJECTIONS WILL BE REALIZED.
The financial projections were prepared by the Debtors; they have not been
audited or reviewed by independent accountants. The significant assumptions used
in the preparation of the financial projections are stated below.
THE FINANCIAL PROJECTIONS, INCLUDING THE UNDERLYING ASSUMPTIONS, SHOULD BE
CAREFULLY REVIEWED IN EVALUATING THE PLAN.
It is projected that the Debtors will emerge from chapter 11 November 30, 1996
(the "Effective Date"). The reorganization will be accounted for in accordance
with the American Institute of Certified Public Accountants' Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" ("SOP 90-7").
The projections included herein are:
1. Pro Forma Consolidated Balance Sheet of Reorganized Eagle-Picher as of
the Effective Date which reflects the projected accounting effects of
the Plan's consummation and of "fresh start" accounting as promulgated
by SOP 90-7.
C-1
<PAGE> 2
2. Projected Consolidated Balance Sheets of Reorganized Eagle- Picher as of
the Effective Date and November 30 for each of the years from 1997 through
2001.
3. Projected Consolidated Statements of Income of Reorganized Eagle-Picher for
each of the six fiscal years in the period ended November 30, 2001.
4. Projected Consolidated Statements of Cash Flow of Reorganized Eagle-Picher
for each of the six fiscal years in the period ended November 30, 2001.
5. Projected Capital Structure of Reorganized Eagle-Picher as of the Effective
Date.
The projections have been prepared on the basis of generally accepted accounting
principles consistent with those currently utilized by Eagle-Picher in the
preparation of its consolidated financial statements except as noted in the
following assumptions. The projections should be read in conjunction with the
significant assumptions, qualifications and notes set forth below and with the
audited consolidated financial statements for the fiscal year ended November 30,
1995 contained in the 1995 Annual Report included in Exhibit C.
WHILE MANAGEMENT BELIEVES THE ASSUMPTIONS UNDERLYING THE PROJECTED FINANCIAL
INFORMATION, WHEN CONSIDERED ON AN OVERALL BASIS, ARE REASONABLE IN LIGHT OF
CURRENT CIRCUMSTANCES AND EXPECTATIONS, NO ASSURANCE CAN BE GIVEN THAT THE
PROJECTIONS WILL BE REALIZED.
A. GENERAL ASSUMPTIONS
The sales volumes of many of the Debtors' operations fluctuate with general
economic cycles. In the interest of presenting a balanced view of their
prospects, the Debtors have assumed that there will be an economic recession in
1998.
Other factors considered in formulating the projections are discussed below:
Automotive Segment
- ------------------
The Debtors' automotive operations serve the automotive industry worldwide as a
tier one supplier to the original equipment manufacturers or as a supplier to
other manufacturers that supply automotive manufacturers with component parts or
assemblies. Major factors considered in developing the projections for the
Automotive Segment include:
1. Automotive industry production in North America in 1995 was approximately
15.3 million units of passenger cars, vans, utility vehicles and light
trucks. A new record of 15.7
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<PAGE> 3
million units was reached in 1994, surpassing the record of 15.1 million
units in 1978.
2. Projections for 1996 and 1997 assume North American automotive production
levels will be relatively flat.
3. The effects of the cyclical recession projected in 1998 are comparable to
those of the last two downturns of the automotive industry.
4. Economic recovery will begin in 1999 moving toward record automotive
production worldwide by 2000.
5. The Debtors will achieve broader market penetration of their products,
particularly in the light truck, van, and sport utility vehicle segment of
the automotive market.
6. A new facility will be constructed in Tennessee in 1997 to produce
transmission pumps for Nissan vehicles.
6. There will be increased emphasis on growth opportunities within the
European automotive market. Production of precision machined automotive
parts will begin in a new facility in England in 1997.
7. The intense pricing pressure from the automotive manufacturers will
continue and, on occasion, Eagle-Picher will be unable to recover cost
increases from customers on a timely basis.
Machinery Segment
- -----------------
The Debtors' operations in the Machinery Segment manufacture several lines of
earth moving, material handling and other industrial machinery and equipment,
components for a wide range of capital goods and systems and components for
aerospace and commercial aviation markets as well as the defense industry.
Specific factors considered in developing the projections of the Machinery
Segment include:
1. The U.S. Government will continue to cut defense spending. However,
significant operations of the Debtors are more dependent on certain
portions of the defense budget which are less subject to funding cuts than
other areas.
2. The level of worldwide commercial and industrial activity will decline with
the projected economic recession in 1998 and will begin recovery
thereafter.
3. Government and commercial aerospace spending, particularly in the
communication satellite area, will remain healthy over the next several
years.
C-3
<PAGE> 4
Industrial Segment
- ------------------
The Debtors' operations in the Industrial Segment can be characterized as
serving niche markets where they enjoy a position of market leadership based on
technical capabilities, proprietary advantages, manufacturing know-how or
marketing skills. These operations generally are not impacted by fluctuations of
the general economy. Specific factors considered in developing the projections
for the Industrial Segment include:
1. Recent historic trends in the performance of individual product lines were
analyzed to develop these projections.
2. Opportunities exist in certain niche markets where the Debtors have a
specific competitive advantage.
3. Since the demand for the Industrial products is not impacted by economic
fluctuations, these products are characterized as being somewhat "recession
proof."
4. In 1997, construction will be completed and production will begin at a new
$14 million facility which will process diatomaceous earth products,
primarily for export markets.
B. DISTRIBUTIONS UNDER THE PLAN
Cash, debt securities and common stock of Reorganized Eagle-Picher will be
distributed pursuant to the Plan.
Cash Distributions
- ------------------
The Debtors expect to distribute cash on the Effective Date as follows:
a) Approximately $11.2 million will be distributed with respect to Priority
Claims, Convenience Claims, certain Secured Claims and certain
Administrative Expenses;
b) Assuming the class of asbestos property damage claimants votes to
approve the Plan, $3.0 million will be used to establish a Qualified
Settlement Fund which will be responsible for satisfying asbestos property
damage claims (the "PD Trust").
c) Approximately $91.0 million will be distributed with respect to the PI
Trust and other unsecured creditors.
Debt Securities
- ---------------
It is anticipated that existing secured debt of Eagle-Picher approximating $7.3
million will be restructured. Such indebtedness will bear 10% interest and, for
the most part, be repaid in installments. An existing $10 million secured
industrial revenue
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<PAGE> 5
bond financing is expected to be reinstated. In addition, debt securities, as
described below, will be issued on the Effective Date:
a) Tax Refund Notes in the anticipated principal amount of $68.9 million.
It is assumed that these notes will mature on May 31, 1997 based on the
assumed Effective Date of November 30, 1996.
b) Divestiture Notes in the principal amount of $50 million which will
mature three years after the Effective Date. These Divestiture Notes will
be redeemed in the event the Debtors consummate major asset sales.
c) Senior Unsecured Sinking Fund Debentures ("Debentures") in the principal
amount of $250 million, which will mature 10 years after the Effective
Date. The Debentures will have a mandatory sinking fund of $20 million per
year on each of the third through ninth anniversaries of the Effective Date
with a final maturity of $110 million.
The assumed interest rates for each of the foregoing is set forth in
Section C below.
Common Stock
- ------------
Common stock of the Reorganized Eagle-Picher will also be issued pursuant to the
Plan. Based on, among other things, its analysis of the projections, the market
value of securities of other companies serving similar markets and their
capitalization rates, the Debtors' financial advisors, McDonald & Company
Securities, Inc. ("McDonald & Co."), have calculated that the residual value of
such common stock is $341.8 million.
The stockholders' existing Eagle-Picher Common Stock will not receive any
distribution under the Plan, and their equity will be canceled.
Pursuant to the Plan, the holders of Unsecured Claims and Environmental Claims
will receive 50% of their distribution value in Divestiture Notes and 50% cash.
The PI Trust will receive the balance of the cash and Divestiture Notes as
consideration, as well as the entire issues of the Tax Refund Notes and the
Debentures and all of the common stock of the Reorganized Eagle-Picher.
C. OTHER SPECIFIC ASSUMPTIONS
Cash
- ----
It is assumed interest of 5% will be earned on cash balances exceeding $15
million. It is also assumed Eagle-Picher will have a line of credit available to
it for certain letters of credit and,
C-5
<PAGE> 6
if necessary, working capital and operating needs. Any borrowings on this line
of credit will carry an interest rate of 8%. For these purposes,no borrowings
were assumed.
Property, Plant and Equipment
- -----------------------------
To adjust net property, plant and equipment to an estimate of its fair value in
accordance with the fresh-start accounting provisions of SOP 90-7, Eagle-Picher
plans to review its property, plant and equipment and obtain appraisals to
determine what revisions, if any, should be made to individual accounts. Since
the appraisal process is not yet complete, $40 million is an estimate used for
purposes of the projections. The actual adjustment at the Effective Date could
be higher or lower. Any adjustment to this allocation would have no impact on
cash flow.
For purposes of this projection, the fair value adjustment of the property,
plant and equipment is to be amortized over eight years, which approximates the
estimated remaining useful life of the assets. However, actual amortization
periods used at the Effective Date could be shorter or longer.
Reorganization Goodwill
- -----------------------
In accordance with SOP 90-7, the reorganization value in excess of amounts
allocable to identifiable assets is an intangible asset. The amortization period
of this intangible asset is assumed for these purposes to be 7 years, but the
actual amortization period utilized at the Effective Date could be shorter or
longer. This item has no tax or cash flow implications.
Debt
- ----
The Tax Refund Notes, the Divestiture Notes and the Debentures will bear
interest at a rate these debt securities should bear in order to have a market
value of 100% of their principal amount on the Effective Date. For purposes of
these projections, it is assumed that such interest rates would be 6.5% for the
Tax Refund Notes, 9% for the Divestiture Notes and 10% for the Debentures.
All payments of principal are assumed to be made on the anniversary of the
Effective Date and interest will be paid semiannually, unless otherwise
specified.
It is assumed the the Tax Refund Notes will be repaid when the tax refund is
received, approximately May 31, 1997.
For these purposes, it was assumed the Divestiture Notes will be repaid by their
maturity date.
It is assumed that sinking fund payments on the Debentures will be made as
scheduled throughout the projections.
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<PAGE> 7
Income Taxes
- ------------
It is assumed that Eagle-Picher will receive tax deductions for cash and the
value of stock distributed to the PI Trust upon such distribution. With respect
to Debt Securities distributed to the PI Trust, deductions are received as the
Debt Securities are repaid or refunded. These deductions will result in
substantial tax net operating losses.
An income tax receivable of $68.9 million will result from the carryback of tax
net operating losses to years in which income is available for carryback.
Assuming the Effective Date is November 30, 1996, the refund will be received
approximately May 31, 1997.
A deferred income tax asset results from tax net operating losses and deferred
deductions available to offset income tax payments in future years. General
business credit carryforwards have been ignored, since it is expected that they
will expire unutilized. For purposes of these projections, it is assumed that
all other tax benefits are available upon the Effective Date and no valuation
allowance is necessary.
A statutory federal income tax rate of 35% is assumed throughout the projection
period. The differences between the statutory and the effective tax rates for
the projection period are due primarily to the amortization of the
reorganization gain, depletion deductions and foreign and state taxes. Due to
the large tax net operating loss carryforward, the Debtor's current Federal tax
liability will be limited to alternative minimum taxes, which are anticipated to
be minimal.
Liabilities Subject to Compromise
- ---------------------------------
Liabilities Subject to Compromise will be discharged at the Effective Date. This
will result in a gain for forgiveness of debt. This, along with the
establishment of the deferred taxes and reorganization gain will offset the
retained deficit.
C-7
<PAGE> 8
EAGLE-PICHER INDUSTRIES, INC.
Pro Forma Consolidated Balance Sheet
November 30, 1996
(in thousands-unaudited)
<TABLE>
<CAPTION>
Before Reorganization After
Reorganization Adjustments Reorganization
<S> <C> <C> <C>
Cash $120,624 ($105,168)(1) $15,456
Escrow cash 5,125 4,200 (2) 9,325
Accts receivable, net 124,300 (1,100)(2) 123,200
Inventories, net 90,000 12,400 (2,3) 102,400
Income tax receivable - 68,900 (4) 68,900
Prepaid expenses 11,500 (50) (2) 11,450
-------------------------------------------------------
Total current assets 351,549 (20,818) 330,731
Property, plant &
equipment, net 166,618 38,700 (2,5) 205,318
Deferred income taxes 79,124 63,835 (4) 142,959
Reorganization goodwil - 120,961 (6) 120,961
Other assets 34,000 (4,000)(7) 30,000
------------------------------------------------------
Total assets $631,291 $198,678 $829,969
======================================================
Accounts payable $38,000 (700)(2) $37,300
Accr. liabilities 38,000 (4,831)(1,2) 33,169
Short-term debt - 68,900 (8) 68,900
Secured debt - current 1,493 (265)(1) 1,228
New debt-current - -
Income tax payable 4,500 4,500
------------------------------------------------------
Total current liab. 81,993 63,104 145,097
Secured debt 16,440 (375)(1) 16,065
New debt-10 - 250,000 (8) 250,000
New debt-3 year - 50,000 (8) 50,000
Other long-term liabilities 27,000 27,000
Liabilities subject to
compromise 2,159,131 (2,159,131)(8) -
Equity (1,653,273) 1,995,080 (9) 341,807
-----------------------------------------------------
Total liab. & equity $631,291 $198,678 $829,969
======================================================
</TABLE>
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<PAGE> 9
EAGLE-PICHER INDUSTRIES, INC.
NOTES TO PRO-FORMA CONSOLIDATED BALANCE SHEET
1. Cash projected to be paid at the Effective Date of the Plan includes
distributions with respect to Priority Claims, Convenience Claims, certain
Secured Claims and Administrative Expenses of approximately $11.2 million,
the Asbestos Property Damage Claim of $3.0 million, and approximately $91.0
million to be distributed to the unsecured creditors and the PI Trust.
2. To reflect the sale of the Fabricon Products Division for $4.2 million,
which approximates the book value of the assets. The proceeds will be
deposited to an Escrow Cash account, which is held for the purpose of
repaying the Divestiture Notes due November 30, 1999. The proceeds from the
sale of the Orthane Division, which took place in early 1996, are also
included in the Escrow cash account.
3. To adjust inventory to its approximated fair value through elimination of
the LIFO reserve. Inventory will continue to be calculated on the LIFO
method for tax purposes, which results in a deferred tax liability. For
purposes of this statement, this has been treated as a reduction of
deferred tax assets existing at the Effective Date.
4. Eagle-Picher will receive tax deductions for cash and the value of equity
securities contributed to the PI Trust. An income tax receivable of $68.9
million will result from carryback of losses to years with available
income. Additional deferred income tax assets of $85.9 million result from
net operating losses and deferred deductions available to offset income tax
payments in future years. For purposes of these projections, it was assumed
that all tax benefits, other than general business credit carryforwards,
are available upon the Effective Date and no valuation allowance is
necessary. General business credit carryforwards were ignored because they
are expected to expire unutilized.
5. To adjust net property, plant and equipment to an estimate of its fair
value in accordance with the fresh-start accounting provisions of SOP 90-7.
Since the appraisal process is not yet complete, $40 million is an estimate
used for purposes of the projections.
6. To record reorganization value in excess of amounts allocable to
identifiable assets in accordance with SOP 90-7.
7. To write off existing goodwill of approximately $12.0 million. This is
offset by a $8.0 million increase to the prepaid pension asset to the
amount by which the plan assets exceed the projected benefit obligations.
C-9
<PAGE> 10
8. To record the discharge of Liabilities Subject to Compromise through the
distribution pursuant to the Plan of debt securities, common stock, and the
cash previously mentioned in Note 1. This will result in a gain for
forgiveness of debt.
a) Eagle-Picher witll issue Tax Refund Notes in the principal amount of
$68.9 million.
b) Eagle-Picher will issue three-year Divestiture Notes in the principal
amount of $50 million.
c) Eagle-Picher will issue Senior Unsecured Sinking Fund Debentures in
the principal amount of $250 million.
d) New Eagle-Picher Common Stock with an estimated value of $341.8
million will be issued. Existing Eagle-Picher Common Stock will be canceled
and the holders thereof will receive no distribution.
9. To eliminate the retained deficit and record the new equity of
Eagle-Picher.
C-10
<PAGE> 11
EAGLE-PICHER INDUSTRIES, INC.
Projected Consolidated Balance Sheets
As of November 30 unless otherwise noted
(in thousands-unaudited)
<TABLE>
<CAPTION>
Adjusted Reorganized Company
--------------------- ----------------------------------------------------------
1996 1996 1997 1998 1999 2000 2001
<S> <C> <C> <C> <C> <C> <C> <C>
Cash $120,624 $15,458 $26,014 $60,580 $26,116 $46,887 $83,337
Escrow cash 5,125 9,325 9,925 10,575 - - -
Accts receivable, net 124,300 123,200 136,100 133,100 138,600 146,100 153,100
Inventories, net 90,000 102,800 96,800 95,800 97,300 98,800 99,800
Income tax receivable - 68,900 - - - - -
Prepaid expenses 11,500 11,450 10,800 10,800 12,800 13,800 14,300
--------------------- ---------------------------------------------------------
Total current assets 351,549 330,731 279,639 310,855 274,816 305,587 350,537
Property, plant &
equipment, net 166,618 205,318 219,318 210,918 206,118 199,918 192,318
Deferred income taxes 79,124 142,959 133,934 127,980 119,036 105,371 87,226
Reorganization goodwill - 120,961 103,681 86,401 69,121 51,841 34,561
Other assets 34,000 30,000 27,500 26,000 27,000 27,500 28,000
--------------------- ---------------------------------------------------------
Total assets $631,291 $829,291 $764,072 $762,154 $696,091 $690,217 $692,642
===================== =========================================================
Accounts payable $38,000 $37,300 $37,500 $38,000 $39,000 $39,500 $40,000
Accr. liabilities 38,000 33,169 34,169 34,169 34,669 34,669 35,169
Short-term debt - 68,900 - - - - -
Secured debt-current 1,493 1,228 1,463 1,608 1,768 1,145 80
New debt-current - - - 70,000 20,000 20,000 20,000
Income tax payable 4,500 4,500 4,500 4,500 4,500 4,500 4,500
--------------------- ---------------------------------------------------------
Total current liab. 81,993 145,097 77,632 148,277 99,937 99,814 99,749
Secured debt 16,440 16,065 14,602 12,994 11,226 10,080 10,000
New debt-10 year - 250,000 250,000 230,000 210,000 190,000 170,000
New debt-3 year - 50,000 50,000 - - - -
Other long-term liabilities 27,000 27,000 26,500 26,500 26,000 26,000 25,500
Liabilities subject to
compromise 2,159,131 - - - - - -
Equity (1,653,273) 341,807 345,338 344,383 348,928 364,323 387,393
----------------------- ---------------------------------------------------------
Total liab. & equity $631,291 $829,969 $764,072 $762,154 $696,091 $690,217 $692,642
======================= =========================================================
</TABLE>
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<PAGE> 12
EAGLE-PICHER INDUSTRIES, INC.
Projected Consolidated Statements of Income
Fiscal Years Ended November 30
(in thousands-unaudited)
<TABLE>
<CAPTION>
Regorganized Company
----------- --------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
<S> <C> <C> <C> <C> <C> <C>
Net Sales $889,249 $931,200 $885,700 $941,700 $1,006,700 $1,060,700
Operating Costs and Expenses
Cost of products sold 743,529 775,150 740,250 785,200 837,400 882,000
Selling and administrative 84,000 85,000 85,000 86,500 88,000 89,000
----------- --------------------------------------------------------------------------
827,529 860,150 825,250 871,700 925,400 971,000
----------- --------------------------------------------------------------------------
Operating Income 61,720 71,050 60,450 70,000 81,300 89,700
Amortizaton:
Reorganization asset - (17,280) (17,280) (17,280) (17,280) (17,280)
Property, plant and equipment
adjustment - (5,000) (5,000) (5,000) (5,000) (5,000)
Interest expense (2,000) (33,639) (31,225) (31,275) (24,425) (22,250)
Interest income 500 1,600 2,600 1,700 700 2,200
Other income (expense) 502,515 - - - - -
Reorganization items (1,300) - - - - -
----------- --------------------------------------------------------------------------
Income before income taxes
and non-recurring item 561,435 16,731 9,545 18,145 35,295 47,370
Income taxes 3,400 13,200 10,500 13,600 19,900 24,300
----------- --------------------------------------------------------------------------
Income before non-
recurring item 558,035 3,531 (955) 4,545 15,395 23,070
Gain on discharge of debt 1,503,085 - - - - -
Fresh start adjustments 149,911 - - - - -
----------- --------------------------------------------------------------------------
Net income 2,211,031 3,531 (955) 4,545 15,395 23,070
=========== ==========================================================================
</TABLE>
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<PAGE> 13
EAGLE-PICHER INDUSTRIES, INC.
Projected Consolidated Statements of Cash Flows
Fiscal Years Ended November 30
(in thousands-unaudited)
<TABLE>
<CAPTION>
Reorganized Company
----------- ----------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
Operating Cash:
<S> <C> <C> <C> <C> <C> <C>
Net income 2,211,031 3,531 (955) 4,545 15,395 23,070
Reduction of asbestos liability (502,511) - - - - -
Gain on discharge of debt (1,503,085) - - - - -
Fresh start adjustments (149,911) - - - - -
Depreciation & amortization 31,200 53,280 55,680 57,080 58,480 59,880
Deferred taxes (16,300) 9,025 5,954 8,944 13,665 18,145
Working capital 6,488 (3,450) 6,000 (9,000) (10,000) (8,500)
Income tax refunds 4,402 68,900 - - - -
----------- ----------------------------------------------------------------------
Operating cash 81,314 131,286 66,679 61,569 77,540 92,595
Investing Cash:
Capital expenditures (42,000) (50,000) (30,000) (35,000) (35,000) (35,000)
Financing Cash:
Escrow activity (9,325) (600) (650) 10,575 - -
Short-term borrowings - (68,900) - - - -
Repayments (2,695) (1,228) (1,463) (71,608) (21,769) (21,145)
----------- ----------------------------------------------------------------------
Financing cash (12,020) (70,728) (2,113) (61,033) (21,769) (21,145)
Cash Payments Pursuant
to the Plan (105,168) - - - - -
Increase (decease) in cash (77,874) 10,558 34,566 (34,464) 20,771 36,450
Beginning cash balance 93,330 15,456 26,014 60,580 26,116 46,887
----------- ----------------------------------------------------------------------
15,456 26,014 60,580 26,116 46,887 83,337
=========== ======================================================================
</TABLE>
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<PAGE> 14
EAGLE-PICHER INDUSTRIES, INC.
-----------------------------
CALCULATION OF EQUITY VALUE
November 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Total Value Of Estate* $819.0 million
Less: Cash Distributed 91.0
Secured Debt 17.3
Tax Refund Notes 68.9
Divestiture Notes 50.0
Debentures 250.0
--------
Value of Equity $341.8 million
* Excludes Priority Claims and Remaining Expenses of Administration
Value Percentage
Secured Notes $17.3 2.4 %
Tax Refund Notes 68.9 9.5
Divestiture Notes 50.0 6.9
Debentures 250.0 34.3
Common Equity 341.8 47.0
-------- --------
$728.0 $100.0 %
</TABLE>
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<PAGE> 15
EAGLE-PICHER INDUSTRIES, INC.
LIQUIDATION ANALYSIS
The Liquidation Analysis reflects the Debtors' estimate of the proceeds that
would be realized if the Debtors were to be liquidated under chapter 7 of the
Bankruptcy Code. Underlying the Liquidation Analysis are a number of estimates
and assumptions that, although developed and considered reasonable by
Management, are inherently subject to significant business, economic and
competitive uncertainties and contingencies beyond the control of the Debtors
and their Management, and upon assumptions with respect to the liquidation
decisions which could be subject to change. THERE CAN BE NO ASSURANCE THAT THE
VALUES REFLECTED IN THE LIQUIDATION ANALYSIS WOULD BE REALIZED IF THE DEBTORS
WOULD UNDERGO SUCH A LIQUIDATION, AND ACTUAL RESULTS COULD VARY MATERIALLY FROM
THOSE SHOWN HERE.
For the purposes of preparing the Liquidation Analysis, the liquidation was
assumed to commence on December 1, 1996 and the sales of the Operating
Businesses (as defined below) were assumed to be completed within six months of
that date. At that point, on May 31, 1997 (the "Liquidation Distribution Date"),
distributions would be made to unsecured creditors. Any funds received
subsequent to the Liquidation Distribution Date would be applied to separate
accounts set up to fund the Debtors' liabilities for workers' compensation,
postretirement benefits and indemnification liabilities resulting from the sales
of the Operating Businesses. Depending on actual circumstances, the six-month
sale and liquidation period ("Liquidation Period") could be significantly longer
or, while the Debtors believe it highly unlikely, shorter.
The Debtors have assumed, for purposes of making distributions to the PI Trust,
in the Liquidation Analysis, that the aggregate value of Asbestos Personal
Injury Claims and Lead Personal Injury Claims that would be allowed in a chapter
7 case is equal to the $2.5 billion that was ruled to be the aggregate value by
the Bankruptcy Court. The Debtors also have assumed, in the Liquidation
Analysis, that in a chapter 7 case the value of the Environmental Claims
addressed in the Environmental Settlement Agreement would be as reflected
therein. There can be no assurance that the EPA, the DOI, and the states listed
therein would agree to the liquidated amounts of their claims set forth in the
Environmental Settlement Agreement in the context of a chapter 7 liquidation.
The following notes describe the significant assumptions used in the Liquidation
Analysis.
A. ESTIMATED LIQUIDATION PROCEEDS
The businesses of the Debtors are conducted through various subsidiaries and
divisions (the "Operating Businesses"). For
E-1
<PAGE> 16
purposes of the Liquidation Analysis, it is assumed that the assets of the
subsidiaries and divisions would be sold on a going concern basis. It is
believed that the sales of the Operating Businesses on a going concern basis
would result in greater proceeds than liquidating the assets of the Operating
Businesses themselves. There can be no assurance, however, that any such going
concern sales could be consummated. The Debtors' financial advisors, McDonald &
Co., estimated the potential proceeds from such dispositions of the Operating
Businesses.
The following information and factors, not listed in any order of importance,
were, among others, considered by McDonald & Co. in estimating the proceeds
which might be received from the sale of the Operating Businesses:
1) The historical financial statements, relevant historical operating
information and projected financial operating performance of the Operating
Businesses;
2) Market valuations of public companies in the same or similar businesses
as the Operating Businesses;
3) The product lines, manufacturing expertise, operating advantages and
disadvantages of the Operating Businesses;
4) The limited base of potential buyers for certain Operating Businesses;
5) The potential impact of a chapter 7 proceeding upon the Operating
Businesses themselves and upon potential buyers' pricing strategies;
6) The relatively short period of time in which the sales of the Operating
Businesses would take place; and
7) The point in the economic cycle in which the sales of the Operating
Businesses would take place.
General economic conditions as well as current conditions in the Operating
Business' industries were also considered in estimating the liquidation
proceeds. However, significant uncertainties exist, such as the cyclical nature
of the automotive industry and the political nature of defense funding. Just as
these items could have an adverse effect on sales and operating income, they
could also adversely affect the price which could be realized in the short-term
from the dispositions of Operating Businesses depending on the timing of these
dispositions.
Transaction costs on the sales of the Operating Businesses were estimated to be
5% of the gross proceeds.
E-2
<PAGE> 17
For purposes of the Liquidation Analysis, it has been assumed that all
subsidiary and division level employees will be retained by the buyers of the
respective Operating Businesses. In the event of actual sale, it is likely that
substantial employee severance costs would reduce sale proceeds.
B. NOTES RECEIVABLE
Eagle-Picher is holding several notes receivable received as partial
consideration for the sale of assets previously consummated. Those that are due
after the Liquidation Distribution Date would be used to fund the
indemnification liability resulting from the sales of the Operating Businesses.
C. INCOME TAXES
Sale of the Operating Businesses will trigger taxable gains for Eagle-Picher,
and Eagle-Picher will receive tax deductions for cash paid to unsecured
creditors on the Liquidation Distribution Date. The resulting tax net operating
loss will be fully absorbed by carryback to years in which income is available
for carryback, resulting in income tax refunds of $62.2 million. Since these
refunds will not be available until after the Liquidation Distribution Date,
they will be assigned to the accounts for Indemnification. The present value of
such refunds is $56.6 million.
Since Eagle-Picher will cease to exist under this scenario, the tax benefit for
deferred deductions for workers' compensation, postretirement benefits and
indemnification liabilities will expire.
D. CLAIMS AND EXPENSES PAID AT THE EFFECTIVE DATE
Under the Liquidation Analysis, it has been assumed that all Administrative
Expenses (including expenses of a chapter 7 trustee and any related professional
fees) and Priority Claims aggregating $9.4 million are paid in full. It is also
assumed that Secured Claims totaling $19.7 million are repaid in full from
proceeds of the collateral securing such sums.
E. ASBESTOS PROPERTY DAMAGE CLAIMS
It has been assumed that the Court values Asbestos Property Damage Claims in the
aggregate approximate amount of $12.0 million.
F. CASHFLOW FROM OPERATIONS DURING THE LIQUIDATION PERIOD
The Debtors estimate that there will be a decrease in cash from operations of
approximately $5 million resulting from adverse effects of a chapter 7
situation. Interest income expected to be
E-3
<PAGE> 18
earned on excess cash held during the Liquidation Period is included in this
estimate.
G. OVERHEAD COSTS OF LIQUIDATION
It has been assumed that overhead costs of a liquidation, including severance
costs associated with general office personnel, will approximate $8 million.
Terminations would take place as reduction of properties permitted.
H. WORKERS' COMPENSATION OBLIGATIONS
The Debtors estimate workers' compensation obligations to be approximately $20
million. This includes existing liabilities and liabilities that will not be
assumed by buyers when the Operating Businesses are sold. The Debtors have
assumed that any buyer of an Operating Business would not assume any obligations
for workers' compensation claims for injuries occurring prior to the date a sale
of the Operating Business is consummated.
I. PENSION AND POSTRETIREMENT BENEFIT OBLIGATIONS
The Debtors currently make health care and life insurance benefits available to
certain retired employees on a limited basis. In most cases, retirees are
required to contribute to the cost of their health insurance coverage. These
benefits are funded on a pay-as- you-go basis. For purposes of this Liquidation
Analysis, it has been assumed that the Debtors' policy would be amended to
exclude current active employees from this benefit. Therefore, the Debtors would
be liable only for the portion of this liability relating to current retirees
and those eligible for retirement.
The pension plans are currently over funded. It is unlikely, however, that there
would be excess funds available to the Debtors in the event of a liquidation
after transfers of pension assets and related liabilities were made to pension
plans of buyers of the Operating Businesses.
J. CANCELLATION OF LEASE OBLIGATIONS
It has been assumed that the Debtors will be liable for claims associated with
the cancellation of certain lease obligations, primarily that of the General
Office in Cincinnati, Ohio. It has also been assumed that the leases of
operating plants would be assumed by buyers of the respective Operating
Businesses.
K. INDEMNIFICATION OF THE SALE OF THE OPERATING BUSINESSES
It has been assumed that the buyer of any Operating Business would require
certain amounts held in escrow for the indemnification of existing and potential
liabilities at the date of the sale. Potential indemnification items include
environmental liabilities
E-4
<PAGE> 19
and warranty obligations for incidents occurring prior to the date the Operating
Businesses were sold.
E-5
<PAGE> 20
EAGLE-PICHER INDUSTRIES, INC.
Liquidation Proceeds Computation
as of November 30, 1996
(in thousands-unaudited)
<TABLE>
<CAPTION>
LIQUIDATION PROCEEDS:
<S> <C>
Proceeds form asset sales $540,000
Less transaction costs (27,000)
----------
Net liquidation proceeds 513,000
Add: Cash and cash equivalents 125,700
Notes receivable and other investments 7,500
Present value of tax refunds receivable 56,600
----------
Cash available 702,800
Less distributions:
Priority claims 3,000
Administrative expenses 6,400
Secured claims 19,700
After-tax net decrease in cash from operations
during six-month disposition period 5,000
Corporate payroll and overhead costs of
liquidation 8,000
Worker's compensation obligation 20,000
Postretirement benefit obligation 13,700
Cancelation of lease obligations 700
Indemnification resulting from disposition
of businesses 50,000
---------
Total distributions 126,500
---------
Net estimated liquidation proceeds available
to unsecured creditors $576,300
=========
PAYMENT OF PREPETITION UNSECURED CLAIMS:
Percentage
Claims Proceeds Recovery
----------- ----------- -------------
Asbestos and lead personal injury claims $2,502,511 $541,059 22%
Unsecured claims 150,999 32,647 22%
Abestos property damage claims 12,000 2,594 22%
Equity interests 0 0 0%
</TABLE>
E-6
<PAGE> 1
Exhibit 2.4
CERTIFICATE OF REORGANIZATION
OF
EAGLE-PICHER INDUSTRIES, INC.
The undersigned, Thomas E. Petry, Chairman of the Board and Chief
Executive Officer, and James A. Ralston, Vice President, General Counsel and
Secretary, of Eagle-Picher Industries, Inc. (the "Corporation"), do hereby
certify that: (1) the Corporation is the Debtor in that certain Chapter 11 case
identified as Consolidated Case No. 1-91-00100 in the United States Bankruptcy
Court for the Southern District of Ohio, Western Division (the "Case"), (2) in
the Case, the Corporation has filed a Consolidated Plan of Reorganization that
provides for the adoption of Amended and Restated Articles of Incorporation for
the Corporation in the form set forth as Exhibit A to this Certificate, (3) the
Consolidated Plan of Reorganization, including the Amended and Restated Articles
of Incorporation that are Exhibit A hereto, was confirmed by an order of the
United States District Court for the Southern District of Ohio, Western
Division, and the United States Bankruptcy Court for the Southern District of
Ohio, Western Division, entered on November 18, 1996, and (4) such order remains
in full force and effect at the date hereof.
The Amended and Restated Articles of Incorporation annexed hereto may
be certified by the office of the Secretary of State of Ohio separately from
this Certificate of Reorganization.
IN WITNESS WHEREOF, the undersigned Chairman of the Board and Chief
Executive Officer and Vice President, General Counsel and Secretary of
Eagle-Picher Industries, Inc., have executed this Certificate of Reorganization
this 29 day of November, 1996.
/s/ Thomas E. Petry
------------------------------
Name: Thomas E. Petry
Title: Chairman of the Board
and Chief Executive
Officer
/s/ James A. Ralston
-------------------------------
Name: James A. Ralston
Title: Vice President, General
Counsel and Secretary
<PAGE> 2
EXHIBIT A
CERTIFICATE OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
EAGLE-PICHER INDUSTRIES, INC.
The undersigned, Thomas E. Petry, Chairman of the Board and Chief
Executive Officer, and James A. Ralston, Vice President, General Counsel and
Secretary, of Eagle-Picher Industries, Inc. (the "Corporation"), do hereby
certify that in connection with a Plan of Reorganization confirmed by the United
States District Court for the Southern District of Ohio, Western Division, and
the United States Bankruptcy Court for the Southern District of Ohio, Western
Division, in the chapter 11 case of the Corporation (the "Plan"), the Articles
of the Corporation were amended and restated, pursuant to the Plan and the
authority granted by Section 1701.75 of the Ohio Revised Code ("O.R.C."), to
read as follows:
FIRST: The name of the Corporation is Eagle-Picher Industries, Inc.
SECOND: The place in Ohio where the principal office of the
Corporation is to be located is Cincinnati, Hamilton County, Ohio.
THIRD: The purpose for which the Corporation is formed is to engage
in any lawful act or activity for which corporations may be formed under
Sections 1701.01 to 1701.98 inclusive, of the O.R.C.
FOURTH: (a) All shares of the Corporation that are authorized for
issuance immediately prior to the time as of which these Amended and Restated
Articles of Incorporation become effective (the "Effective Time") are hereby
canceled. As of the Effective Time, the number of shares that the Corporation is
authorized to have outstanding is 20,000,000 common shares, without par value
(the "Common Stock").
(b) Pursuant to the requirements of Section 1123(a)(6) of
the Bankruptcy Code, the Corporation shall not issue nonvoting equity
securities, subject, however, to further amendment of these Amended and Restated
Articles of Incorporation as and to the extent permitted by applicable law.
FIFTH: The Corporation, by action of its Board of Directors, may
purchase its own shares at any time and from time- to-time to the extent
permitted by law.
<PAGE> 3
SIXTH: The shares of the Corporation's Common Stock, other rights or
options to purchase shares of the Corporation's Common Stock and any other
interests that would be treated as "stock" of the Corporation under Section 382
of the Internal Revenue Code (collectively, the "Corporate Securities") are
subject to the following restrictions:
1. During the period beginning on the Effective Time and ending
twenty-five (25) months thereafter, any attempted sale, purchase, transfer,
assignment, conveyance, pledge or other disposition of any share or shares of
Corporate Securities ("Transfer") to any person or entity or to any group of
persons or entities acting in concert ("Transferee") who directly or indirectly
owns, or is treated as owning (within the meaning of the attribution rules
applicable under Section 382 of the Internal Revenue Code ("Own")), 4.75% or
more of any class of Corporate Securities, or after giving effect to the
Transfer, would directly or indirectly Own more than 4.75% of the outstanding
shares of any class of Corporate Securities, shall be void ab initio and shall
not be effective to Transfer any of such shares to the extent the Transfer
increases the Transferee's direct or indirect ownership of the Corporate
Securities above 4.75% of the total outstanding shares of such class of
Corporate Securities; provided, however, that the foregoing restriction shall
not apply to the original issuance of 10,000,000 shares of the Corporation's
Common Stock pursuant to the Plan. Similarly, any Transfer by a transferor who
directly or indirectly Owns 5% or more of the outstanding shares of any class of
Corporate Securities shall be void ab initio and shall not be effective to
Transfer any of such shares to the purported Transferee.
2. (a) If the Board of Directors of the Corporation determines that
a Transfer of Corporate Securities constitutes a Transfer prohibited by Section
1 hereof (a "Prohibited Transfer"), then upon written demand made by any officer
of the Corporation, the purported Transferee shall transfer or cause to be
transferred any certificate or other evidence of ownership of Corporate
Securities that are the subject of the Prohibited Transfer ("Prohibited
Securities"), together with any dividends or other distributions that were
received by the Transferee from the Corporation with respect to such Prohibited
Securities ("Prohibited Distributions"), to an agent designated by the Board of
Directors of the Corporation (the "Agent"). The Agent shall then sell to a buyer
or buyers the Prohibited Securities so transferred to it. If, before receiving
the demand of the Corporation to transfer the Prohibited Securities to the
Agent, the purported Transferee has resold the Prohibited Securities, the
purported Transferee shall be deemed to have sold the Prohibited Securities for
and on behalf of the Agent and, in lieu of transferring the Prohibited
Securities to the Agent, shall transfer to the Agent any Prohibited
Distributions and the proceeds of such sale. If the purported Transferee fails
to surrender the Prohibited Securities or the proceeds of a sale
<PAGE> 4
thereof, together with any Prohibited Distributions, to the Agent within thirty
(30) business days from the date on which the Corporation makes its demand for
surrender hereunder, the Corporation shall institute legal proceedings to compel
the surrender. The costs of any such proceeding in which the court shall compel
such surrender or award damages shall be borne by the purported Transferee.
(b) Upon the receipt of the proceeds of any sale of Prohibited
Securities by the Agent or, upon the receipt from the purported Transferee
thereof of the proceeds from any previous sale of such Prohibited Securities by
such Transferee, the amount so received shall be applied by the Agent as
follows: (i) first, to the payment of the reasonable expenses of the Agent
incurred in connection with the performance of its duties hereunder; (ii)
second, to the purported Transferee up to the amount paid by the purported
Transferee for the Prohibited Securities, which amount shall be determined by
the Board of Directors of the Corporation in its sole discretion; and (iii)
third, to one or more organizations that shall then be qualified under Section
501(c)(3) of the Internal Revenue Code as selected by the Board of Directors of
the Corporation.
3. Neither the Corporation nor any transfer agent or other person on
its behalf shall effect a Prohibited Transfer on the stock record books of the
Corporation and the purported Transferee thereof shall not be recognized as a
shareholder of the Corporation for any purpose whatsoever in respect of the
Prohibited Securities. Until the Prohibited Securities are acquired by another
person in a Transfer that is not a Prohibited Transfer, the purported Transferee
shall not be entitled with respect to such Prohibited Securities to any rights
of shareholders of the Corporation, including, without limitation, the right to
vote such Prohibited Securities and to receive dividend distributions, whether
liquidating or otherwise, in respect thereof, if any. Once the Prohibited
Securities have been acquired in a Transfer that is not a Prohibited Transfer,
the Corporate Securities shall cease to be Prohibited Securities.
4. All certificates evidencing any Corporate Securities issued by the
Corporation after the Effective Time, shall bear a conspicuous legend reading
substantially as follows:
THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO
RESTRICTION PURSUANT TO THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION OF REORGANIZED EAGLE- PICHER, WHICH RESTRICTION IS
REPRINTED IN ITS ENTIRETY ON THE BACK OF THIS CERTIFICATE.
With respect to any Corporate Securities that are not evidenced by a
certificate, but are uncertificated securities, the foregoing legend shall be
set forth in the initial transaction statement
<PAGE> 5
required for restrictions on transfer by Section 1308.11 of the O.R.C.
5. Notwithstanding any other provisions of these Amended and Restated
Articles of Incorporation or the Regulations of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified by law, these
Amended and Restated Articles of Incorporation or the Regulations), the
affirmative vote of the holders of 80% or more of the outstanding shares, voting
together as a single class, shall be required to amend or repeal, or adopt any
provisions inconsistent with this Article Sixth; provided, however, that
shareholder action without a meeting shall require the unanimous written consent
of all shareholders entitled to vote thereon.
SEVENTH: These Amended and Restated Articles of Incorporation
supersede and take the place of all prior Articles of Incorporation of the
Corporation.
IN WITNESS WHEREOF, the undersigned Chairman of the Board and Chief
Executive Officer and Vice President, General Counsel and Secretary of
Eagle-Picher Industries, Inc. have executed this Certificate this 29 day of
November, 1996.
EAGLE-PICHER INDUSTRIES, INC.
By /s/ Thomas E. Petry
-------------------------------
Name: Thomas E. Petry
Title: Chairman of the Board
and Chief Executive
Officer
/s/ James A. Ralston
-------------------------------
Name: James A. Ralston
Title: Vice President, General
Counsel and Secretary
<PAGE> 1
Exhibit 2.5
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 29, 1996, between EAGLE-PICHER
INDUSTRIES, INC. (the "Company"), having its principal executive offices at 580
Walnut Street, Cincinnati, Ohio 45201, and Wayne R. Wickens (the "Executive"),
residing at 7470 Pinehurst, Cincinnati, Ohio 45244.
W I T N E S S E T H :
WHEREAS, the Executive is employed on a full-time basis by the
Company and is currently serving as Senior Vice President and Group Executive of
the Company; and
WHEREAS, on January 7, 1991, the Company and certain of its
affiliates (collectively, the "Debtors") each filed a petition for relief under
chapter 11, title 11 of the United States Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Southern District of Ohio, Western
Division (the "Bankruptcy Court"); and
WHEREAS, by order dated November 18, 1996 (the "Confirmation
Order") the Bankruptcy Court and the United States District Court for the
Southern District of Ohio, Western Division, confirmed the Third Amended
Consolidated Plan of Reorganization, dated August 28, 1996 (the "Plan"), in the
Debtors' chapter 11 cases; and
WHEREAS, the Plan contemplates that the Company and the
Executive will enter into this Agreement which is to
<PAGE> 2
become effective on the Effective Date (as such term is defined in the Plan).
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter contained, the parties hereto agree as follows:
1. Employment; Effectiveness of Agreement. The obligation of
the Company to employ the Executive, and of the Executive to serve the Company,
pursuant to this Agreement shall become effective automatically on the
Effective Date.
2. Term. The term of Executive's employment hereunder
(hereinafter referred to as the "Term") shall commence on the Effective Date and
shall continue thereafter until the date which is thirty (30) months from and
after the date on which the Confirmation Order was entered by the Bankruptcy
Court, unless terminated earlier as hereinafter provided.
3. Duties and Extent of Services. During the Term, Executive
agrees to continue to serve as the Senior Vice President and Group Executive of
the Company faithfully and to the best of his ability under the direction of the
Chief Executive Officer and the Board of Directors of the Company (the "Board"),
and agrees to devote substantially all of his business time, energy and skill to
such
2
<PAGE> 3
employment. Executive agrees to perform the duties commensurate with the
position of Senior Vice President and Group Executive of the Company, which
shall include, without limitation, the duties set forth on Annex A hereto.
Executive agrees also to perform such specific duties and services of a senior
executive nature as the Chief Executive Officer of the Company or the Board
shall reasonably request consistent with Executive's position as Senior Vice
President and Group Executive. The principal place of employment of Executive
shall be Cincinnati, Ohio and, subject to such reasonable travel as the
performance of his duties may require, such principal place of employment shall
not be changed unless the Executive otherwise consents.
4. Compensation.
4.1 Base Salary. The Company agrees to pay or cause
to be paid to Executive during the Term, a base salary equal to the amount of
his base salary as at the date immediately preceding the Effective Date, subject
to adjustment as provided below (as so adjusted, the "Base Salary"). The Base
Salary shall be payable in accordance with the regular payroll policies of the
Company from time to time in effect, less such deductions as shall be required
to be withheld by applicable law and regulations. On each December 1 during the
Term, the Board or a committee
3
<PAGE> 4
thereof, shall review Executive's Base Salary as then in effect and may, but
shall not be obligated to, increase such salary by such amount as the Board (or
such committee), in its sole discretion, shall determine.
4.2 Discretionary Bonus. In addition to Base Salary,
the Executive shall be entitled to receive an annual cash bonus based on the
performance of the Company and of the Executive, the amount of which, if any,
shall be determined by the Board (or a committee thereof). Determinations made
by the Board (or such committee) with respect to the amount, if any, of annual
bonuses to be paid to Executive under this Agreement shall be final and
conclusive.
4.3 Benefits and Perquisites. During the Term, the
Company shall provide Executive with and Executive shall be entitled to the
following benefits and perquisites:
(a) participation in and the receipt of benefits
under (i) all of the Company's employee benefit plans and arrangements in effect
from time to time applicable to salaried employees of the Company, (ii) all
short-term and long-term incentive plans of the Company as in effect from time
to time, (iii) a supplemental executive retirement plan (the "SERP")
substantially in accordance with and no less favorable to Executive than the
terms,
4
<PAGE> 5
provisions and benefits under the supplemental executive retirement plan
currently provided by the Company, and (iv) any life insurance, health and
accident plan or arrangement made available by the Company, now or in the
future, to its executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements.
(b) four (4) weeks of paid vacation in each calendar
year.
(c) an automobile paid for by the Company for use in
the performance of his services under this Agreement, in a manner substantially
consistent with past practices.
(d) membership fees paid for by the Company with
respect to any of the Executive's business-related club memberships (it being
understood that such membership fees shall not include any fees for country
clubs or other similar, primarily social, clubs).
The Company also shall implement, as soon as reasonably
practicable after the Effective Date, a long-term incentive plan. Although the
ability to receive stock of the Company may not be available for such plan, the
plan nevertheless shall provide the Executive with opportunities and incentives
reasonably economically equivalent to those
5
<PAGE> 6
provided by similar companies, many of which do provide stock options and/or
other types of stock grants as components of their long-term incentive plans.
4.4 Expenses. Subject to such policies as may from
time to time be established by the Board, the Company shall pay or reimburse
Executive for all reasonable expenses actually incurred or paid by Executive
during the Term in the performance of his services under this Agreement, upon
presentation of expense statements or vouchers or such other supporting
information as the Company may require.
5. Termination.
5.1 Cause. The Company may terminate Executive's
employment hereunder for Cause. For the purposes of this Agreement, the Company
shall have "Cause" to terminate Executive's employment hereunder only by reason
of any one or more of the following:
(i) Executive's commission of any crime
(whether or not involving the Company or any of its
subsidiaries) which constitutes a felony in the
jurisdiction involved; or
(ii) Executive's commission of an act of
fraud upon the Company or any or its subsidiaries; or
(iii) Executive's willful failure to
perform in all material respects his duties hereunder
in accordance with the terms of this Agreement which
failure (other than by reason of death or disability)
continues
6
<PAGE> 7
uncorrected for a period of ten (10) days after
Executive shall have received written notice from the
Board stating with specificity the nature of such
failure or refusal.
5.2 Termination by the Executive. Executive may
terminate his employment hereunder upon thirty (30) days' prior written notice
to the Company for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean (i) the material diminution of the nature or scope of the duties
assigned to Executive from that contemplated by Section 3 hereof, (ii) a
reduction in Executive's Base Salary, or a material reduction in Executive's
fringe benefits or any other material failure by the Company to comply with
Section 4 hereof, other than any such reduction or failure as shall apply to all
salaried employees of the Company generally, (iii) ceased participation by
Executive, for any reason other than as a result of any action by Executive, in
any employee benefit plan of the Company with respect to which Executive is or
was, prior to such time, eligible to participate, (iv) the relocation of
Executive's principal place of employment more than twenty (20) miles from the
location specified in Section 3 hereof without Executive's consent, (v) the
requirement that Executive engage in a substantial amount of additional travel
(as compared to Executive's past practices) in the performance of his duties
7
<PAGE> 8
hereunder without Executive's consent, or (vi) any other material breach by the
Company of its obligations under this Agreement. Good Reason shall not exist in
the event of a sale or disposition of a subsidiary or division of the Company
and Executive either (a) voluntarily agrees to be employed by such subsidiary or
division, or (b) is offered a comparable position with the Company. For purposes
hereof, comparable shall encompass such items as salary, benefits, duties and
geographic location.
5.3 Notice of Termination. Any termination by the
Company pursuant to Section 5.1 above or by Executive pursuant to Section 5.2
above shall be communicated by written notice (the "Notice of Termination"),
which notice shall indicate the specific termination provision in this Agreement
relied upon for such termination.
5.4 Date of Termination. "Date of Termination"
shall mean (i) if Executive's employment is terminated pursuant to Section 5.1
or 5.2 hereof, the date specified in the Notice of Termination, and (ii) if
Executive's employment is terminated by the Company other than for Cause or by
Executive other than for Good Reason, the date on which a Notice of Termination
is given.
5.5 Payments upon Termination. (a) If the employment
of Executive with the Company is terminated (i)
8
<PAGE> 9
by the Company other than for Cause or (ii) by the Executive for Good Reason,
then Executive shall be entitled to receive from the Company, and the Company
shall pay to Executive, a lump sum severance payment equal to the greater of (x)
the aggregate Base Salary (at the rate in effect at the Date of Termination)
that Executive would have received for the remainder of the Term if his
employment had not been terminated, or (y) the aggregate amount of the Base
Salary (at the rate in effect at the Date of Termination) which would be paid
for a period of twenty-four (24) months, plus, in either case, such other
benefits or reimbursement of expenses payable to the Executive pursuant to
Sections 4.3 and 4.4 hereof (including, without limitation, the SERP), and less
such amounts as shall be required to be withheld by the Company pursuant to
applicable laws and regulations (the "Severance Amount"). The Severance Amount
shall not be present-valued and shall be payable by the Company to Executive
within thirty (30) days after Executive's termination. Executive shall not be
required to mitigate the Company's obligation to pay the full Severance Amount
by seeking employment or otherwise and the Severance Amount shall not be
decreased or otherwise offset as a result of any compensation received by
Executive from employment in any capacity. The Severance Amount shall be deemed
9
<PAGE> 10
compensation payable to Executive for the purpose of determining the total
amount due Executive pursuant to the SERP.
(b) If the employment of Executive with the Company is
terminated (i) by the Company for Cause, or (ii) by the Executive other than for
Good Reason, then the Executive shall be entitled to receive, and the Company
shall pay to Executive, (x) all accrued and unpaid Base Salary and amounts due
Executive in respect of perquisites provided him hereunder through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
(y) Base Salary payable in lieu of accrued and unused vacation days in
accordance with the policies of the Company from time to time in effect, and (z)
all accrued and unpaid benefits payable to Executive pursuant to any benefit
plan or otherwise through the Date of Termination. Upon the payment of the
foregoing amounts, the Company shall have no further obligations to Executive
under this Agreement.
5.6 Limited Payment Cap. (a) Notwithstanding any
other provision in this Agreement to the contrary, this Section 5.6 will apply
in the event that the Executive would receive payments under this Agreement or
under any other plan, agreement, program, or policy that is sponsored by the
Company, which relate to a change in
10
<PAGE> 11
control of the Company ("parachute payments"), and any such parachute payments
are determined by the Company to be subject to excise tax under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") ("excess parachute
payments"). If it is determined that such excise tax would cause the net
after-tax parachute payments to be paid to or on behalf of the Executive to be
less than what he would have netted, after federal, state and local income and
social security taxes, had the present value of his total parachute payments
equalled $1 less than three times his "base amount," as defined under Section
280G(b)(3)(A) of the Code, then such Executive's total parachute payments shall
be reduced (but by the minimum possible amount), so that their aggregate present
value equals $1 less than three times the Executive's base amount. If it is
determined that any payment to or on behalf of the Executive will be an excess
parachute payment, the Company shall promptly give the Executive notice to that
effect, a copy of the detailed calculation thereof, and an explanation of the
calculation of the reduction (if any) required hereunder. If a reduction
hereunder is required, the Executive may then elect which payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the remaining parachute payments is less than three times the
11
<PAGE> 12
Executive's base amount). The Executive shall advise the Company in writing of
his election within 10 days of his receipt of this notice. If no such election
is made by the Executive, the Company may elect which and how much of such
payments to eliminate or reduce to accomplish this required reduction, and shall
promptly thereafter pay or distribute for the Executive's benefit such amounts
as become due under this Agreement.
(b) It shall be assumed for purposes of the calculations
described in subsection (a) above that the Executive's income tax rate will be
computed based upon the maximum effective marginal federal, state and local
income tax rates and Medicare tax on earned income, with such maximum effective
federal income tax rate to be computed with regard to Section 68 of the Code,
and applying any available deduction of state and local income taxes for federal
income tax purposes. In the event that the Executive and the Company are unable
to agree as to the amount of the reduction described in subsection (a) above, if
any, the Executive shall select a law firm or public accounting firm from among
those regularly consulted by the Company regarding federal income tax matters,
such law firm or accounting firm shall determine the amount of such
12
<PAGE> 13
reduction, and such firm's determination shall be final and binding upon the
Executive and the Company.
6. Death or Disability.
6.1 Death. If Executive dies during the Term, this
Employment Agreement, other than the provisions of Section 6.3 hereof, shall
terminate.
6.2 Disability. If, during the Term, Executive
becomes physically or mentally disabled, whether totally or partially, so that
he is unable substantially to perform his services hereunder for (i) a period of
six (6) consecutive months or (ii) for shorter periods aggregating six (6)
months during any eighteen (18) month period, the Company may at any time after
the last day of the six (6) consecutive months of disability or the day on which
the shorter periods of disability equal an aggregate of six (6) months, by
written notice to Executive (the "Disability Notice"), terminate the Term of the
Executive's employment hereunder.
6.3 Payments upon Death or Disability. Upon a
termination due to the death or disability of Executive, Executive (or, in the
event of a termination as a result of the death of Executive, Executive's estate
(or a designated beneficiary thereof)) shall be entitled to receive from the
Company, and the Company shall pay to Executive (or Execu-
13
<PAGE> 14
tive's estate, if applicable) the amount of any accrued and unpaid Base Salary
and other benefits and reimbursement of expenses payable to the Executive
hereunder pursuant to Sections 4.3 and 4.4 hereof as of the date of Executive's
death or the date of the Disability Notice, as applicable. In addition, for a
period of thirty (30) months following the date of such termination, the Company
shall continue to pay and provide to Executive and Executive's dependents at the
Date of Termination all medical benefits pursuant to any plans and programs in
which Executive was entitled to participate immediately prior to the Date of
Termination as if Executive were still employed by the Company pursuant hereto.
If Executive's participation in any plan or program pursuant to which such
medical benefits are provided to Executive is barred as a result of such
termination, the Company shall arrange to provide Executive and Executive's
dependents with benefits substantially similar on an after tax basis to those
which Executive was entitled to receive under such plan or program.
7. Non-Competition; Confidentiality.
7.1 Non-Competition. Executive agrees that, during
the Term and for a period of two years following the date of a termination of
Executive's employment under Section 5 hereof (the "Restricted Period"), he will
not,
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directly or indirectly, own, manage, operate or control, or participate in the
ownership, management, operation or control of, or be connected as an officer,
employee, partner, director or otherwise with, or have any financial interest
in, or aid or assist anyone else in the conduct of, any entity or business which
competes with any material business conducted by the Company or by any group,
division or subsidiary of the Company, in any area where such business is being
conducted, or for which negotiations to conduct business are pending, at the
date of such termination (a "Competitive Operation"); provided, however, that
Executive may acquire, solely as an investment and through market purchases,
securities of any corporation that are traded on any national securities
exchange or listed on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), if Executive is not a controlling person of, or a
member of a group which controls, such corporation; and Executive does not,
directly or indirectly, own more than one percent (1%) of any class of
securities of such corporation.
7.2 Confidential Information; Personal Relationships.
Executive agrees that, during the Term and thereafter, he shall keep secret and
retain in strictest confidence, and shall not use for his benefit or the benefit
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of others, any and all confidential information relating to the Company,
including, without limitation, trade secrets, customer lists, financial plans or
projections, pricing policies, marketing plans or strategies, business
acquisition or divestiture plans, new personnel acquisition plans, technical
processes, inventions and other research projects heretofore or hereafter
learned by Executive, and he shall not disclose any such information to anyone
outside the Company or any of its subsidiaries, except as required by law in
connection with any judicial or administrative proceeding or inquiry (provided
prior written notice thereof is given by Executive to the Company) or except
with the Company's prior written consent, unless such information is known
generally to the public or the trade through sources other than Executive's
unauthorized disclosure.
7.3 Property of the Company. All memoranda, notes,
lists, records and other documents or papers (and all copies thereof), including
such items stored in computer memories, or microfiche or by any other means,
made or compiled by or on behalf of Executive, or made available to Executive,
relating to the Company or any successors thereto, are and shall be the property
of the Company or any such successor and shall be delivered to the Company or
any such successor promptly at any time on request.
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7.4 Employees of the Company. During the Restricted
Period, the Executive shall not, directly or indirectly, hire, solicit or
encourage to leave the employment of the Company, any of its employees or hire
any such employee who has left the employment of the Company.
7.5 Rights and Remedies Upon Breach. If Executive
breaches, or threatens to commit a breach of, any of the provisions of this
Section 7 (the "Restrictive Covenants"), the Company and any successor thereto
shall have the following rights and remedies, each of which shall be independent
of the other and severally enforceable, and all of which shall be in addition
to, and not in lieu of, any other rights and remedies available to the Company
under law or in equity.
(a) Specific Performance. The right and remedy to
have the Restrictive Covenants specifically enforced by any arbitrator or any
court having equity jurisdiction, it being acknowledged and agreed by Executive
that any such breach or threatened breach will cause irreparable injury to the
Company and that money damages will not provide an adequate remedy to the
Company.
(b) Accounting. The right and remedy to require
Executive to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or
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other benefits (collectively, "Benefits") derived or received by Executive as
the result of any transactions constituting a breach of any of the Restrictive
Covenants, and Executive shall account for and pay over such Benefits to the
Company.
7.6 Severability of Covenants. Executive acknowledges
and agrees that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. Notwithstanding the
foregoing, if any arbitrator or court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable or should be
reduced, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect without regard to the invalid
Restrictive Covenants or portions thereof.
8. Insurance. The Company may, from time to time, apply for
and take out, in its own name and at its own expense, naming itself or others as
the designated beneficiary (which it may change from time to time), policies for
health, accident, disability or other insurance upon Executive in any amount
that it may deem necessary or appropriate to protect its interest. Executive
agrees to aid the Company in procuring such insurance by submitting to
reasonable medical examinations and by filling out, executing and
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delivering such applications and other instruments in writing as may reasonably
be required by any insurance company to which the Company may apply for
insurance.
9. Indemnification. To the fullest extent permitted or
required by the laws of the State of Ohio, the Company shall indemnify and hold
harmless Executive, in accordance with the terms of such laws, if Executive is
made a party, or threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Executive is or was an officer or
director of the Company, or any subsidiary or affiliate of the Company in which
capacity Executive is or was serving at the Company's request, against expenses
(including reasonable attorneys' fees), judgments, fines and amounts paid in
settlement, all as actually and reasonably incurred by him in connection with
such action, suit or proceeding. In the event it becomes necessary for Executive
to take any action to enforce the indemnity provided herein, Executive shall be
promptly reimbursed by the Company for all costs and expenses associated
therewith (including reasonable attorneys' fees).
10. Arbitration. All disputes arising under or
related to this Agreement shall be resolved by arbitration.
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Such arbitration shall be conducted by an arbitrator mutually selected by the
Company and Executive (or, if the Company and Executive are unable to agree upon
an arbitrator within ten (10) days, then the Company and Executive shall each
select an arbitrator, and the arbitrators so selected shall mutually select a
third arbitrator, who shall resolve such dispute). Such arbitration shall be
conducted in accordance with the applicable rules of the American Arbitration
Association. Any decision rendered by an arbitrator pursuant hereto may be
enforced by a court of competent jurisdiction without review of such decision by
such court. The Company shall pay all of the fees and expenses of the
arbitrators and the other costs of arbitration. The Company also shall pay
Executive's reasonable legal fees and expenses incurred in connection with any
successful enforcement by Executive of his rights hereunder.
11. Miscellaneous.
11.1 Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, telecopied or sent by certified or registered mail, postage prepaid,
or by Federal Express or similar overnight courier. Any such notice shall be
deemed given when delivered:
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(i) if to the Company, to:
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Attn: General Counsel
Telecopy No.: (513) 721-3404
(ii) if to Executive, to:
Wayne R. Wickens
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Telecopy No.: (513) 721-2779
11.2 Waivers and Amendments. This Agreement may not
be amended, modified, superseded or cancelled except by a written instrument
signed by the Company and Executive. No delay on the part of any party in
exercising any right or remedy hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right or remedy, nor any
single or partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy.
11.3 Survival. The provisions of Sections 7 and 9
hereof shall survive the Term, irrespective of the reasons for termination of
Executive's employment hereunder.
11.4 Governing Law. This Agreement shall be governed
by and construed in accordance with the law of the State of Ohio applicable to
agreements made and to be performed entirely within such State.
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11.5 Entire Agreement. This Agreement (including
the schedules, annexes and exhibits hereto) contain the entire agreement between
the parties with respect to the subject matter hereof and supersede all prior
agreements, proposals or representations, arrangements or understandings,
written or oral, with respect thereto.
11.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by any
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party hereto without the prior written consent of the other party.
11.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EAGLE-PICHER INDUSTRIES, INC.
By /s/ Thomas E. Petry
--------------------------------
Name: Thomas E. Petry
Title: Chairman of the Board
of Directors and Chief
Executive Officer
/s/ Wayne R. Wickens
-----------------------------------
Wayne R. Wickens
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ANNEX A
TO EMPLOYMENT AGREEMENT OF
WAYNE R. WICKENS
Position: Senior Vice President and Group Executive
Duties: Plans, directs and controls all activities in certain profit
centers (currently ten Automotive Divisions) through the
general managers of those entities. Those general managers are
in turn responsible for production, research, engineering,
marketing/sales, purchasing and human resources in their
operations.
<PAGE> 25
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 29, 1996, between EAGLE-PICHER
INDUSTRIES, INC. (the "Company"), having its principal executive offices at 580
Walnut Street, Cincinnati, Ohio 45201, and Thomas E. Petry (the "Executive"),
residing at Four Lexington Circle, Terrace Park, Ohio 45174.
W I T N E S S E T H :
WHEREAS, the Executive is employed on a full-time basis by the
Company and is currently serving as Chairman of the Board of Directors and Chief
Executive Officer of the Company; and
WHEREAS, on January 7, 1991, the Company and certain of its
affiliates (collectively, the "Debtors") each filed a petition for relief under
chapter 11, title 11 of the United States Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Southern District of Ohio, Western
Division (the "Bankruptcy Court"); and
WHEREAS, by order dated November 18, 1996 (the "Confirmation
Order") the Bankruptcy Court and the United States District Court for the
Southern District of Ohio, Western Division, confirmed the Third Amended
Consolidated Plan of Reorganization, dated August 28, 1996 (the "Plan"), in the
Debtors' chapter 11 cases; and
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WHEREAS, the Plan contemplates that the Company and the
Executive will enter into this Agreement which is to become effective on the
Effective Date (as such term is defined in the Plan).
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter contained, the parties hereto agree as follows:
1. Employment; Effectiveness of Agreement. The obligation of
the Company to employ the Executive, and of the Executive to serve the Company,
pursuant to this Agreement shall become effective automatically on the
Effective Date.
2. Term. The term of Executive's employment hereunder
(hereinafter referred to as the "Term") shall commence on the Effective Date and
shall continue thereafter until the date which is thirty (30) months from and
after the date on which the Confirmation Order was entered by the Bankruptcy
Court, unless terminated earlier as hereinafter provided.
3. Duties and Extent of Services. During the Term, Executive
agrees to continue to serve as the Chairman of the Board of Directors and Chief
Executive Officer of the Company faithfully and to the best of his ability under
the direction of the Board of Directors of the Company (the
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"Board"), and agrees to devote substantially all of his business time, energy
and skill to such employment. Executive agrees to perform the duties
commensurate with the position of Chairman of the Board of Directors and Chief
Executive Officer of the Company, which shall include, without limitation, the
duties set forth on Annex A hereto. Executive agrees also to perform such
specific duties and services of a senior executive nature as the Board shall
reasonably request consistent with Executive's position as Chairman of the Board
of Directors and Chief Executive Officer. The principal place of employment of
Executive shall be Cincinnati, Ohio and, subject to such reasonable travel as
the performance of his duties may require, such principal place of employment
shall not be changed unless the Executive otherwise consents.
4. Compensation.
4.1 Base Salary. The Company agrees to pay or cause
to be paid to Executive during the Term, a base salary equal to the amount of
his base salary as at the date immediately preceding the Effective Date, subject
to adjustment as provided below (as so adjusted, the "Base Salary"). The Base
Salary shall be payable in accordance with the regular payroll policies of the
Company from time to time in effect, less such deductions as shall be required
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to be withheld by applicable law and regulations. On each December 1 during the
Term, the Board or a committee thereof, shall review Executive's Base Salary as
then in effect and may, but shall not be obligated to, increase such salary by
such amount as the Board (or such committee), in its sole discretion, shall
determine.
4.2 Discretionary Bonus. In addition to Base Salary,
the Executive shall be entitled to receive an annual cash bonus based on the
performance of the Company and of the Executive, the amount of which, if any,
shall be determined by the Board (or a committee thereof). Determinations made
by the Board (or such committee) with respect to the amount, if any, of annual
bonuses to be paid to Executive under this Agreement shall be final and
conclusive.
4.3 Benefits and Perquisites. During the Term, the
Company shall provide Executive with and Executive shall be entitled to the
following benefits and perquisites:
(a) participation in and the receipt of benefits
under (i) all of the Company's employee benefit plans and arrangements in effect
from time to time applicable to salaried employees of the Company, (ii) all
short-term and long-term incentive plans of the Company as in effect from time
to time, (iii) a supplemental executive
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retirement plan (the "SERP") substantially in accordance with and no less
favorable to Executive than the terms, provisions and benefits under the
supplemental executive retirement plan currently provided by the Company, and
(iv) any life insurance, health and accident plan or arrangement made available
by the Company, now or in the future, to its executives and key management
employees, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements.
(b) four (4) weeks of paid vacation in each calendar
year.
(c) an automobile paid for by the Company for use in
the performance of his services under this Agreement, in a manner substantially
consistent with past practices.
(d) membership fees paid for by the Company with
respect to any of the Executive's business-related club memberships (it being
understood that such membership fees shall not include any fees for country
clubs or other similar, primarily social, clubs).
The Company also shall implement, as soon as reasonably
practicable after the Effective Date, a long-term incentive plan. Although the
ability to receive stock of the Company may not be available for such plan, the
plan
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nevertheless shall provide the Executive with opportunities and incentives
reasonably economically equivalent to those provided by similar companies, many
of which do provide stock options and/or other types of stock grants as
components of their long-term incentive plans.
4.4 Expenses. Subject to such policies as may from
time to time be established by the Board, the Company shall pay or reimburse
Executive for all reasonable expenses actually incurred or paid by Executive
during the Term in the performance of his services under this Agreement, upon
presentation of expense statements or vouchers or such other supporting
information as the Company may require.
5. Termination.
5.1 Cause. The Company may terminate Executive's
employment hereunder for Cause. For the purposes of this Agreement, the Company
shall have "Cause" to terminate Executive's employment hereunder only by reason
of any one or more of the following:
(i) Executive's commission of any crime
(whether or not involving the Company or any of its
subsidiaries) which constitutes a felony in the
jurisdiction involved; or
(ii) Executive's commission of an act of
fraud upon the Company or any or its subsidiaries; or
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(iii) Executive's willful failure to
perform in all material respects his duties hereunder
in accordance with the terms of this Agreement which
failure (other than by reason of death or disability)
continues uncorrected for a period of ten (10) days
after Executive shall have received written notice
from the Board stating with specificity the nature of
such failure or refusal.
5.2 Termination by the Executive. Executive may
terminate his employment hereunder upon thirty (30) days' prior written notice
to the Company for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean (i) the material diminution of the nature or scope of the duties
assigned to Executive from that contemplated by Section 3 hereof, (ii) a
reduction in Executive's Base Salary, or a material reduction in Executive's
fringe benefits or any other material failure by the Company to comply with
Section 4 hereof, other than any such reduction or failure as shall apply to all
salaried employees of the Company generally, (iii) ceased participation by
Executive, for any reason other than as a result of any action by Executive, in
any employee benefit plan of the Company with respect to which Executive is or
was, prior to such time, eligible to participate, (iv) the relocation of
Executive's principal place of employment more than twenty (20) miles from the
location specified in Section 3 hereof without Executive's consent, (v) the
requirement that Executive engage in a
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substantial amount of additional travel (as compared to Executive's past
practices) in the performance of his duties hereunder without Executive's
consent, or (vi) any other material breach by the Company of its obligations
under this Agreement. Good Reason shall not exist in the event of a sale or
disposition of a subsidiary or division of the Company and Executive either (a)
voluntarily agrees to be employed by such subsidiary or division, or (b) is
offered a comparable position with the Company. For purposes hereof, comparable
shall encompass such items as salary, benefits, duties and geographic location.
5.3 Notice of Termination. Any termination by the
Company pursuant to Section 5.1 above or by Executive pursuant to Section 5.2
above shall be communicated by written notice (the "Notice of Termination"),
which notice shall indicate the specific termination provision in this Agreement
relied upon for such termination.
5.4 Date of Termination. "Date of Termination"
shall mean (i) if Executive's employment is terminated pursuant to Section 5.1
or 5.2 hereof, the date specified in the Notice of Termination, and (ii) if
Executive's employment is terminated by the Company other than for Cause or by
Executive other than for Good Reason, the date on which a Notice of Termination
is given.
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5.5 Payments upon Termination. (a) If the employment
of Executive with the Company is terminated (i) by the Company other than for
Cause or (ii) by the Executive for Good Reason, then Executive shall be entitled
to receive from the Company, and the Company shall pay to Executive, a lump sum
severance payment equal to the greater of (x) the aggregate Base Salary (at the
rate in effect at the Date of Termination) that Executive would have received
for the remainder of the Term if his employment had not been terminated, or (y)
the aggregate amount of the Base Salary (at the rate in effect at the Date of
Termination) which would be paid for a period of twenty-four (24) months, plus,
in either case, such other benefits or reimbursement of expenses payable to the
Executive pursuant to Sections 4.3 and 4.4 hereof (including, without
limitation, the SERP), and less such amounts as shall be required to be withheld
by the Company pursuant to applicable laws and regulations (the "Severance
Amount"). The Severance Amount shall not be present-valued and shall be payable
by the Company to Executive within thirty (30) days after Executive's
termination. Executive shall not be required to mitigate the Company's
obligation to pay the full Severance Amount by seeking employment or otherwise
and the Severance Amount shall not be decreased or otherwise offset as a result
of
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any compensation received by Executive from employment in any capacity. The
Severance Amount shall be deemed compensation payable to Executive for the
purpose of determining the total amount due Executive pursuant to the SERP.
(b) If the employment of Executive with the Company is
terminated (i) by the Company for Cause, or (ii) by the Executive other than for
Good Reason, then the Executive shall be entitled to receive, and the Company
shall pay to Executive, (x) all accrued and unpaid Base Salary and amounts due
Executive in respect of perquisites provided him hereunder through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
(y) Base Salary payable in lieu of accrued and unused vacation days in
accordance with the policies of the Company from time to time in effect, and (z)
all accrued and unpaid benefits payable to Executive pursuant to any benefit
plan or otherwise through the Date of Termination. Upon the payment of the
foregoing amounts, the Company shall have no further obligations to Executive
under this Agreement.
5.6 Limited Payment Cap. (a) Notwithstanding any
other provision in this Agreement to the contrary, this Section 5.6 will apply
in the event that the Executive would receive payments under this Agreement or
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under any other plan, agreement, program, or policy that is sponsored by the
Company, which relate to a change in control of the Company ("parachute
payments"), and any such parachute payments are determined by the Company to be
subject to excise tax under Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code") ("excess parachute payments"). If it is determined that
such excise tax would cause the net after-tax parachute payments to be paid to
or on behalf of the Executive to be less than what he would have netted, after
federal, state and local income and social security taxes, had the present value
of his total parachute payments equalled $1 less than three times his "base
amount," as defined under Section 280G(b)(3)(A) of the Code, then such
Executive's total parachute payments shall be reduced (but by the minimum
possible amount), so that their aggregate present value equals $1 less than
three times the Executive's base amount. If it is determined that any payment to
or on behalf of the Executive will be an excess parachute payment, the Company
shall promptly give the Executive notice to that effect, a copy of the detailed
calculation thereof, and an explanation of the calculation of the reduction (if
any) required hereunder. If a reduction hereunder is required, the Executive may
then elect which payments shall be eliminated or reduced (as long
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as after such election the aggregate present value of the remaining parachute
payments is less than three times the Executive's base amount). The Executive
shall advise the Company in writing of his election within 10 days of his
receipt of this notice. If no such election is made by the Executive, the
Company may elect which and how much of such payments to eliminate or reduce to
accomplish this required reduction, and shall promptly thereafter pay or
distribute for the Executive's benefit such amounts as become due under this
Agreement.
(b) It shall be assumed for purposes of the calculations
described in subsection (a) above that the Executive's income tax rate will be
computed based upon the maximum effective marginal federal, state and local
income tax rates and Medicare tax on earned income, with such maximum effective
federal income tax rate to be computed with regard to Section 68 of the Code,
and applying any available deduction of state and local income taxes for federal
income tax purposes. In the event that the Executive and the Company are unable
to agree as to the amount of the reduction described in subsection (a) above, if
any, the Executive shall select a law firm or public accounting firm from among
those regularly consulted by the Company regarding federal income tax matters,
such law firm
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or accounting firm shall determine the amount of such reduction, and such firm's
determination shall be final and binding upon the Executive and the Company.
6. Death or Disability.
6.1 Death. If Executive dies during the Term, this
Employment Agreement, other than the provisions of Section 6.3 hereof, shall
terminate.
6.2 Disability. If, during the Term, Executive
becomes physically or mentally disabled, whether totally or partially, so that
he is unable substantially to perform his services hereunder for (i) a period of
six (6) consecutive months or (ii) for shorter periods aggregating six (6)
months during any eighteen (18) month period, the Company may at any time after
the last day of the six (6) consecutive months of disability or the day on which
the shorter periods of disability equal an aggregate of six (6) months, by
written notice to Executive (the "Disability Notice"), terminate the Term of the
Executive's employment hereunder.
6.3 Payments upon Death or Disability. Upon a
termination due to the death or disability of Executive, Executive (or, in the
event of a termination as a result of the death of Executive, Executive's estate
(or a designated beneficiary thereof)) shall be entitled to receive from the
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Company, and the Company shall pay to Executive (or Executive's estate, if
applicable) the amount of any accrued and unpaid Base Salary and other benefits
and reimbursement of expenses payable to the Executive hereunder pursuant to
Sections 4.3 and 4.4 hereof as of the date of Executive's death or the date of
the Disability Notice, as applicable. In addition, for a period of thirty (30)
months following the date of such termination, the Company shall continue to pay
and provide to Executive and Executive's dependents at the Date of Termination
all medical benefits pursuant to any plans and programs in which Executive was
entitled to participate immediately prior to the Date of Termination as if
Executive were still employed by the Company pursuant hereto. If Executive's
participation in any plan or program pursuant to which such medical benefits are
provided to Executive is barred as a result of such termination, the Company
shall arrange to provide Executive and Executive's dependents with benefits
substantially similar on an after tax basis to those which Executive was
entitled to receive under such plan or program.
7. Non-Competition; Confidentiality.
7.1 Non-Competition. Executive agrees that, during
the Term and for a period of two years following the date of a termination of
Executive's employment under
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Section 5 hereof (the "Restricted Period"), he will not, directly or indirectly,
own, manage, operate or control, or participate in the ownership, management,
operation or control of, or be connected as an officer, employee, partner,
director or otherwise with, or have any financial interest in, or aid or assist
anyone else in the conduct of, any entity or business which competes with any
material business conducted by the Company or by any group, division or
subsidiary of the Company, in any area where such business is being conducted,
or for which negotiations to conduct business are pending, at the date of such
termination (a "Competitive Operation"); provided, however, that Executive may
acquire, solely as an investment and through market purchases, securities of any
corporation that are traded on any national securities exchange or listed on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), if Executive is not a controlling person of, or a member of a group
which controls, such corporation; and Executive does not, directly or
indirectly, own more than one percent (1%) of any class of securities of such
corporation.
7.2 Confidential Information; Personal Relationships.
Executive agrees that, during the Term and thereafter, he shall keep secret and
retain in strictest
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confidence, and shall not use for his benefit or the benefit of others, any and
all confidential information relating to the Company, including, without
limitation, trade secrets, customer lists, financial plans or projections,
pricing policies, marketing plans or strategies, business acquisition or
divestiture plans, new personnel acquisition plans, technical processes,
inventions and other research projects heretofore or hereafter learned by
Executive, and he shall not disclose any such information to anyone outside the
Company or any of its subsidiaries, except as required by law in connection with
any judicial or administrative proceeding or inquiry (provided prior written
notice thereof is given by Executive to the Company) or except with the
Company's prior written consent, unless such information is known generally to
the public or the trade through sources other than Executive's unauthorized
disclosure.
7.3 Property of the Company. All memoranda, notes,
lists, records and other documents or papers (and all copies thereof), including
such items stored in computer memories, or microfiche or by any other means,
made or compiled by or on behalf of Executive, or made available to Executive,
relating to the Company or any successors thereto, are and shall be the property
of the Company or any such
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successor and shall be delivered to the Company or any such
successor promptly at any time on request.
7.4 Employees of the Company. During the Restricted
Period, the Executive shall not, directly or indirectly, hire, solicit or
encourage to leave the employment of the Company, any of its employees or hire
any such employee who has left the employment of the Company.
7.5 Rights and Remedies Upon Breach. If Executive
breaches, or threatens to commit a breach of, any of the provisions of this
Section 7 (the "Restrictive Covenants"), the Company and any successor thereto
shall have the following rights and remedies, each of which shall be independent
of the other and severally enforceable, and all of which shall be in addition
to, and not in lieu of, any other rights and remedies available to the Company
under law or in equity.
(a) Specific Performance. The right and remedy to
have the Restrictive Covenants specifically enforced by any arbitrator or any
court having equity jurisdiction, it being acknowledged and agreed by Executive
that any such breach or threatened breach will cause irreparable injury to the
Company and that money damages will not provide an adequate remedy to the
Company.
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(b) Accounting. The right and remedy to require
Executive to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or other benefits (collectively, "Benefits")
derived or received by Executive as the result of any transactions constituting
a breach of any of the Restrictive Covenants, and Executive shall account for
and pay over such Benefits to the Company.
7.6 Severability of Covenants. Executive acknowledges
and agrees that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. Notwithstanding the
foregoing, if any arbitrator or court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable or should be
reduced, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect without regard to the invalid
Restrictive Covenants or portions thereof.
8. Insurance. The Company may, from time to time, apply for
and take out, in its own name and at its own expense, naming itself or others as
the designated beneficiary (which it may change from time to time), policies for
health, accident, disability or other insurance upon Executive in any amount
that it may deem necessary or appropriate
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to protect its interest. Executive agrees to aid the Company in procuring such
insurance by submitting to reasonable medical examinations and by filling out,
executing and delivering such applications and other instruments in writing as
may reasonably be required by any insurance company to which the Company may
apply for insurance.
9. Indemnification. To the fullest extent permitted or
required by the laws of the State of Ohio, the Company shall indemnify and hold
harmless Executive, in accordance with the terms of such laws, if Executive is
made a party, or threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Executive is or was an officer or
director of the Company, or any subsidiary or affiliate of the Company in which
capacity Executive is or was serving at the Company's request, against expenses
(including reasonable attorneys' fees), judgments, fines and amounts paid in
settlement, all as actually and reasonably incurred by him in connection with
such action, suit or proceeding. In the event it becomes necessary for Executive
to take any action to enforce the indemnity provided herein, Executive shall be
promptly reimbursed by the Company for all costs and
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<PAGE> 44
expenses associated therewith (including reasonable attorneys' fees).
10. Arbitration. All disputes arising under or related to this
Agreement shall be resolved by arbitration. Such arbitration shall be conducted
by an arbitrator mutually selected by the Company and Executive (or, if the
Company and Executive are unable to agree upon an arbitrator within ten (10)
days, then the Company and Executive shall each select an arbitrator, and the
arbitrators so selected shall mutually select a third arbitrator, who shall
resolve such dispute). Such arbitration shall be conducted in accordance with
the applicable rules of the American Arbitration Association. Any decision
rendered by an arbitrator pursuant hereto may be enforced by a court of
competent jurisdiction without review of such decision by such court. The
Company shall pay all of the fees and expenses of the arbitrators and the other
costs of arbitration. The Company also shall pay Executive's reasonable legal
fees and expenses incurred in connection with any successful enforcement by
Executive of his rights hereunder.
11. Miscellaneous.
11.1 Notices. Any notice or other communication
required or permitted hereunder shall be in writing
20
<PAGE> 45
and shall be delivered personally, telecopied or sent by certified or registered
mail, postage prepaid, or by Federal Express or similar overnight courier. Any
such notice shall be deemed given when delivered:
(i) if to the Company, to:
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Attn: General Counsel
Telecopy No.: (513) 721-3404
(ii) if to Executive, to:
Thomas E. Petry
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Telecopy No.: (513) 721-2779
11.2 Waivers and Amendments. This Agreement may not
be amended, modified, superseded or cancelled except by a written instrument
signed by the Company and Executive. No delay on the part of any party in
exercising any right or remedy hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right or remedy, nor any
single or partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy.
11.3 Survival. The provisions of Sections 7 and 9
hereof shall survive the Term, irrespective of the reasons for termination of
Executive's employment hereunder.
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<PAGE> 46
11.4 Governing Law. This Agreement shall be governed
by and construed in accordance with the law of the State of Ohio applicable to
agreements made and to be performed entirely within such State.
11.5 Entire Agreement. This Agreement (including
the schedules, annexes and exhibits hereto) contain the entire agreement between
the parties with respect to the subject matter hereof and supersede all prior
agreements, proposals or representations, arrangements or understandings,
written or oral, with respect thereto.
11.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by any party hereto without the prior
written consent of the other party.
11.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an
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<PAGE> 47
original but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EAGLE-PICHER INDUSTRIES, INC.
By /s/ ANDRIES RUIJSSENAARS
------------------------
Name: Andries Ruijssenaars
Title: President and Chief
Operating Officer
/s/ THOMAS E. PETRY
------------------------
Thomas E. Petry
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<PAGE> 48
ANNEX A
TO EMPLOYMENT AGREEMENT OF
THOMAS E. PETRY
Position: Chairman and Chief Executive Officer
Duties: Serves as presiding officer of the Board of Directors. In that
capacity guides the deliberations and activities of that group.
Responsible for directing the Company toward the objective of
providing maximum profit and return on invested capital.
Establishes short-term and long-range objectives, plans, and
policies, subject to the approval of the Board of Directors.
Represents the Company before all of its constituencies,
including, without limitation, major customers, the financial
community, the Company's operations and host communities, and
the public.
<PAGE> 49
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 29, 1996, between EAGLE-PICHER
INDUSTRIES, INC. (the "Company"), having its principal executive offices at 580
Walnut Street, Cincinnati, Ohio 45201, and Carroll D. Curless (the "Executive"),
residing at 2117 Beechcreek Lane, Cincinnati, Ohio 45233.
W I T N E S S E T H :
WHEREAS, the Executive is employed on a full-time basis by the
Company and is currently serving as Vice President and Controller of the
Company; and
WHEREAS, on January 7, 1991, the Company and certain of its
affiliates (collectively, the "Debtors") each filed a petition for relief under
chapter 11, title 11 of the United States Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Southern District of Ohio, Western
Division (the "Bankruptcy Court"); and
WHEREAS, by order dated November 18, 1996 (the "Confirmation
Order") the Bankruptcy Court and the United States District Court for the
Southern District of Ohio, Western Division, confirmed the Third Amended
Consolidated Plan of Reorganization, dated August 28, 1996 (the "Plan"), in the
Debtors' chapter 11 cases; and
WHEREAS, the Plan contemplates that the Company and the
Executive will enter into this Agreement which is to
<PAGE> 50
become effective on the Effective Date (as such term is defined in the Plan).
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter contained, the parties hereto agree as follows:
1. Employment; Effectiveness of Agreement. The obligation of
the Company to employ the Executive, and of the Executive to serve the Company,
pursuant to this Agreement shall become effective automatically on the Effective
Date.
2. Term. The term of Executive's employment hereunder
(hereinafter referred to as the "Term") shall commence on the Effective Date and
shall continue thereafter until the date which is thirty (30) months from and
after the date on which the Confirmation Order was entered by the Bankruptcy
Court, unless terminated earlier as hereinafter provided.
3. Duties and Extent of Services. During the Term, Executive
agrees to continue to serve as the Vice President and Controller of the Company
faithfully and to the best of his ability under the direction of the Chief
Executive Officer and the Board of Directors of the Company (the "Board"), and
agrees to devote substantially all of his business time, energy and skill to
such employment. Execu-
2
<PAGE> 51
tive agrees to perform the duties commensurate with the position of Vice
President and Controller of the Company, which shall include, without
limitation, the duties set forth on Annex A hereto. Executive agrees also to
perform such specific duties and services of a senior executive nature as the
Chief Executive Officer of the Company or the Board shall reasonably request
consistent with Executive's position as Vice President and Controller. The
principal place of employment of Executive shall be Cincinnati, Ohio and,
subject to such reasonable travel as the performance of his duties may require,
such principal place of employment shall not be changed unless the Executive
otherwise consents.
4. Compensation.
4.1 Base Salary. The Company agrees to pay or cause
to be paid to Executive during the Term, a base salary equal to the amount of
his base salary as at the date immediately preceding the Effective Date, subject
to adjustment as provided below (as so adjusted, the "Base Salary"). The Base
Salary shall be payable in accordance with the regular payroll policies of the
Company from time to time in effect, less such deductions as shall be required
to be withheld by applicable law and regulations. On each December 1 during the
Term, the Board or a committee
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<PAGE> 52
thereof, shall review Executive's Base Salary as then in effect and may, but
shall not be obligated to, increase such salary by such amount as the Board (or
such committee), in its sole discretion, shall determine.
4.2 Discretionary Bonus. In addition to Base Salary,
the Executive shall be entitled to receive an annual cash bonus based on the
performance of the Company and of the Executive, the amount of which, if any,
shall be determined by the Board (or a committee thereof). Determinations made
by the Board (or such committee) with respect to the amount, if any, of annual
bonuses to be paid to Executive under this Agreement shall be final and
conclusive.
4.3 Benefits and Perquisites. During the Term, the
Company shall provide Executive with and Executive shall be entitled to the
following benefits and perquisites:
(a) participation in and the receipt of benefits
under (i) all of the Company's employee benefit plans and arrangements in effect
from time to time applicable to salaried employees of the Company, (ii) all
short-term and long-term incentive plans of the Company as in effect from time
to time, (iii) a supplemental executive retirement plan (the "SERP")
substantially in accordance with and no less favorable to Executive than the
terms,
4
<PAGE> 53
provisions and benefits under the supplemental executive retirement plan
currently provided by the Company, and (iv) any life insurance, health and
accident plan or arrangement made available by the Company, now or in the
future, to its executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements.
(b) four (4) weeks of paid vacation in each calendar
year.
(c) an automobile paid for by the Company for use in
the performance of his services under this Agreement, in a manner substantially
consistent with past practices.
(d) membership fees paid for by the Company with
respect to any of the Executive's business-related club memberships (it being
understood that such membership fees shall not include any fees for country
clubs or other similar, primarily social, clubs).
The Company also shall implement, as soon as reasonably
practicable after the Effective Date, a long-term incentive plan. Although the
ability to receive stock of the Company may not be available for such plan, the
plan nevertheless shall provide the Executive with opportunities and incentives
reasonably economically equivalent to those
5
<PAGE> 54
provided by similar companies, many of which do provide stock options and/or
other types of stock grants as components of their long-term incentive plans.
4.4 Expenses. Subject to such policies as may from
time to time be established by the Board, the Company shall pay or reimburse
Executive for all reasonable expenses actually incurred or paid by Executive
during the Term in the performance of his services under this Agreement, upon
presentation of expense statements or vouchers or such other supporting
information as the Company may require.
5. Termination.
5.1 Cause. The Company may terminate Executive's
employment hereunder for Cause. For the purposes of this Agreement, the Company
shall have "Cause" to terminate Executive's employment hereunder only by reason
of any one or more of the following:
(i) Executive's commission of any crime
(whether or not involving the Company or any of its
subsidiaries) which constitutes a felony in the
jurisdiction involved; or
(ii) Executive's commission of an act of
fraud upon the Company or any or its subsidiaries; or
(iii) Executive's willful failure to
perform in all material respects his duties hereunder
in accordance with the terms of this Agreement which
failure (other than by reason of death or disability)
continues
6
<PAGE> 55
uncorrected for a period of ten (10) days after
Executive shall have received written notice from the
Board stating with specificity the nature of such
failure or refusal.
5.2 Termination by the Executive. Executive may
terminate his employment hereunder upon thirty (30) days' prior written notice
to the Company for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean (i) the material diminution of the nature or scope of the duties
assigned to Executive from that contemplated by Section 3 hereof, (ii) a
reduction in Executive's Base Salary, or a material reduction in Executive's
fringe benefits or any other material failure by the Company to comply with
Section 4 hereof, other than any such reduction or failure as shall apply to all
salaried employees of the Company generally, (iii) ceased participation by
Executive, for any reason other than as a result of any action by Executive, in
any employee benefit plan of the Company with respect to which Executive is or
was, prior to such time, eligible to participate, (iv) the relocation of
Executive's principal place of employment more than twenty (20) miles from the
location specified in Section 3 hereof without Executive's consent, (v) the
requirement that Executive engage in a substantial amount of additional travel
(as compared to Executive's past practices) in the performance of his duties
7
<PAGE> 56
hereunder without Executive's consent, or (vi) any other material breach by the
Company of its obligations under this Agreement. Good Reason shall not exist in
the event of a sale or disposition of a subsidiary or division of the Company
and Executive either (a) voluntarily agrees to be employed by such subsidiary or
division, or (b) is offered a comparable position with the Company. For purposes
hereof, comparable shall encompass such items as salary, benefits, duties and
geographic location.
5.3 Notice of Termination. Any termination by the
Company pursuant to Section 5.1 above or by Executive pursuant to Section 5.2
above shall be communicated by written notice (the "Notice of Termination"),
which notice shall indicate the specific termination provision in this Agreement
relied upon for such termination.
5.4 Date of Termination. "Date of Termination" shall
mean (i) if Executive's employment is terminated pursuant to Section 5.1 or 5.2
hereof, the date specified in the Notice of Termination, and (ii) if Executive's
employment is terminated by the Company other than for Cause or by Executive
other than for Good Reason, the date on which a Notice of Termination is given.
5.5 Payments upon Termination. (a) If the employment
of Executive with the Company is terminated (i)
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<PAGE> 57
by the Company other than for Cause or (ii) by the Executive for Good Reason,
then Executive shall be entitled to receive from the Company, and the Company
shall pay to Executive, a lump sum severance payment equal to the greater of (x)
the aggregate Base Salary (at the rate in effect at the Date of Termination)
that Executive would have received for the remainder of the Term if his
employment had not been terminated, or (y) the aggregate amount of the Base
Salary (at the rate in effect at the Date of Termination) which would be paid
for a period of twenty-four (24) months, plus, in either case, such other
benefits or reimbursement of expenses payable to the Executive pursuant to
Sections 4.3 and 4.4 hereof (including, without limitation, the SERP), and less
such amounts as shall be required to be withheld by the Company pursuant to
applicable laws and regulations (the "Severance Amount"). The Severance Amount
shall not be present-valued and shall be payable by the Company to Executive
within thirty (30) days after Executive's termination. Executive shall not be
required to mitigate the Company's obligation to pay the full Severance Amount
by seeking employment or otherwise and the Severance Amount shall not be
decreased or otherwise offset as a result of any compensation received by
Executive from employment in any capacity. The Severance Amount shall be deemed
9
<PAGE> 58
compensation payable to Executive for the purpose of determining the total
amount due Executive pursuant to the SERP.
(b) If the employment of Executive with the Company is
terminated (i) by the Company for Cause, or (ii) by the Executive other than for
Good Reason, then the Executive shall be entitled to receive, and the Company
shall pay to Executive, (x) all accrued and unpaid Base Salary and amounts due
Executive in respect of perquisites provided him hereunder through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
(y) Base Salary payable in lieu of accrued and unused vacation days in
accordance with the policies of the Company from time to time in effect, and (z)
all accrued and unpaid benefits payable to Executive pursuant to any benefit
plan or otherwise through the Date of Termination. Upon the payment of the
foregoing amounts, the Company shall have no further obligations to Executive
under this Agreement.
5.6 Limited Payment Cap. (a) Notwithstanding any
other provision in this Agreement to the contrary, this Section 5.6 will apply
in the event that the Executive would receive payments under this Agreement or
under any other plan, agreement, program, or policy that is sponsored by the
Company, which relate to a change in
10
<PAGE> 59
control of the Company ("parachute payments"), and any such parachute payments
are determined by the Company to be subject to excise tax under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") ("excess parachute
payments"). If it is determined that such excise tax would cause the net
after-tax parachute payments to be paid to or on behalf of the Executive to be
less than what he would have netted, after federal, state and local income and
social security taxes, had the present value of his total parachute payments
equalled $1 less than three times his "base amount," as defined under Section
280G(b)(3)(A) of the Code, then such Executive's total parachute payments shall
be reduced (but by the minimum possible amount), so that their aggregate present
value equals $1 less than three times the Executive's base amount. If it is
determined that any payment to or on behalf of the Executive will be an excess
parachute payment, the Company shall promptly give the Executive notice to that
effect, a copy of the detailed calculation thereof, and an explanation of the
calculation of the reduction (if any) required hereunder. If a reduction
hereunder is required, the Executive may then elect which payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the remaining parachute payments is less than three times the
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<PAGE> 60
Executive's base amount). The Executive shall advise the Company in writing of
his election within 10 days of his receipt of this notice. If no such election
is made by the Executive, the Company may elect which and how much of such
payments to eliminate or reduce to accomplish this required reduction, and shall
promptly thereafter pay or distribute for the Executive's benefit such amounts
as become due under this Agreement.
(b) It shall be assumed for purposes of the calculations
described in subsection (a) above that the Executive's income tax rate will be
computed based upon the maximum effective marginal federal, state and local
income tax rates and Medicare tax on earned income, with such maximum effective
federal income tax rate to be computed with regard to Section 68 of the Code,
and applying any available deduction of state and local income taxes for federal
income tax purposes. In the event that the Executive and the Company are unable
to agree as to the amount of the reduction described in subsection (a) above, if
any, the Executive shall select a law firm or public accounting firm from among
those regularly consulted by the Company regarding federal income tax matters,
such law firm or accounting firm shall determine the amount of such
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<PAGE> 61
reduction, and such firm's determination shall be final and binding upon the
Executive and the Company.
6. Death or Disability.
6.1 Death. If Executive dies during the Term, this
Employment Agreement, other than the provisions of Section 6.3 hereof, shall
terminate.
6.2 Disability. If, during the Term, Executive
becomes physically or mentally disabled, whether totally or partially, so that
he is unable substantially to perform his services hereunder for (i) a period of
six (6) consecutive months or (ii) for shorter periods aggregating six (6)
months during any eighteen (18) month period, the Company may at any time after
the last day of the six (6) consecutive months of disability or the day on which
the shorter periods of disability equal an aggregate of six (6) months, by
written notice to Executive (the "Disability Notice"), terminate the Term of the
Executive's employment hereunder.
6.3 Payments upon Death or Disability. Upon a
termination due to the death or disability of Executive, Executive (or, in the
event of a termination as a result of the death of Executive, Executive's estate
(or a designated beneficiary thereof)) shall be entitled to receive from the
Company, and the Company shall pay to Executive (or Execu-
13
<PAGE> 62
tive's estate, if applicable) the amount of any accrued and unpaid Base Salary
and other benefits and reimbursement of expenses payable to the Executive
hereunder pursuant to Sections 4.3 and 4.4 hereof as of the date of Executive's
death or the date of the Disability Notice, as applicable. In addition, for a
period of thirty (30) months following the date of such termination, the Company
shall continue to pay and provide to Executive and Executive's dependents at the
Date of Termination all medical benefits pursuant to any plans and programs in
which Executive was entitled to participate immediately prior to the Date of
Termination as if Executive were still employed by the Company pursuant hereto.
If Executive's participation in any plan or program pursuant to which such
medical benefits are provided to Executive is barred as a result of such
termination, the Company shall arrange to provide Executive and Executive's
dependents with benefits substantially similar on an after tax basis to those
which Executive was entitled to receive under such plan or program.
7. Non-Competition; Confidentiality.
7.1 Non-Competition. Executive agrees that, during
the Term and for a period of two years following the date of a termination of
Executive's employment under Section 5 hereof (the "Restricted Period"), he will
not,
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directly or indirectly, own, manage, operate or control, or participate in the
ownership, management, operation or control of, or be connected as an officer,
employee, partner, director or otherwise with, or have any financial interest
in, or aid or assist anyone else in the conduct of, any entity or business which
competes with any material business conducted by the Company or by any group,
division or subsidiary of the Company, in any area where such business is being
conducted, or for which negotiations to conduct business are pending, at the
date of such termination (a "Competitive Operation"); provided, however, that
Executive may acquire, solely as an investment and through market purchases,
securities of any corporation that are traded on any national securities
exchange or listed on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), if Executive is not a controlling person of, or a
member of a group which controls, such corporation; and Executive does not,
directly or indirectly, own more than one percent (1%) of any class of
securities of such corporation.
7.2 Confidential Information; Personal Relationships.
Executive agrees that, during the Term and thereafter, he shall keep secret and
retain in strictest confidence, and shall not use for his benefit or the benefit
15
<PAGE> 64
of others, any and all confidential information relating to the Company,
including, without limitation, trade secrets, customer lists, financial plans or
projections, pricing policies, marketing plans or strategies, business
acquisition or divestiture plans, new personnel acquisition plans, technical
processes, inventions and other research projects heretofore or hereafter
learned by Executive, and he shall not disclose any such information to anyone
outside the Company or any of its subsidiaries, except as required by law in
connection with any judicial or administrative proceeding or inquiry (provided
prior written notice thereof is given by Executive to the Company) or except
with the Company's prior written consent, unless such information is known
generally to the public or the trade through sources other than Executive's
unauthorized disclosure.
7.3 Property of the Company. All memoranda, notes,
lists, records and other documents or papers (and all copies thereof), including
such items stored in computer memories, or microfiche or by any other means,
made or compiled by or on behalf of Executive, or made available to Executive,
relating to the Company or any successors thereto, are and shall be the property
of the Company or any such successor and shall be delivered to the Company or
any such successor promptly at any time on request.
16
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7.4 Employees of the Company. During the Restricted
Period, the Executive shall not, directly or indirectly, hire, solicit or
encourage to leave the employment of the Company, any of its employees or hire
any such employee who has left the employment of the Company.
7.5 Rights and Remedies Upon Breach. If Executive
breaches, or threatens to commit a breach of, any of the provisions of this
Section 7 (the "Restrictive Covenants"), the Company and any successor thereto
shall have the following rights and remedies, each of which shall be independent
of the other and severally enforceable, and all of which shall be in addition
to, and not in lieu of, any other rights and remedies available to the Company
under law or in equity.
(a) Specific Performance. The right and remedy to
have the Restrictive Covenants specifically enforced by any arbitrator or any
court having equity jurisdiction, it being acknowledged and agreed by Executive
that any such breach or threatened breach will cause irreparable injury to the
Company and that money damages will not provide an adequate remedy to the
Company.
(b) Accounting. The right and remedy to require
Executive to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or
17
<PAGE> 66
other benefits (collectively, "Benefits") derived or received by Executive as
the result of any transactions constituting a breach of any of the Restrictive
Covenants, and Executive shall account for and pay over such Benefits to the
Company.
7.6 Severability of Covenants. Executive acknowledges
and agrees that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. Notwithstanding the
foregoing, if any arbitrator or court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable or should be
reduced, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect without regard to the invalid
Restrictive Covenants or portions thereof.
8. Insurance. The Company may, from time to time, apply for
and take out, in its own name and at its own expense, naming itself or others as
the designated beneficiary (which it may change from time to time), policies for
health, accident, disability or other insurance upon Executive in any amount
that it may deem necessary or appropriate to protect its interest. Executive
agrees to aid the Company in procuring such insurance by submitting to
reasonable medical examinations and by filling out, executing and
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<PAGE> 67
delivering such applications and other instruments in writing as may reasonably
be required by any insurance company to which the Company may apply for
insurance.
9. Indemnification. To the fullest extent permitted or
required by the laws of the State of Ohio, the Company shall indemnify and hold
harmless Executive, in accordance with the terms of such laws, if Executive is
made a party, or threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Executive is or was an officer or
director of the Company, or any subsidiary or affiliate of the Company in which
capacity Executive is or was serving at the Company's request, against expenses
(including reasonable attorneys' fees), judgments, fines and amounts paid in
settlement, all as actually and reasonably incurred by him in connection with
such action, suit or proceeding. In the event it becomes necessary for Executive
to take any action to enforce the indemnity provided herein, Executive shall be
promptly reimbursed by the Company for all costs and expenses associated
therewith (including reasonable attorneys' fees).
10. Arbitration. All disputes arising under or related to this
Agreement shall be resolved by arbitration.
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<PAGE> 68
Such arbitration shall be conducted by an arbitrator mutually selected by the
Company and Executive (or, if the Company and Executive are unable to agree upon
an arbitrator within ten (10) days, then the Company and Executive shall each
select an arbitrator, and the arbitrators so selected shall mutually select a
third arbitrator, who shall resolve such dispute). Such arbitration shall be
conducted in accordance with the applicable rules of the American Arbitration
Association. Any decision rendered by an arbitrator pursuant hereto may be
enforced by a court of competent jurisdiction without review of such decision by
such court. The Company shall pay all of the fees and expenses of the
arbitrators and the other costs of arbitration. The Company also shall pay
Executive's reasonable legal fees and expenses incurred in connection with any
successful enforcement by Executive of his rights hereunder.
11. Miscellaneous.
11.1 Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, telecopied or sent by certified or registered mail, postage prepaid,
or by Federal Express or similar overnight courier. Any such notice shall be
deemed given when delivered:
20
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(i) if to the Company, to:
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Attn: General Counsel
Telecopy No.: (513) 721-3404
(ii) if to Executive, to:
Carroll D. Curless
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Telecopy No.: (513) 721-2779
11.2 Waivers and Amendments. This Agreement may not
be amended, modified, superseded or cancelled except by a written instrument
signed by the Company and Executive. No delay on the part of any party in
exercising any right or remedy hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right or remedy, nor any
single or partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy.
11.3 Survival. The provisions of Sections 7 and 9
hereof shall survive the Term, irrespective of the reasons for termination of
Executive's employment hereunder.
11.4 Governing Law. This Agreement shall be governed
by and construed in accordance with the law of the State of Ohio applicable to
agreements made and to be performed entirely within such State.
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11.5 Entire Agreement. This Agreement (including the
schedules, annexes and exhibits hereto) contain the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
agreements, proposals or representations, arrangements or understandings,
written or oral, with respect thereto.
11.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by any party hereto without the prior
written consent of the other party.
11.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EAGLE-PICHER INDUSTRIES, INC.
By /s/ THOMAS E. PETRY
-------------------------
Name: Thomas E. Petry
Title: Chairman of the Board
of Directors and Chief
Executive Officer
/s/ CARROLL D. CURLESS
-------------------------
Carroll D. Curless
22
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ANNEX A
TO EMPLOYMENT AGREEMENT OF
CARROLL D. CURLESS
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Position: Vice President and Controller
Duties: Directs and has responsibility for the Company's accounting
practices, the maintenance of its fiscal records, and the
preparation of its financial reports. Directs and has
overall supervisory responsibility for general and property
accounting, internal auditing, cost accounting, and
budgetary controls. Appraises operating results in terms of
costs, budgets, policies of operations, trends and increased
profit opportunities.
<PAGE> 72
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 29, 1996, between EAGLE-PICHER
INDUSTRIES, INC. (the "Company"), having its principal executive offices at 580
Walnut Street, Cincinnati, Ohio 45201, and Andries Ruijssenaars (the
"Executive"), residing at 4875 Councilrock Lane, Cincinnati, Ohio 45243.
W I T N E S S E T H :
WHEREAS, the Executive is employed on a full-time basis by the
Company and is currently serving as President and Chief Operating Officer of the
Company; and
WHEREAS, on January 7, 1991, the Company and certain of its
affiliates (collectively, the "Debtors") each filed a petition for relief under
chapter 11, title 11 of the United States Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Southern District of Ohio, Western
Division (the "Bankruptcy Court"); and
WHEREAS, by order dated November 18, 1996 (the "Confirmation
Order") the Bankruptcy Court and the United States District Court for the
Southern District of Ohio, Western Division, confirmed the Third Amended
Consolidated Plan of Reorganization, dated August 28, 1996 (the "Plan"), in the
Debtors' chapter 11 cases; and
WHEREAS, the Plan contemplates that the Company and the
Executive will enter into this Agreement which is to
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become effective on the Effective Date (as such term is defined in the Plan).
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter contained, the parties hereto agree as follows:
1. Employment; Effectiveness of Agreement. The obligation of
the Company to employ the Executive, and of the Executive to serve the Company,
pursuant to this Agreement shall become effective automatically on the
Effective Date.
2. Term. The term of Executive's employment hereunder
(hereinafter referred to as the "Term") shall commence on the Effective Date and
shall continue thereafter until the date which is thirty (30) months from and
after the date on which the Confirmation Order was entered by the Bankruptcy
Court, unless terminated earlier as hereinafter provided.
3. Duties and Extent of Services. During the Term, Executive
agrees to continue to serve as the President and Chief Operating Officer of the
Company faithfully and to the best of his ability under the direction of the
Chief Executive Officer and the Board of Directors of the Company (the "Board"),
and agrees to devote substantially all of his business time, energy and skill to
such employment.
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Executive agrees to perform the duties commensurate with the position of
President and Chief Operating Officer of the Company, which shall include,
without limitation, the duties set forth on Annex A hereto. Executive agrees
also to perform such specific duties and services of a senior executive nature
as the Chief Executive Officer of the Company or the Board shall reasonably
request consistent with Executive's position as President and Chief Operating
Officer. The principal place of employment of Executive shall be Cincinnati,
Ohio and, subject to such reasonable travel as the performance of his duties may
require, such principal place of employment shall not be changed unless the
Executive otherwise consents.
4. Compensation.
4.1 Base Salary. The Company agrees to pay or cause
to be paid to Executive during the Term, a base salary equal to the amount of
his base salary as at the date immediately preceding the Effective Date, subject
to adjustment as provided below (as so adjusted, the "Base Salary"). The Base
Salary shall be payable in accordance with the regular payroll policies of the
Company from time to time in effect, less such deductions as shall be required
to be withheld by applicable law and regulations. On each December 1 during the
Term, the Board or a committee
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thereof, shall review Executive's Base Salary as then in effect and may, but
shall not be obligated to, increase such salary by such amount as the Board (or
such committee), in its sole discretion, shall determine.
4.2 Discretionary Bonus. In addition to Base Salary, the
Executive shall be entitled to receive an annual cash bonus based on the
performance of the Company and of the Executive, the amount of which, if any,
shall be determined by the Board (or a committee thereof). Determinations made
by the Board (or such committee) with respect to the amount, if any, of annual
bonuses to be paid to Executive under this Agreement shall be final and
conclusive.
4.3 Benefits and Perquisites. During the Term, the Company
shall provide Executive with and Executive shall be entitled to the following
benefits and perquisites:
(a) participation in and the receipt of
benefits under (i) all of the Company's employee benefit plans and arrangements
in effect from time to time applicable to salaried employees of the Company,
(ii) all short-term and long-term incentive plans of the Company as in effect
from time to time, (iii) a supplemental executive retirement plan (the "SERP")
substantially in accordance with and no less favorable to Executive than the
terms,
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provisions and benefits under the supplemental executive retirement plan
currently provided by the Company, and (iv) any life insurance, health and
accident plan or arrangement made available by the Company, now or in the
future, to its executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements.
(b) four (4) weeks of paid vacation in each calendar
year.
(c) an automobile paid for by the Company for use in
the performance of his services under this Agreement, in a manner substantially
consistent with past practices.
(d) membership fees paid for by the Company with
respect to any of the Executive's business-related club memberships (it being
understood that such membership fees shall not include any fees for country
clubs or other similar, primarily social, clubs).
The Company also shall implement, as soon as reasonably
practicable after the Effective Date, a long-term incentive plan. Although the
ability to receive stock of the Company may not be available for such plan, the
plan nevertheless shall provide the Executive with opportunities and incentives
reasonably economically equivalent to those
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provided by similar companies, many of which do provide stock options and/or
other types of stock grants as components of their long-term incentive plans.
4.4 Expenses. Subject to such policies as may from
time to time be established by the Board, the Company shall pay or reimburse
Executive for all reasonable expenses actually incurred or paid by Executive
during the Term in the performance of his services under this Agreement, upon
presentation of expense statements or vouchers or such other supporting
information as the Company may require.
5. Termination.
5.1 Cause. The Company may terminate Executive's
employment hereunder for Cause. For the purposes of this Agreement, the Company
shall have "Cause" to terminate Executive's employment hereunder only by reason
of any one or more of the following:
(i) Executive's commission of any
crime (whether or not involving the Company
or any of its subsidiaries) which constitutes
a felony in the jurisdiction involved; or
(ii) Executive's commission of an
act of fraud upon the Company or any or its
subsidiaries; or
(iii) Executive's willful failure to
perform in all material respects his duties hereunder
in accordance with the terms of this Agreement which
failure (other than by reason of death or disability)
continues
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uncorrected for a period of ten (10) days after
Executive shall have received written notice from the
Board stating with specificity the nature of such
failure or
refusal.
5.2 Termination by the Executive. Executive
may terminate his employment hereunder upon thirty (30) days' prior written
notice to the Company for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean (i) the material diminution of the nature or scope of the
duties assigned to Executive from that contemplated by Section 3 hereof, (ii) a
reduction in Executive's Base Salary, or a material reduction in Executive's
fringe benefits or any other material failure by the Company to comply with
Section 4 hereof, other than any such reduction or failure as shall apply to all
salaried employees of the Company generally, (iii) ceased participation by
Executive, for any reason other than as a result of any action by Executive, in
any employee benefit plan of the Company with respect to which Executive is or
was, prior to such time, eligible to participate, (iv) the relocation of
Executive's principal place of employment more than twenty (20) miles from the
location specified in Section 3 hereof without Executive's consent, (v) the
requirement that Executive engage in a substantial amount of additional travel
(as compared to Executive's past practices) in the performance of his duties
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hereunder without Executive's consent, or (vi) any other material breach by the
Company of its obligations under this Agreement. Good Reason shall not exist in
the event of a sale or disposition of a subsidiary or division of the Company
and Executive either (a) voluntarily agrees to be employed by such subsidiary or
division, or (b) is offered a comparable position with the Company. For purposes
hereof, comparable shall encompass such items as salary, benefits, duties and
geographic location.
5.3 Notice of Termination. Any termination by the
Company pursuant to Section 5.1 above or by Executive pursuant to Section 5.2
above shall be communicated by written notice (the "Notice of Termination"),
which notice shall indicate the specific termination provision in this Agreement
relied upon for such termination.
5.4 Date of Termination. "Date of Termination"
shall mean (i) if Executive's employment is terminated pursuant to Section 5.1
or 5.2 hereof, the date specified in the Notice of Termination, and (ii) if
Executive's employment is terminated by the Company other than for Cause or by
Executive other than for Good Reason, the date on which a Notice of Termination
is given.
5.5 Payments upon Termination. (a) If the employment
of Executive with the Company is terminated (i)
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by the Company other than for Cause or (ii) by the Executive for Good Reason,
then Executive shall be entitled to receive from the Company, and the Company
shall pay to Executive, a lump sum severance payment equal to the greater of (x)
the aggregate Base Salary (at the rate in effect at the Date of Termination)
that Executive would have received for the remainder of the Term if his
employment had not been terminated, or (y) the aggregate amount of the Base
Salary (at the rate in effect at the Date of Termination) which would be paid
for a period of twenty-four (24) months, plus, in either case, such other
benefits or reimbursement of expenses payable to the Executive pursuant to
Sections 4.3 and 4.4 hereof (including, without limitation, the SERP), and less
such amounts as shall be required to be withheld by the Company pursuant to
applicable laws and regulations (the "Severance Amount"). The Severance Amount
shall not be present-valued and shall be payable by the Company to Executive
within thirty (30) days after Executive's termination. Executive shall not be
required to mitigate the Company's obligation to pay the full Severance Amount
by seeking employment or otherwise and the Severance Amount shall not be
decreased or otherwise offset as a result of any compensation received by
Executive from employment in any capacity. The Severance Amount shall be deemed
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compensation payable to Executive for the purpose of determining the total
amount due Executive pursuant to the SERP.
(b) If the employment of Executive with the Company is
terminated (i) by the Company for Cause, or (ii) by the Executive other than for
Good Reason, then the Executive shall be entitled to receive, and the Company
shall pay to Executive, (x) all accrued and unpaid Base Salary and amounts due
Executive in respect of perquisites provided him hereunder through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
(y) Base Salary payable in lieu of accrued and unused vacation days in
accordance with the policies of the Company from time to time in effect, and (z)
all accrued and unpaid benefits payable to Executive pursuant to any benefit
plan or otherwise through the Date of Termination. Upon the payment of the
foregoing amounts, the Company shall have no further obligations to Executive
under this Agreement.
5.6. Limited Payment Cap. (a) Notwithstanding any
other provision in this Agreement to the contrary, this Section 5.6 will apply
in the event that the Executive would receive payments under this Agreement or
under any other plan, agreement, program, or policy that is sponsored by the
Company, which relate to a change in
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control of the Company ("parachute payments"), and any such parachute payments
are determined by the Company to be subject to excise tax under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") ("excess parachute
payments"). If it is determined that such excise tax would cause the net
after-tax parachute payments to be paid to or on behalf of the Executive to be
less than what he would have netted, after federal, state and local income and
social security taxes, had the present value of his total parachute payments
equalled $1 less than three times his "base amount," as defined under Section
280G(b)(3)(A) of the Code, then such Executive's total parachute payments shall
be reduced (but by the minimum possible amount), so that their aggregate present
value equals $1 less than three times the Executive's base amount. If it is
determined that any payment to or on behalf of the Executive will be an excess
parachute payment, the Company shall promptly give the Executive notice to that
effect, a copy of the detailed calculation thereof, and an explanation of the
calculation of the reduction (if any) required hereunder. If a reduction
hereunder is required, the Executive may then elect which payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the remaining parachute payments is less than three times the
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Executive's base amount). The Executive shall advise the Company in writing of
his election within 10 days of his receipt of this notice. If no such election
is made by the Executive, the Company may elect which and how much of such
payments to eliminate or reduce to accomplish this required reduction, and shall
promptly thereafter pay or distribute for the Executive's benefit such amounts
as become due under this Agreement.
(b) It shall be assumed for purposes of the calculations
described in subsection (a) above that the Executive's income tax rate will be
computed based upon the maximum effective marginal federal, state and local
income tax rates and Medicare tax on earned income, with such maximum effective
federal income tax rate to be computed with regard to Section 68 of the Code,
and applying any available deduction of state and local income taxes for federal
income tax purposes. In the event that the Executive and the Company are unable
to agree as to the amount of the reduction described in subsection (a) above, if
any, the Executive shall select a law firm or public accounting firm from among
those regularly consulted by the Company regarding federal income tax matters,
such law firm or accounting firm shall determine the amount of such
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reduction, and such firm's determination shall be final and binding upon the
Executive and the Company.
6. Death or Disability.
6.1 Death. If Executive dies during the Term, this
Employment Agreement, other than the provisions of Section 6.3 hereof, shall
terminate.
6.2 Disability. If, during the Term, Executive
becomes physically or mentally disabled, whether totally or partially, so that
he is unable substantially to perform his services hereunder for (i) a period of
six (6) consecutive months or (ii) for shorter periods aggregating six (6)
months during any eighteen (18) month period, the Company may at any time after
the last day of the six (6) consecutive months of disability or the day on which
the shorter periods of disability equal an aggregate of six (6) months, by
written notice to Executive (the "Disability Notice"), terminate the Term of the
Executive's employment hereunder.
6.3 Payments upon Death or Disability. Upon a
termination due to the death or disability of Executive, Executive (or, in the
event of a termination as a result of the death of Executive, Executive's estate
(or a designated beneficiary thereof)) shall be entitled to receive from the
Company, and the Company shall pay to Executive (or Executive's
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estate, if applicable) the amount of any accrued and unpaid Base Salary and
other benefits and reimbursement of expenses payable to the Executive hereunder
pursuant to Sections 4.3 and 4.4 hereof as of the date of Executive's death or
the date of the Disability Notice, as applicable. In addition, for a period of
thirty (30) months following the date of such termination, the Company shall
continue to pay and provide to Executive and Executive's dependents at the Date
of Termination all medical benefits pursuant to any plans and programs in which
Executive was entitled to participate immediately prior to the Date of
Termination as if Executive were still employed by the Company pursuant hereto.
If Executive's participation in any plan or program pursuant to which such
medical benefits are provided to Executive is barred as a result of such
termination, the Company shall arrange to provide Executive and Executive's
dependents with benefits substantially similar on an after tax basis to those
which Executive was entitled to receive under such plan or program.
7. Non-Competition; Confidentiality.
7.1 Non-Competition. Executive agrees that, during
the Term and for a period of two years following the date of a termination of
Executive's employment under Section 5 hereof (the "Restricted Period"), he will
not,
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directly or indirectly, own, manage, operate or control, or participate in the
ownership, management, operation or control of, or be connected as an officer,
employee, partner, director or otherwise with, or have any financial interest
in, or aid or assist anyone else in the conduct of, any entity or business which
competes with any material business conducted by the Company or by any group,
division or subsidiary of the Company, in any area where such business is being
conducted, or for which negotiations to conduct business are pending, at the
date of such termination (a "Competitive Operation"); provided, however, that
Executive may acquire, solely as an investment and through market purchases,
securities of any corporation that are traded on any national securities
exchange or listed on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), if Executive is not a controlling person of, or a
member of a group which controls, such corporation; and Executive does not,
directly or indirectly, own more than one percent (1%) of any class of
securities of such corporation.
7.2 Confidential Information; Personal Relationships.
Executive agrees that, during the Term and thereafter, he shall keep secret and
retain in strictest confidence, and shall not use for his benefit or the benefit
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of others, any and all confidential information relating to the Company,
including, without limitation, trade secrets, customer lists, financial plans or
projections, pricing policies, marketing plans or strategies, business
acquisition or divestiture plans, new personnel acquisition plans, technical
processes, inventions and other research projects heretofore or hereafter
learned by Executive, and he shall not disclose any such information to anyone
outside the Company or any of its subsidiaries, except as required by law in
connection with any judicial or administrative proceeding or inquiry (provided
prior written notice thereof is given by Executive to the Company) or except
with the Company's prior written consent, unless such information is known
generally to the public or the trade through sources other than Executive's
unauthorized disclosure.
7.3 Property of the Company. All memoranda, notes,
lists, records and other documents or papers (and all copies thereof), including
such items stored in computer memories, or microfiche or by any other means,
made or compiled by or on behalf of Executive, or made available to Executive,
relating to the Company or any successors thereto, are and shall be the property
of the Company or any such successor and shall be delivered to the Company or
any such successor promptly at any time on request.
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7.4 Employees of the Company. During the Restricted
Period, the Executive shall not, directly or indirectly, hire, solicit or
encourage to leave the employment of the Company, any of its employees or hire
any such employee who has left the employment of the Company.
7.5 Rights and Remedies Upon Breach. If Executive
breaches, or threatens to commit a breach of, any of the provisions of this
Section 7 (the "Restrictive Covenants"), the Company and any successor thereto
shall have the following rights and remedies, each of which shall be independent
of the other and severally enforceable, and all of which shall be in addition
to, and not in lieu of, any other rights and remedies available to the Company
under law or in equity.
(a) Specific Performance. The right and remedy to
have the Restrictive Covenants specifically enforced by any arbitrator or any
court having equity jurisdiction, it being acknowledged and agreed by Executive
that any such breach or threatened breach will cause irreparable injury to the
Company and that money damages will not provide an adequate remedy to the
Company.
(b) Accounting. The right and remedy to require
Executive to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or
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other benefits (collectively, "Benefits") derived or received by Executive as
the result of any transactions constituting a breach of any of the Restrictive
Covenants, and Executive shall account for and pay over such Benefits to the
Company.
7.6 Severability of Covenants. Executive acknowledges
and agrees that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. Notwithstanding the
foregoing, if any arbitrator or court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable or should be
reduced, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect without regard to the invalid
Restrictive Covenants or portions thereof.
8. Insurance. The Company may, from time to time, apply for
and take out, in its own name and at its own expense, naming itself or others as
the designated beneficiary (which it may change from time to time), policies for
health, accident, disability or other insurance upon Executive in any amount
that it may deem necessary or appropriate to protect its interest. Executive
agrees to aid the Company in procuring such insurance by submitting to
reasonable medical examinations and by filling out, executing and
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delivering such applications and other instruments in writing as may reasonably
be required by any insurance company to which the Company may apply for
insurance.
9. Indemnification. To the fullest extent permitted or
required by the laws of the State of Ohio, the Company shall indemnify and hold
harmless Executive, in accordance with the terms of such laws, if Executive is
made a party, or threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Executive is or was an officer or
director of the Company, or any subsidiary or affiliate of the Company in which
capacity Executive is or was serving at the Company's request, against expenses
(including reasonable attorneys' fees), judgments, fines and amounts paid in
settlement, all as actually and reasonably incurred by him in connection with
such action, suit or proceeding. In the event it becomes necessary for Executive
to take any action to enforce the indemnity provided herein, Executive shall be
promptly reimbursed by the Company for all costs and expenses associated
therewith (including reasonable attorneys' fees).
10. Arbitration. All disputes arising under or related to this
Agreement shall be resolved by arbitration.
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Such arbitration shall be conducted by an arbitrator mutually selected by the
Company and Executive (or, if the Company and Executive are unable to agree upon
an arbitrator within ten (10) days, then the Company and Executive shall each
select an arbitrator, and the arbitrators so selected shall mutually select a
third arbitrator, who shall resolve such dispute). Such arbitration shall be
conducted in accordance with the applicable rules of the American Arbitration
Association. Any decision rendered by an arbitrator pursuant hereto may be
enforced by a court of competent jurisdiction without review of such decision by
such court. The Company shall pay all of the fees and expenses of the
arbitrators and the other costs of arbitration. The Company also shall pay
Executive's reasonable legal fees and expenses incurred in connection with any
successful enforcement by Executive of his rights hereunder.
11. Miscellaneous.
11.1 Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, telecopied or sent by certified or registered mail, postage prepaid,
or by Federal Express or similar overnight courier. Any such notice shall be
deemed given when delivered:
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(i) if to the Company, to:
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Attn: General Counsel
Telecopy No.: (513) 721-3404
(ii) if to Executive, to:
Andries Ruijssenaars
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Telecopy No.: (513) 721-2779
11.2 Waivers and Amendments. This Agreement may not
be amended, modified, superseded or cancelled except by a written instrument
signed by the Company and Executive. No delay on the part of any party in
exercising any right or remedy hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right or remedy, nor any
single or partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy.
11.3 Survival. The provisions of Sections 7 and 9
hereof shall survive the Term, irrespective of the reasons for termination of
Executive's employment hereunder.
11.4 Governing Law. This Agreement shall be governed
by and construed in accordance with the law of the State of Ohio applicable to
agreements made and to be performed entirely within such State.
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11.5 Entire Agreement. This Agreement (including
the schedules, annexes and exhibits hereto) contain the entire agreement between
the parties with respect to the subject matter hereof and supersede all prior
agreements, proposals or representations, arrangements or understandings,
written or oral, with respect thereto.
11.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by any party hereto without the prior
written consent of the other party.
11.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EAGLE-PICHER INDUSTRIES, INC.
By /s/ THOMAS E. PETRY
----------------------------
Name: Thomas E. Petry
Title: Chairman of the Board
of Directors and Chief
Executive Officer
/s/ ANDRIES RUIJSSENAARS
----------------------------
Andries Ruijssenaars
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ANNEX A
TO EMPLOYMENT AGREEMENT OF
ANDRIES RUIJSSENAARS
Position: President and Chief Operating Officer
Duties: Directs, administers and coordinates the activities of the
Company in accordance with policies, goals and objectives
established by the Chief Executive Officer and the Board of
Directors. Assists the Chief Executive Officer in the
development of Company policies and goals for, among others,
operations, personnel, financial performance and growth. Has
direct line responsibility for all operating units.
<PAGE> 95
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 29, 1996, between EAGLE-PICHER
INDUSTRIES, INC. (the "Company"), having its principal executive offices at 580
Walnut Street, Cincinnati, Ohio 45201, and James A. Ralston (the "Executive"),
residing at 2486 Royalview Court, Cincinnati, Ohio 45244.
W I T N E S S E T H :
WHEREAS, the Executive is employed on a full-time basis by the
Company and is currently serving as Vice President, General Counsel and
Secretary of the Company; and
WHEREAS, on January 7, 1991, the Company and certain of its
affiliates (collectively, the "Debtors") each filed a petition for relief under
chapter 11, title 11 of the United States Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Southern District of Ohio, Western
Division (the "Bankruptcy Court"); and
WHEREAS, by order dated November 18, 1996 (the "Confirmation
Order") the Bankruptcy Court and the United States District Court for the
Southern District of Ohio, Western Division, confirmed the Third Amended
Consolidated Plan of Reorganization, dated August 28, 1996 (the "Plan"), in the
Debtors' chapter 11 cases; and
WHEREAS, the Plan contemplates that the Company and the
Executive will enter into this Agreement which is to
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become effective on the Effective Date (as such term is defined in the Plan).
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter contained, the parties hereto agree as follows:
1. Employment; Effectiveness of Agreement. The obligation of
the Company to employ the Executive, and of the Executive to serve the Company,
pursuant to this Agreement shall become effective automatically on the Effective
Date.
2. Term. The term of Executive's employment hereunder
(hereinafter referred to as the "Term") shall commence on the Effective Date and
shall continue thereafter until the date which is thirty (30) months from and
after the date on which the Confirmation Order was entered by the Bankruptcy
Court, unless terminated earlier as hereinafter provided.
3. Duties and Extent of Services. During the Term, Executive
agrees to continue to serve as the Vice President, General Counsel and Secretary
of the Company faithfully and to the best of his ability under the direction of
the Chief Executive Officer and the Board of Directors of the Company (the
"Board"), and agrees to devote substantially all of his business time, energy
and skill to
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such employment. Executive agrees to perform the duties commensurate with the
position of Vice President, General Counsel and Secretary of the Company, which
shall include, without limitation, the duties set forth on Annex A hereto.
Executive agrees also to perform such specific duties and services of a senior
executive nature as the Chief Executive Officer of the Company or the Board
shall reasonably request consistent with Executive's position as Vice President,
General Counsel and Secretary. The principal place of employment of Executive
shall be Cincinnati, Ohio and, subject to such reasonable travel as the
performance of his duties may require, such principal place of employment shall
not be changed unless the Executive otherwise consents.
4. Compensation.
4.1 Base Salary. The Company agrees to pay or cause
to be paid to Executive during the Term, a base salary equal to the amount of
his base salary as at the date immediately preceding the Effective Date, subject
to adjustment as provided below (as so adjusted, the "Base Salary"). The Base
Salary shall be payable in accordance with the regular payroll policies of the
Company from time to time in effect, less such deductions as shall be required
to be withheld by applicable law and regulations. On each December 1 during the
Term, the Board or a committee
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thereof, shall review Executive's Base Salary as then in effect and may, but
shall not be obligated to, increase such salary by such amount as the Board (or
such committee), in its sole discretion, shall determine.
4.2 Discretionary Bonus. In addition to Base Salary, the
Executive shall be entitled to receive an annual cash bonus based on the
performance of the Company and of the Executive, the amount of which, if any,
shall be determined by the Board (or a committee thereof). Determinations made
by the Board (or such committee) with respect to the amount, if any, of annual
bonuses to be paid to Executive under this Agreement shall be final and
conclusive.
4.3 Benefits and Perquisites. During the Term, the Company
shall provide Executive with and Executive shall be entitled to the following
benefits and perquisites:
(a) participation in and the receipt of benefits
under (i) all of the Company's employee benefit plans and arrangements in effect
from time to time applicable to salaried employees of the Company, (ii) all
short-term and long-term incentive plans of the Company as in effect from time
to time, (iii) a supplemental executive retirement plan (the "SERP")
substantially in accordance with and no less favorable to Executive than the
terms,
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provisions and benefits under the supplemental executive retirement plan
currently provided by the Company, and (iv) any life insurance, health and
accident plan or arrangement made available by the Company, now or in the
future, to its executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements.
(b) four (4) weeks of paid vacation in each calendar
year.
(c) an automobile paid for by the Company for use in
the performance of his services under this Agreement, in a manner substantially
consistent with past practices.
(d) membership fees paid for by the Company with
respect to any of the Executive's business-related club memberships (it being
understood that such membership fees shall not include any fees for country
clubs or other similar, primarily social, clubs).
The Company also shall implement, as soon as reasonably
practicable after the Effective Date, a long-term incentive plan. Although the
ability to receive stock of the Company may not be available for such plan, the
plan nevertheless shall provide the Executive with opportunities and incentives
reasonably economically equivalent to those
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provided by similar companies, many of which do provide stock options and/or
other types of stock grants as components of their long-term incentive plans.
4.4 Expenses. Subject to such policies as may from
time to time be established by the Board, the Company shall pay or reimburse
Executive for all reasonable expenses actually incurred or paid by Executive
during the Term in the performance of his services under this Agreement, upon
presentation of expense statements or vouchers or such other supporting
information as the Company may require.
5. Termination.
5.1 Cause. The Company may terminate Executive's
employment hereunder for Cause. For the purposes of this Agreement, the Company
shall have "Cause" to terminate Executive's employment hereunder only by reason
of any one or more of the following:
(i) Executive's commission of any
crime (whether or not involving the Company
or any of its subsidiaries) which constitutes
a felony in the jurisdiction involved; or
(ii) Executive's commission of an
act of fraud upon the Company or any or its
subsidiaries; or
(iii) Executive's willful failure to
perform in all material respects his duties hereunder
in accordance with the terms of this Agreement which
failure (other than by reason of death or disability)
continues
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uncorrected for a period of ten (10) days after
Executive shall have received written notice from the
Board stating with specificity the nature of such
failure or
refusal.
5.2 Termination by the Executive. Executive may
terminate his employment hereunder upon thirty (30) days' prior written notice
to the Company for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean (i) the material diminution of the nature or scope of the duties
assigned to Executive from that contemplated by Section 3 hereof, (ii) a
reduction in Executive's Base Salary, or a material reduction in Executive's
fringe benefits or any other material failure by the Company to comply with
Section 4 hereof, other than any such reduction or failure as shall apply to all
salaried employees of the Company generally, (iii) ceased participation by
Executive, for any reason other than as a result of any action by Executive, in
any employee benefit plan of the Company with respect to which Executive is or
was, prior to such time, eligible to participate, (iv) the relocation of
Executive's principal place of employment more than twenty (20) miles from the
location specified in Section 3 hereof without Executive's consent, (v) the
requirement that Executive engage in a substantial amount of additional travel
(as compared to Executive's past practices) in the performance of his duties
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hereunder without Executive's consent, or (vi) any other material breach by the
Company of its obligations under this Agreement. Good Reason shall not exist in
the event of a sale or disposition of a subsidiary or division of the Company
and Executive either (a) voluntarily agrees to be employed by such subsidiary or
division, or (b) is offered a comparable position with the Company. For purposes
hereof, comparable shall encompass such items as salary, benefits, duties and
geographic location.
5.3 Notice of Termination. Any termination by the
Company pursuant to Section 5.1 above or by Executive pursuant to Section 5.2
above shall be communicated by written notice (the "Notice of Termination"),
which notice shall indicate the specific termination provision in this Agreement
relied upon for such termination.
5.4 Date of Termination. "Date of Termination"
shall mean (i) if Executive's employment is terminated pursuant to Section 5.1
or 5.2 hereof, the date specified in the Notice of Termination, and (ii) if
Executive's employment is terminated by the Company other than for Cause or by
Executive other than for Good Reason, the date on which a Notice of Termination
is given.
5.5 Payments upon Termination. (a) If the employment
of Executive with the Company is terminated (i)
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by the Company other than for Cause or (ii) by the Executive for Good Reason,
then Executive shall be entitled to receive from the Company, and the Company
shall pay to Executive, a lump sum severance payment equal to the greater of (x)
the aggregate Base Salary (at the rate in effect at the Date of Termination)
that Executive would have received for the remainder of the Term if his
employment had not been terminated, or (y) the aggregate amount of the Base
Salary (at the rate in effect at the Date of Termination) which would be paid
for a period of twenty-four (24) months, plus, in either case, such other
benefits or reimbursement of expenses payable to the Executive pursuant to
Sections 4.3 and 4.4 hereof (including, without limitation, the SERP), and less
such amounts as shall be required to be withheld by the Company pursuant to
applicable laws and regulations (the "Severance Amount"). The Severance Amount
shall not be present-valued and shall be payable by the Company to Executive
within thirty (30) days after Executive's termination. Executive shall not be
required to mitigate the Company's obligation to pay the full Severance Amount
by seeking employment or otherwise and the Severance Amount shall not be
decreased or otherwise offset as a result of any compensation received by
Executive from employment in any capacity. The Severance Amount shall be deemed
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compensation payable to Executive for the purpose of determining the total
amount due Executive pursuant to the SERP.
(b) If the employment of Executive with the Company is
terminated (i) by the Company for Cause, or (ii) by the Executive other than for
Good Reason, then the Executive shall be entitled to receive, and the Company
shall pay to Executive, (x) all accrued and unpaid Base Salary and amounts due
Executive in respect of perquisites provided him hereunder through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
(y) Base Salary payable in lieu of accrued and unused vacation days in
accordance with the policies of the Company from time to time in effect, and (z)
all accrued and unpaid benefits payable to Executive pursuant to any benefit
plan or otherwise through the Date of Termination. Upon the payment of the
foregoing amounts, the Company shall have no further obligations to Executive
under this Agreement.
5.6 Limited Payment Cap. (a) Notwithstanding any
other provision in this Agreement to the contrary, this Section 5.6 will apply
in the event that the Executive would receive payments under this Agreement or
under any other plan, agreement, program, or policy that is sponsored by the
Company, which relate to a change in
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control of the Company ("parachute payments"), and any such parachute payments
are determined by the Company to be subject to excise tax under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") ("excess parachute
payments"). If it is determined that such excise tax would cause the net
after-tax parachute payments to be paid to or on behalf of the Executive to be
less than what he would have netted, after federal, state and local income and
social security taxes, had the present value of his total parachute payments
equalled $1 less than three times his "base amount," as defined under Section
280G(b)(3)(A) of the Code, then such Executive's total parachute payments shall
be reduced (but by the minimum possible amount), so that their aggregate present
value equals $1 less than three times the Executive's base amount. If it is
determined that any payment to or on behalf of the Executive will be an excess
parachute payment, the Company shall promptly give the Executive notice to that
effect, a copy of the detailed calculation thereof, and an explanation of the
calculation of the reduction (if any) required hereunder. If a reduction
hereunder is required, the Executive may then elect which payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the remaining parachute payments is less than three times the
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Executive's base amount). The Executive shall advise the Company in writing of
his election within 10 days of his receipt of this notice. If no such election
is made by the Executive, the Company may elect which and how much of such
payments to eliminate or reduce to accomplish this required reduction, and shall
promptly thereafter pay or distribute for the Executive's benefit such amounts
as become due under this Agreement.
(b) It shall be assumed for purposes of the calculations
described in subsection (a) above that the Executive's income tax rate will be
computed based upon the maximum effective marginal federal, state and local
income tax rates and Medicare tax on earned income, with such maximum effective
federal income tax rate to be computed with regard to Section 68 of the Code,
and applying any available deduction of state and local income taxes for federal
income tax purposes. In the event that the Executive and the Company are unable
to agree as to the amount of the reduction described in subsection (a) above, if
any, the Executive shall select a law firm or public accounting firm from among
those regularly consulted by the Company regarding federal income tax matters,
such law firm or accounting firm shall determine the amount of such
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reduction, and such firm's determination shall be final and binding upon the
Executive and the Company.
6. Death or Disability.
6.1 Death. If Executive dies during the Term, this
Employment Agreement, other than the provisions of Section 6.3 hereof, shall
terminate.
6.2 Disability. If, during the Term, Executive
becomes physically or mentally disabled, whether totally or partially, so that
he is unable substantially to perform his services hereunder for (i) a period of
six (6) consecutive months or (ii) for shorter periods aggregating six (6)
months during any eighteen (18) month period, the Company may at any time after
the last day of the six (6) consecutive months of disability or the day on which
the shorter periods of disability equal an aggregate of six (6) months, by
written notice to Executive (the "Disability Notice"), terminate the Term of the
Executive's employment hereunder.
6.3 Payments upon Death or Disability. Upon a
termination due to the death or disability of Executive, Executive (or, in the
event of a termination as a result of the death of Executive, Executive's estate
(or a designated beneficiary thereof)) shall be entitled to receive from the
Company, and the Company shall pay to Executive (or Executive's
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estate, if applicable) the amount of any accrued and unpaid Base Salary and
other benefits and reimbursement of expenses payable to the Executive hereunder
pursuant to Sections 4.3 and 4.4 hereof as of the date of Executive's death or
the date of the Disability Notice, as applicable. In addition, for a period of
thirty (30) months following the date of such termination, the Company shall
continue to pay and provide to Executive and Executive's dependents at the Date
of Termination all medical benefits pursuant to any plans and programs in which
Executive was entitled to participate immediately prior to the Date of
Termination as if Executive were still employed by the Company pursuant hereto.
If Executive's participation in any plan or program pursuant to which such
medical benefits are provided to Executive is barred as a result of such
termination, the Company shall arrange to provide Executive and Executive's
dependents with benefits substantially similar on an after tax basis to those
which Executive was entitled to receive under such plan or program.
7. Non-Competition; Confidentiality.
7.1 Non-Competition. Executive agrees that, during
the Term and for a period of two years following the date of a termination of
Executive's employment under Section 5 hereof (the "Restricted Period"), he will
not,
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directly or indirectly, own, manage, operate or control, or participate in the
ownership, management, operation or control of, or be connected as an officer,
employee, partner, director or otherwise with, or have any financial interest
in, or aid or assist anyone else in the conduct of, any entity or business which
competes with any material business conducted by the Company or by any group,
division or subsidiary of the Company, in any area where such business is being
conducted, or for which negotiations to conduct business are pending, at the
date of such termination (a "Competitive Operation"); provided, however, that
Executive may acquire, solely as an investment and through market purchases,
securities of any corporation that are traded on any national securities
exchange or listed on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), if Executive is not a controlling person of, or a
member of a group which controls, such corporation; and Executive does not,
directly or indirectly, own more than one percent (1%) of any class of
securities of such corporation.
7.2 Confidential Information; Personal Relationships.
Executive agrees that, during the Term and thereafter, he shall keep secret and
retain in strictest confidence, and shall not use for his benefit or the benefit
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of others, any and all confidential information relating to the Company,
including, without limitation, trade secrets, customer lists, financial plans or
projections, pricing policies, marketing plans or strategies, business
acquisition or divestiture plans, new personnel acquisition plans, technical
processes, inventions and other research projects heretofore or hereafter
learned by Executive, and he shall not disclose any such information to anyone
outside the Company or any of its subsidiaries, except as required by law in
connection with any judicial or administrative proceeding or inquiry (provided
prior written notice thereof is given by Executive to the Company) or except
with the Company's prior written consent, unless such information is known
generally to the public or the trade through sources other than Executive's
unauthorized disclosure.
7.3 Property of the Company. All memoranda, notes,
lists, records and other documents or papers (and all copies thereof), including
such items stored in computer memories, or microfiche or by any other means,
made or compiled by or on behalf of Executive, or made available to Executive,
relating to the Company or any successors thereto, are and shall be the property
of the Company or any such successor and shall be delivered to the Company or
any such successor promptly at any time on request.
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7.4 Employees of the Company. During the Restricted
Period, the Executive shall not, directly or indirectly, hire, solicit or
encourage to leave the employment of the Company, any of its employees or hire
any such employee who has left the employment of the Company.
7.5 Rights and Remedies Upon Breach. If Executive
breaches, or threatens to commit a breach of, any of the provisions of this
Section 7 (the "Restrictive Covenants"), the Company and any successor thereto
shall have the following rights and remedies, each of which shall be independent
of the other and severally enforceable, and all of which shall be in addition
to, and not in lieu of, any other rights and remedies available to the Company
under law or in equity.
(a) Specific Performance. The right and remedy to
have the Restrictive Covenants specifically enforced by any arbitrator or any
court having equity jurisdiction, it being acknowledged and agreed by Executive
that any such breach or threatened breach will cause irreparable injury to the
Company and that money damages will not provide an adequate remedy to the
Company.
(b) Accounting. The right and remedy to require
Executive to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or
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other benefits (collectively, "Benefits") derived or received by Executive as
the result of any transactions constituting a breach of any of the Restrictive
Covenants, and Executive shall account for and pay over such Benefits to the
Company.
7.6 Severability of Covenants. Executive acknowledges
and agrees that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. Notwithstanding the
foregoing, if any arbitrator or court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable or should be
reduced, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect without regard to the invalid
Restrictive Covenants or portions thereof.
8. Insurance. The Company may, from time to time, apply for
and take out, in its own name and at its own expense, naming itself or others as
the designated beneficiary (which it may change from time to time), policies for
health, accident, disability or other insurance upon Executive in any amount
that it may deem necessary or appropriate to protect its interest. Executive
agrees to aid the Company in procuring such insurance by submitting to
reasonable medical examinations and by filling out, executing and
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delivering such applications and other instruments in writing as may reasonably
be required by any insurance company to which the Company may apply for
insurance.
9. Indemnification. To the fullest extent permitted or
required by the laws of the State of Ohio, the Company shall indemnify and hold
harmless Executive, in accordance with the terms of such laws, if Executive is
made a party, or threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Executive is or was an officer or
director of the Company, or any subsidiary or affiliate of the Company in which
capacity Executive is or was serving at the Company's request, against expenses
(including reasonable attorneys' fees), judgments, fines and amounts paid in
settlement, all as actually and reasonably incurred by him in connection with
such action, suit or proceeding. In the event it becomes necessary for Executive
to take any action to enforce the indemnity provided herein, Executive shall be
promptly reimbursed by the Company for all costs and expenses associated
therewith (including reasonable attorneys' fees).
10. Arbitration. All disputes arising under or related to this
Agreement shall be resolved by arbitration.
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Such arbitration shall be conducted by an arbitrator mutually selected by the
Company and Executive (or, if the Company and Executive are unable to agree upon
an arbitrator within ten (10) days, then the Company and Executive shall each
select an arbitrator, and the arbitrators so selected shall mutually select a
third arbitrator, who shall resolve such dispute). Such arbitration shall be
conducted in accordance with the applicable rules of the American Arbitration
Association. Any decision rendered by an arbitrator pursuant hereto may be
enforced by a court of competent jurisdiction without review of such decision by
such court. The Company shall pay all of the fees and expenses of the
arbitrators and the other costs of arbitration. The Company also shall pay
Executive's reasonable legal fees and expenses incurred in connection with any
successful enforcement by Executive of his rights hereunder.
11. Miscellaneous.
11.1 Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, telecopied or sent by certified or registered mail, postage prepaid,
or by Federal Express or similar overnight courier. Any such notice shall be
deemed given when delivered:
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(i) if to the Company, to:
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Attn: President
Telecopy No.: (513) 721-2779
(ii) if to Executive, to:
James A. Ralston
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Telecopy No.: (513) 721-3404
11.2 Waivers and Amendments. This Agreement may not
be amended, modified, superseded or cancelled except by a written instrument
signed by the Company and Executive. No delay on the part of any party in
exercising any right or remedy hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right or remedy, nor any
single or partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy.
11.3 Survival. The provisions of Sections 7 and 9
hereof shall survive the Term, irrespective of the reasons for termination of
Executive's employment hereunder.
11.4 Governing Law. This Agreement shall be governed
by and construed in accordance with the law of the State of Ohio applicable to
agreements made and to be performed entirely within such State.
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11.5 Entire Agreement. This Agreement (including
the schedules, annexes and exhibits hereto) contain the entire agreement between
the parties with respect to the subject matter hereof and supersede all prior
agreements, proposals or representations, arrangements or understandings,
written or oral, with respect thereto.
11.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by any party hereto without the prior
written consent of the other party.
11.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EAGLE-PICHER INDUSTRIES, INC.
By /s/ Thomas E. Petry
--------------------------------
Name: Thomas E. Petry
Title: Chairman of the Board
of Directors and Chief
Executive Officer
/s/ James A. Ralston
-----------------------------
James A. Ralston
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ANNEX A
TO EMPLOYMENT AGREEMENT OF
JAMES A. RALSTON
Position: Vice President, General Counsel and Secretary
Duties: As chief legal officer directs the legal affairs of the Company.
Provides legal counsel and guidance in the ordinary and special
activities of the Company to insure maximum protection of its
legal rights utilizing broad familiarity with most legal
disciplines. Participates in senior management policy
deliberations. Directs the defense of suits or claims and
manages the prosecution of the Company's claims against others.
Supervises the legal aspects of Company transactions and the
preparation of reports and statements of a legal nature.
Supervises the environmental compliance function within the
Company. Serves as Secretary in accordance with the charter,
by-laws, and other legal requirements. Coordinates meetings of
the Board of Directors and keeps minutes of such meetings.
Attends to Company notices and correspondence, and conducts
relations with shareholders on matters concerning meetings of
shareholders or share holdings.
<PAGE> 118
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 29, 1996, between EAGLE-PICHER
INDUSTRIES, INC. (the "Company"), having its principal executive offices at 580
Walnut Street, Cincinnati, Ohio 45201, and David N. Hall (the "Executive"),
residing at 8200 Brill Road, Cincinnati, Ohio 45243.
W I T N E S S E T H :
WHEREAS, the Executive is employed on a full-time basis by the
Company and is currently serving as Senior Vice President and Chief Financial
Officer of the Company; and
WHEREAS, on January 7, 1991, the Company and certain of its
affiliates (collectively, the "Debtors") each filed a petition for relief under
chapter 11, title 11 of the United States Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Southern District of Ohio, Western
Division (the "Bankruptcy Court"); and
WHEREAS, by order dated November 18, 1996 (the "Confirmation
Order") the Bankruptcy Court and the United States District Court for the
Southern District of Ohio, Western Division, confirmed the Third Amended
Consolidated Plan of Reorganization, dated August 28, 1996 (the "Plan"), in the
Debtors' chapter 11 cases; and
WHEREAS, the Plan contemplates that the Company and the
Executive will enter into this Agreement which is to
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become effective on the Effective Date (as such term is defined in the Plan).
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter contained, the parties hereto agree as follows:
1. Employment; Effectiveness of Agreement. The obligation of
the Company to employ the Executive, and of the Executive to serve the Company,
pursuant to this Agreement shall become effective automatically on the Effective
Date.
2. Term. The term of Executive's employment hereunder
(hereinafter referred to as the "Term") shall commence on the Effective Date and
shall continue thereafter until the date which is thirty (30) months from and
after the date on which the Confirmation Order was entered by the Bankruptcy
Court, unless terminated earlier as hereinafter provided.
3. Duties and Extent of Services. During the Term, Executive
agrees to continue to serve as the Senior Vice President and Chief Financial
Officer of the Company faithfully and to the best of his ability under the
direction of the Chief Executive Officer and the Board of Directors of the
Company (the "Board"), and agrees to devote substantially all of his business
time, energy and skill to
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such employment. Executive agrees to perform the duties commensurate with the
position of Senior Vice President and Chief Financial Officer of the Company,
which shall include, without limitation, the duties set forth on Annex A hereto.
Executive agrees also to perform such specific duties and services of a senior
executive nature as the Chief Executive Officer of the Company or the Board
shall reasonably request consistent with Executive's position as Senior Vice
President and Chief Financial Officer. The principal place of employment of
Executive shall be Cincinnati, Ohio and, subject to such reasonable travel as
the performance of his duties may require, such principal place of employment
shall not be changed unless the Executive otherwise consents.
4. Compensation.
4.1 Base Salary. The Company agrees to pay or cause
to be paid to Executive during the Term, a base salary equal to the amount of
his base salary as at the date immediately preceding the Effective Date, subject
to adjustment as provided below (as so adjusted, the "Base Salary"). The Base
Salary shall be payable in accordance with the regular payroll policies of the
Company from time to time in effect, less such deductions as shall be required
to be withheld by applicable law and regulations. On each December 1 during the
Term, the Board or a committee
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thereof, shall review Executive's Base Salary as then in effect and may, but
shall not be obligated to, increase such salary by such amount as the Board (or
such committee), in its sole discretion, shall determine.
4.2 Discretionary Bonus. In addition to Base Salary,
the Executive shall be entitled to receive an annual cash bonus based on the
performance of the Company and of the Executive, the amount of which, if any,
shall be determined by the Board (or a committee thereof). Determinations made
by the Board (or such committee) with respect to the amount, if any, of annual
bonuses to be paid to Executive under this Agreement shall be final and
conclusive.
4.3 Benefits and Perquisites. During the Term, the
Company shall provide Executive with and Executive shall be entitled to the
following benefits and perquisites:
(a) participation in and the receipt of benefits
under (i) all of the Company's employee benefit plans and arrangements in effect
from time to time applicable to salaried employees of the Company, (ii) all
short-term and long-term incentive plans of the Company as in effect from time
to time, (iii) a supplemental executive retirement plan (the "SERP")
substantially in accordance with and no less favorable to Executive than the
terms,
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provisions and benefits under the supplemental executive retirement plan
currently provided by the Company, and (iv) any life insurance, health and
accident plan or arrangement made available by the Company, now or in the
future, to its executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements.
(b) four (4) weeks of paid vacation in each calendar
year.
(c) an automobile paid for by the Company for use in
the performance of his services under this Agreement, in a manner substantially
consistent with past practices.
(d) membership fees paid for by the Company with
respect to any of the Executive's business-related club memberships (it being
understood that such membership fees shall not include any fees for country
clubs or other similar, primarily social, clubs).
The Company also shall implement, as soon as reasonably
practicable after the Effective Date, a long-term incentive plan. Although the
ability to receive stock of the Company may not be available for such plan, the
plan nevertheless shall provide the Executive with opportunities and incentives
reasonably economically equivalent to those
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provided by similar companies, many of which do provide stock options and/or
other types of stock grants as components of their long-term incentive plans.
4.4 Expenses. Subject to such policies as may from
time to time be established by the Board, the Company shall pay or reimburse
Executive for all reasonable expenses actually incurred or paid by Executive
during the Term in the performance of his services under this Agreement, upon
presentation of expense statements or vouchers or such other supporting
information as the Company may require.
5. Termination.
5.1 Cause. The Company may terminate Executive's
employment hereunder for Cause. For the purposes of this Agreement, the Company
shall have "Cause" to terminate Executive's employment hereunder only by reason
of any one or more of the following:
(i) Executive's commission of any crime
(whether or not involving the Company or any of its
subsidiaries) which constitutes a felony in the
jurisdiction involved; or
(ii) Executive's commission of an act of
fraud upon the Company or any or its subsidiaries; or
(iii) Executive's willful failure to perform
in all material respects his duties hereunder in
accordance with the terms of this Agreement which
failure (other than by reason of death or disability)
continues
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uncorrected for a period of ten (10) days after
Executive shall have received written notice from the
Board stating with specificity the nature of such
failure or refusal.
5.2 Termination by the Executive. Executive may
terminate his employment hereunder upon thirty (30) days' prior written notice
to the Company for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean (i) the material diminution of the nature or scope of the duties
assigned to Executive from that contemplated by Section 3 hereof, (ii) a
reduction in Executive's Base Salary, or a material reduction in Executive's
fringe benefits or any other material failure by the Company to comply with
Section 4 hereof, other than any such reduction or failure as shall apply to all
salaried employees of the Company generally, (iii) ceased participation by
Executive, for any reason other than as a result of any action by Executive, in
any employee benefit plan of the Company with respect to which Executive is or
was, prior to such time, eligible to participate, (iv) the relocation of
Executive's principal place of employment more than twenty (20) miles from the
location specified in Section 3 hereof without Executive's consent, (v) the
requirement that Executive engage in a substantial amount of additional travel
(as compared to Executive's past practices) in the performance of his duties
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hereunder without Executive's consent, or (vi) any other material breach by the
Company of its obligations under this Agreement. Good Reason shall not exist in
the event of a sale or disposition of a subsidiary or division of the Company
and Executive either (a) voluntarily agrees to be employed by such subsidiary or
division, or (b) is offered a comparable position with the Company. For purposes
hereof, comparable shall encompass such items as salary, benefits, duties and
geographic location.
5.3 Notice of Termination. Any termination by the
Company pursuant to Section 5.1 above or by Executive pursuant to Section 5.2
above shall be communicated by written notice (the "Notice of Termination"),
which notice shall indicate the specific termination provision in this Agreement
relied upon for such termination.
5.4 Date of Termination. "Date of Termination" shall
mean (i) if Executive's employment is terminated pursuant to Section 5.1 or 5.2
hereof, the date specified in the Notice of Termination, and (ii) if Executive's
employment is terminated by the Company other than for Cause or by Executive
other than for Good Reason, the date on which a Notice of Termination is given.
5.5 Payments upon Termination. (a) If the employment
of Executive with the Company is terminated (i)
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by the Company other than for Cause or (ii) by the Executive for Good Reason,
then Executive shall be entitled to receive from the Company, and the Company
shall pay to Executive, a lump sum severance payment equal to the greater of (x)
the aggregate Base Salary (at the rate in effect at the Date of Termination)
that Executive would have received for the remainder of the Term if his
employment had not been terminated, or (y) the aggregate amount of the Base
Salary (at the rate in effect at the Date of Termination) which would be paid
for a period of twenty-four (24) months, plus, in either case, such other
benefits or reimbursement of expenses payable to the Executive pursuant to
Sections 4.3 and 4.4 hereof (including, without limitation, the SERP), and less
such amounts as shall be required to be withheld by the Company pursuant to
applicable laws and regulations (the "Severance Amount"). The Severance Amount
shall not be present-valued and shall be payable by the Company to Executive
within thirty (30) days after Executive's termination. Executive shall not be
required to mitigate the Company's obligation to pay the full Severance Amount
by seeking employment or otherwise and the Severance Amount shall not be
decreased or otherwise offset as a result of any compensation received by
Executive from employment in any capacity. The Severance Amount shall be deemed
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compensation payable to Executive for the purpose of determining the total
amount due Executive pursuant to the SERP.
(b) If the employment of Executive with the Company is
terminated (i) by the Company for Cause, or (ii) by the Executive other than for
Good Reason, then the Executive shall be entitled to receive, and the Company
shall pay to Executive, (x) all accrued and unpaid Base Salary and amounts due
Executive in respect of perquisites provided him hereunder through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
(y) Base Salary payable in lieu of accrued and unused vacation days in
accordance with the policies of the Company from time to time in effect, and (z)
all accrued and unpaid benefits payable to Executive pursuant to any benefit
plan or otherwise through the Date of Termination. Upon the payment of the
foregoing amounts, the Company shall have no further obligations to Executive
under this Agreement.
5.6 Limited Payment Cap. (a) Notwithstanding any
other provision in this Agreement to the contrary, this Section 5.6 will apply
in the event that the Executive would receive payments under this Agreement or
under any other plan, agreement, program, or policy that is sponsored by the
Company, which relate to a change in
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control of the Company ("parachute payments"), and any such parachute payments
are determined by the Company to be subject to excise tax under Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") ("excess parachute
payments"). If it is determined that such excise tax would cause the net
after-tax parachute payments to be paid to or on behalf of the Executive to be
less than what he would have netted, after federal, state and local income and
social security taxes, had the present value of his total parachute payments
equalled $1 less than three times his "base amount," as defined under Section
280G(b)(3)(A) of the Code, then such Executive's total parachute payments shall
be reduced (but by the minimum possible amount), so that their aggregate present
value equals $1 less than three times the Executive's base amount. If it is
determined that any payment to or on behalf of the Executive will be an excess
parachute payment, the Company shall promptly give the Executive notice to that
effect, a copy of the detailed calculation thereof, and an explanation of the
calculation of the reduction (if any) required hereunder. If a reduction
hereunder is required, the Executive may then elect which payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the remaining parachute payments is less than three times the
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Executive's base amount). The Executive shall advise the Company in writing of
his election within 10 days of his receipt of this notice. If no such election
is made by the Executive, the Company may elect which and how much of such
payments to eliminate or reduce to accomplish this required reduction, and shall
promptly thereafter pay or distribute for the Executive's benefit such amounts
as become due under this Agreement.
(b) It shall be assumed for purposes of the calculations
described in subsection (a) above that the Executive's income tax rate will be
computed based upon the maximum effective marginal federal, state and local
income tax rates and Medicare tax on earned income, with such maximum effective
federal income tax rate to be computed with regard to Section 68 of the Code,
and applying any available deduction of state and local income taxes for federal
income tax purposes. In the event that the Executive and the Company are unable
to agree as to the amount of the reduction described in subsection (a) above, if
any, the Executive shall select a law firm or public accounting firm from among
those regularly consulted by the Company regarding federal income tax matters,
such law firm or accounting firm shall determine the amount of such
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reduction, and such firm's determination shall be final and binding upon the
Executive and the Company.
6. Death or Disability.
6.1 Death. If Executive dies during the Term, this
Employment Agreement, other than the provisions of Section 6.3 hereof, shall
terminate.
6.2 Disability. If, during the Term, Executive
becomes physically or mentally disabled, whether totally or partially, so that
he is unable substantially to perform his services hereunder for (i) a period of
six (6) consecutive months or (ii) for shorter periods aggregating six (6)
months during any eighteen (18) month period, the Company may at any time after
the last day of the six (6) consecutive months of disability or the day on which
the shorter periods of disability equal an aggregate of six (6) months, by
written notice to Executive (the "Disability Notice"), terminate the Term of the
Executive's employment hereunder.
6.3 Payments upon Death or Disability. Upon a
termination due to the death or disability of Executive, Executive (or, in the
event of a termination as a result of the death of Executive, Executive's estate
(or a designated beneficiary thereof)) shall be entitled to receive from the
Company, and the Company shall pay to Executive (or Execu-
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tive's estate, if applicable) the amount of any accrued and unpaid Base Salary
and other benefits and reimbursement of expenses payable to the Executive
hereunder pursuant to Sections 4.3 and 4.4 hereof as of the date of Executive's
death or the date of the Disability Notice, as applicable. In addition, for a
period of thirty (30) months following the date of such termination, the Company
shall continue to pay and provide to Executive and Executive's dependents at the
Date of Termination all medical benefits pursuant to any plans and programs in
which Executive was entitled to participate immediately prior to the Date of
Termination as if Executive were still employed by the Company pursuant hereto.
If Executive's participation in any plan or program pursuant to which such
medical benefits are provided to Executive is barred as a result of such
termination, the Company shall arrange to provide Executive and Executive's
dependents with benefits substantially similar on an after tax basis to those
which Executive was entitled to receive under such plan or program.
7. Non-Competition; Confidentiality.
7.1 Non-Competition. Executive agrees that, during
the Term and for a period of two years following the date of a termination of
Executive's employment under Section 5 hereof (the "Restricted Period"), he will
not,
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directly or indirectly, own, manage, operate or control, or participate in the
ownership, management, operation or control of, or be connected as an officer,
employee, partner, director or otherwise with, or have any financial interest
in, or aid or assist anyone else in the conduct of, any entity or business which
competes with any material business conducted by the Company or by any group,
division or subsidiary of the Company, in any area where such business is being
conducted, or for which negotiations to conduct business are pending, at the
date of such termination (a "Competitive Operation"); provided, however, that
Executive may acquire, solely as an investment and through market purchases,
securities of any corporation that are traded on any national securities
exchange or listed on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), if Executive is not a controlling person of, or a
member of a group which controls, such corporation; and Executive does not,
directly or indirectly, own more than one percent (1%) of any class of
securities of such corporation.
7.2 Confidential Information; Personal Relationships.
Executive agrees that, during the Term and thereafter, he shall keep secret and
retain in strictest confidence, and shall not use for his benefit or the benefit
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of others, any and all confidential information relating to the Company,
including, without limitation, trade secrets, customer lists, financial plans or
projections, pricing policies, marketing plans or strategies, business
acquisition or divestiture plans, new personnel acquisition plans, technical
processes, inventions and other research projects heretofore or hereafter
learned by Executive, and he shall not disclose any such information to anyone
outside the Company or any of its subsidiaries, except as required by law in
connection with any judicial or administrative proceeding or inquiry (provided
prior written notice thereof is given by Executive to the Company) or except
with the Company's prior written consent, unless such information is known
generally to the public or the trade through sources other than Executive's
unauthorized disclosure.
7.3 Property of the Company. All memoranda, notes,
lists, records and other documents or papers (and all copies thereof), including
such items stored in computer memories, or microfiche or by any other means,
made or compiled by or on behalf of Executive, or made available to Executive,
relating to the Company or any successors thereto, are and shall be the property
of the Company or any such successor and shall be delivered to the Company or
any such successor promptly at any time on request.
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7.4 Employees of the Company. During the Restricted
Period, the Executive shall not, directly or indirectly, hire, solicit or
encourage to leave the employment of the Company, any of its employees or hire
any such employee who has left the employment of the Company.
7.5 Rights and Remedies Upon Breach. If Executive
breaches, or threatens to commit a breach of, any of the provisions of this
Section 7 (the "Restrictive Covenants"), the Company and any successor thereto
shall have the following rights and remedies, each of which shall be independent
of the other and severally enforceable, and all of which shall be in addition
to, and not in lieu of, any other rights and remedies available to the Company
under law or in equity.
(a) Specific Performance. The right and remedy to
have the Restrictive Covenants specifically enforced by any arbitrator or any
court having equity jurisdiction, it being acknowledged and agreed by Executive
that any such breach or threatened breach will cause irreparable injury to the
Company and that money damages will not provide an adequate remedy to the
Company.
(b) Accounting. The right and remedy to require
Executive to account for and pay over to the Company all compensation, profits,
monies, accruals, increments or
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other benefits (collectively, "Benefits") derived or received by Executive as
the result of any transactions constituting a breach of any of the Restrictive
Covenants, and Executive shall account for and pay over such Benefits to the
Company.
7.6 Severability of Covenants. Executive acknowledges
and agrees that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. Notwithstanding the
foregoing, if any arbitrator or court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable or should be
reduced, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect without regard to the invalid
Restrictive Covenants or portions thereof.
8. Insurance. The Company may, from time to time, apply for
and take out, in its own name and at its own expense, naming itself or others as
the designated beneficiary (which it may change from time to time), policies for
health, accident, disability or other insurance upon Executive in any amount
that it may deem necessary or appropriate to protect its interest. Executive
agrees to aid the Company in procuring such insurance by submitting to
reasonable medical examinations and by filling out, executing and
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<PAGE> 136
delivering such applications and other instruments in writing as may reasonably
be required by any insurance company to which the Company may apply for
insurance.
9. Indemnification. To the fullest extent permitted or
required by the laws of the State of Ohio, the Company shall indemnify and hold
harmless Executive, in accordance with the terms of such laws, if Executive is
made a party, or threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that Executive is or was an officer or
director of the Company, or any subsidiary or affiliate of the Company in which
capacity Executive is or was serving at the Company's request, against expenses
(including reasonable attorneys' fees), judgments, fines and amounts paid in
settlement, all as actually and reasonably incurred by him in connection with
such action, suit or proceeding. In the event it becomes necessary for Executive
to take any action to enforce the indemnity provided herein, Executive shall be
promptly reimbursed by the Company for all costs and expenses associated
therewith (including reasonable attorneys' fees).
10. Arbitration. All disputes arising under or related to this
Agreement shall be resolved by arbitration.
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Such arbitration shall be conducted by an arbitrator mutually selected by the
Company and Executive (or, if the Company and Executive are unable to agree upon
an arbitrator within ten (10) days, then the Company and Executive shall each
select an arbitrator, and the arbitrators so selected shall mutually select a
third arbitrator, who shall resolve such dispute). Such arbitration shall be
conducted in accordance with the applicable rules of the American Arbitration
Association. Any decision rendered by an arbitrator pursuant hereto may be
enforced by a court of competent jurisdiction without review of such decision by
such court. The Company shall pay all of the fees and expenses of the
arbitrators and the other costs of arbitration. The Company also shall pay
Executive's reasonable legal fees and expenses incurred in connection with any
successful enforcement by Executive of his rights hereunder.
11. Miscellaneous.
11.1 Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, telecopied or sent by certified or registered mail, postage prepaid,
or by Federal Express or similar overnight courier. Any such notice shall be
deemed given when delivered:
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(i) if to the Company, to:
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Attn: General Counsel
Telecopy No.: (513) 721-3404
(ii) if to Executive, to:
David N. Hall
Eagle-Picher Industries, Inc.
580 Walnut Street
Cincinnati, Ohio 45201
Telecopy No.: (513) 721-2779
11.2 Waivers and Amendments. This Agreement may not
be amended, modified, superseded or cancelled except by a written instrument
signed by the Company and Executive. No delay on the part of any party in
exercising any right or remedy hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right or remedy, nor any
single or partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy.
11.3 Survival. The provisions of Sections 7 and 9
hereof shall survive the Term, irrespective of the reasons for termination of
Executive's employment hereunder.
11.4 Governing Law. This Agreement shall be governed
by and construed in accordance with the law of the State of Ohio applicable to
agreements made and to be performed entirely within such State.
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11.5 Entire Agreement. This Agreement (including the
schedules, annexes and exhibits hereto) contain the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
agreements, proposals or representations, arrangements or understandings,
written or oral, with respect thereto.
11.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by any party hereto without the prior
written consent of the other party.
11.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EAGLE-PICHER INDUSTRIES, INC.
By /s/ Thomas E. Petry
---------------------------
Name: Thomas E. Petry
Title: Chairman of the Board
of Directors and Chief
Executive Officer
/s/ David N. Hall
---------------------------
David N. Hall
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ANNEX A
TO EMPLOYMENT AGREEMENT OF
DAVID N. HALL
POSITION: Senior Vice President and Chief Financial Officer
DUTIES: Plans, directs and controls the Company's overall financial plans
and policies, and its accounting practices, and conducts the
Company's relationship with lending institutions and the
financial community. Directs treasury, budgeting, audit, tax,
accounting, information management, insurance and certain
administrative functions. Develops and coordinates necessary and
appropriate accounting and statistical data for all departments.
<PAGE> 1
Exhibit 2.6
EAGLE-PICHER INDUSTRIES, INC.
PERSONAL INJURY SETTLEMENT TRUST AGREEMENT
This Trust Agreement is among Eagle-Picher Industries, Inc., an Ohio
corporation and debtor in possession ("EAGLE-PICHER"), and its affiliates, Daisy
Parts, Inc., Transicoil, Inc., Michigan Automotive Research Corp., EDI, Inc.,
Eagle-Picher Minerals, Inc., Eagle-Picher Europe, Inc., and Hillsdale Tool &
Manufacturing Co. ("SETTLORS"), and James J. McMonagle, Ruth McMullin, and
Daniel M. Phillips, as Trustees ("TRUSTEES"), pursuant to the Third Amended
Consolidated Plan of Reorganization of Eagle-Picher and its affiliated debtors,
dated August 28, 1996 (the "PLAN").
WHEREAS, at the time of the entry of the order for relief in the
Chapter 11 Cases, Eagle-Picher was named as a defendant in personal injury,
wrongful death, and property damage actions seeking recovery for damages
allegedly caused by the presence of, or exposure to, asbestos or
asbestos-containing products; and
WHEREAS, Eagle-Picher and its affiliated debtors (collectively, the
"DEBTORS") have reorganized under the provisions of Chapter 11 of the Bankruptcy
Code in cases pending in the United States Bankruptcy Court for the Southern
District of Ohio, Western Division, known as IN RE EAGLE-PICHER INDUSTRIES,
INC., ET AL., Consolidated Case No. 1-91-00100 ("CHAPTER 11 CASES"); and
WHEREAS, the Plan, filed by the Debtors, the Legal Representative for
Future Claimants appointed by the Bankruptcy Court pursuant to its order of
October 31, 1991 and the Bankruptcy Court-appointed committee composed of the
representatives of certain tort claimants of the Debtors ("INJURY CLAIMANTS'
COMMITTEE") has been confirmed by the Bankruptcy Court; and
WHEREAS, the Plan provides, inter alia, for the creation of the
Eagle-Picher Industries, Inc. Personal Injury Settlement Trust ("PI TRUST"); and
WHEREAS, pursuant to the Plan, the PI Trust is to be funded in whole or
in part by the securities of the Debtors and by the obligation of the Debtors to
make future payments, including dividends; and
WHEREAS, pursuant to the Plan, the PI Trust is to own a majority of the
voting shares of Eagle-Picher; and
WHEREAS, pursuant to the Plan, the PI Trust is to use its assets or
income to pay Claims and Demands, as defined in Sections 101(5) and 524(g)(5) of
the Bankruptcy Code respectively, against the Debtors; and
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WHEREAS, the Plan provides, among other things, for the complete
settlement and satisfaction of all liabilities and obligations of the Debtors
with respect to Asbestos Personal Injury Claims and Lead Personal Injury Claims
(hereinafter Asbestos Personal Injury Claims and Lead Personal Injury Claims are
sometimes jointly referred to as "TOXIC PERSONAL INJURY CLAIMS"); and
WHEREAS, pursuant to the Plan, the PI Trust is intended to qualify as a
"Qualified Settlement Fund" within the meaning of Section 1.468B-1 of the
Treasury Regulations promulgated under Section 468B of the Internal Revenue
Code; and
WHEREAS, the Bankruptcy Court has determined that the PI Trust and the
Plan satisfy all the prerequisites for a supplemental injunction pursuant to
Section 524(g) of the Bankruptcy Code, which Asbestos and Lead PI Permanent
Channeling Injunction has been entered in connection with the Confirmation
Order;
NOW, THEREFORE, it is hereby agreed as follows:
ARTICLE 1
DEFINITIONS
-----------
As used herein, the following terms shall have the meanings specified
below:
1.1 Affiliate: Any Entity that is an "affiliate" of any of the Debtors
within the meaning of Section 101(2) of the Bankruptcy Code except (i) American
Imaging Services, Inc., (ii) Tri Sigma Corporation, and (iii) the PI Trust.
1.2 Asbestos and Lead PI Permanent Channeling Injunction: An order or
orders of the Bankruptcy Court or the District Court permanently and forever
staying, restraining, and enjoining any Entity from taking any of the following
actions for the purpose of, directly or indirectly, collecting, recovering, or
receiving payment of, on, or with respect to any Asbestos Personal Injury Claims
or Lead Personal Injury Claims (other than actions brought to enforce any right
or obligation under the Plan, any Exhibits to the Plan, or any other agreement
or instrument between any of the Debtors or the Reorganized Debtors and the PI
Trust, which actions shall be in conformity and compliance with the provisions
hereof):
(a) commencing, conducting, or continuing in any manner,
directly or indirectly, any suit, action, or other proceeding (including,
without express or implied limitation, a judicial,
<PAGE> 3
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arbitral, administrative, or other proceeding) in any forum against or affecting
any PI Protected Party or any property or interests in property of any PI
Protected Party;
(b) enforcing, levying, attaching (including, without express
or implied limitation, any prejudgment attachment), collecting, or otherwise
recovering by any means or in any manner, whether directly or indirectly, any
judgment, award, decree, or other order against any PI Protected Party or any
property or interests in property of any PI Protected Party;
(c) creating, perfecting, or otherwise enforcing in any manner,
directly or indirectly, any Encumbrance against any PI Protected Party or any
property or interests in property of any PI Protected Party;
(d) setting off, seeking reimbursement of, contribution from,
or subrogation against, or otherwise recouping in any manner, directly or
indirectly, any amount against any liability owed to any PI Protected Party or
any property or interests in property of any PI Protected Party; and
(e) proceeding in any manner in any place with regard to any
matter that is subject to resolution pursuant to the PI Trust, except in
conformity and compliance therewith.
1.3 Asbestos or Lead Contribution Claim: Any right to payment, claim,
remedy, liability, or Demand now existing or hereafter arising, whether or not
such right, claim, remedy, liability or Demand is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured, whether or not the facts of
or legal bases for such right, claim, remedy, liability or Demand are known or
unknown, that is (i) held by (A) any Entity (other than a director or officer
entitled to indemnification pursuant to Section 8.6 of the Plan) who has been,
is, or may be a defendant in an action seeking damages for death, bodily injury,
or other personal damages (whether physical, emotional, or otherwise) to the
extent caused or allegedly caused, directly or indirectly, by exposure to (x)
asbestos or asbestos-containing products or (y) products that contain lead
chemicals, or (B) any assignee or transferee of such Entity, and (ii) on account
of alleged liability of any of the Debtors for reimbursement or contribution of
any portion of any damages such Entity has paid or may pay to the plaintiff in
such action.
1.4 Asbestos Personal Injury Claim: Any right to payment, claim,
remedy, liability, or Demand now existing or hereafter arising, whether or not
such right, claim, remedy, liability, or Demand is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured, whether or not the facts of
or legal bases for such right, claim, remedy, liability, or Demand are known or
unknown, for, under any theory of law, equity, admiralty, or otherwise, death,
bodily injury,
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or other personal damages (whether physical, emotional, or otherwise) to the
extent caused or allegedly caused, directly or indirectly, by exposure to
asbestos or asbestos-containing products that were manufactured, sold, supplied,
produced, distributed, released, or in any way marketed by any of the Debtors
prior to the Petition Date, including, without express or implied limitation,
any right, claim, remedy, liability, or Demand for compensatory damages (such as
loss of consortium, wrongful death, survivorship, proximate, consequential,
general, and special damages) and including punitive damages and any Asbestos or
Lead Contribution Claim.
1.5 Bankruptcy Code: The Bankruptcy Reform Act of 1978, as amended, and
as codified in Title 11 of the United States Code, as applicable to the Chapter
11 Cases.
1.6 Bankruptcy Court: The United States District Court for the Southern
District of Ohio, Western Division, having jurisdiction over the Chapter 11
Cases and, to the extent of any reference made pursuant to section 157 of title
28 of the United States Code, the unit of such District Court constituted
pursuant to section 151 of title 28 of the United States Code.
1.7 Business Day: Any day on which commercial banks are required to be
open for business in Cincinnati, Ohio.
1.8 Claim: (a) A "claim," as defined in Section 101(5) of the
Bankruptcy Code, against any of the Debtors or Debtors in Possession, whether or
not asserted, whether or not the facts of or legal bases therefor are known or
unknown, and specifically including, without express or implied limitation, any
rights under Sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, any
claim of a derivative nature, any potential or unmatured contract claims, and
any other Contingent Claim, and (b) any Environmental Claim or Product Liability
Tort Claim, whether or not it constitutes a "claim," as defined in Section
101(5) of the Bankruptcy Code.
1.9 Confirmation Order: The order or orders of the Bankruptcy Court
confirming the Plan in accordance with the provisions of Chapter 11 of the
Bankruptcy Code, which will contain, inter alia, the Asbestos and Lead PI
Permanent Channeling Injunction, and the Claims Trading Injunction.
1.10 Contingent Claim: Any Claim, the liability for which attaches or
is dependent upon the occurrence or happening, or is triggered by, an event,
which event has not yet occurred, happened, or been triggered, as of the date on
which such Claim is sought to be estimated or an objection to such Claim is
filed, whether or not such event is within the actual or presumed contemplation
of the holder of such Claim and whether or not a relationship between the holder
of such Claim and any of the Debtors now or hereafter exists or previously
existed.
<PAGE> 5
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1.11 Demand: A demand for payment, present or future, that (i) was not
a Claim during the Chapter 11 Cases; (ii) arises out of the same or similar
conduct or events that gave rise to the Claims addressed by the Asbestos and
Lead PI Permanent Channeling Injunction; and (iii) pursuant to the Plan, is to
be paid by the PI Trust.
1.12 Divestiture Notes: Those certain senior unsecured notes in the
aggregate principal amount of Fifty Million and 00/100 Dollars ($50,000,000.00),
bearing interest at a rate determined by McDonald & Company Securities, Inc.
after consultation with the financial advisers to the unsecured creditors'
committee on the Effective Date as the rate such senior unsecured notes should
bear in order to have a market value of one hundred percent (100%) of their
principal amount on the Effective Date, and substantially in the form of Exhibit
"1.1.55" to the Plan.
1.13 Effective Date: The first Business Day on which all of the
conditions precedent to the effectiveness of the Plan specified in Section 7.9
of the Plan have been satisfied or waived or, if a stay of the Confirmation
Order is in effect on such date, the first Business Day after the expiration,
dissolution, or lifting of such stay.
1.14 Encumbrance: With respect to any asset, any mortgage, lien,
pledge, charge, security interest, assignment, or encumbrance of any kind or
nature in respect of such asset (including, without express or implied
limitation, any conditional sale or other title retention agreement, any
security agreement, and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction).
1.15 Entity: An individual, corporation, partnership, association,
joint stock company, joint venture, estate, trust, unincorporated organization,
or government or any political subdivision thereof, or other person or entity.
1.16 Environmental Claim: Any Claim as to which the treatment thereof
is set forth in (a) the Environmental Settlement Agreement or (b) an agreement
by and between any of the Debtors and any party asserting a Claim against any of
the Debtors relating to alleged contamination under the federal or state
environmental laws or regulations, pursuant to which agreement all or a portion
of such Claim (to the extent and subject to the limitations imposed by such
agreement) may be asserted by the holder thereof after the Effective Date, to
the extent that such agreement is approved and authorized by a Final Order of
the Bankruptcy Court or otherwise in accordance with the Claims Settlement
Guidelines.
1.17 Environmental Settlement Agreement: That certain Settlement
Agreement, lodged with the Bankruptcy Court on March 23, 1995, by and between
the Debtors and the parties
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listed on the signatory pages thereof, to the extent that such Settlement
Agreement is approved and authorized by the Bankruptcy Court by a Final Order of
the Bankruptcy Court.
1.18 Final Order: An order as to which the time to appeal, petition for
certiorari, or move for reargument or rehearing has expired and as to which no
appeal, petition for certiorari or other proceedings for reargument or rehearing
shall then be pending or as to which any right to appeal, petition for
certiorari, reargue, or rehear shall have been waived in writing in form and
substance satisfactory to the Debtors or the Reorganized Debtors, as the case
may be, and their counsel or, in the event that an appeal, writ of certiorari,
or reargument or rehearing thereof has been sought, such order shall have been
affirmed by the highest court to which such order was appealed, or certiorari
has been denied or from which reargument or rehearing was sought, and the time
to take any further appeal, petition for certiorari or move for reargument or
rehearing shall have expired.
1.19 Lead Personal Injury Claim: Any right to payment, claim, remedy,
liability, or Demand, now existing or hereafter arising, whether or not such
right, claim, remedy, liability, or Demand is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured, whether or not the facts of or legal
bases for such right, claim, remedy, liability, or Demand are known or unknown,
for, under any theory of law, equity, admiralty, or otherwise, death, bodily
injury, or other personal damages (whether physical, emotional, or otherwise) to
the extent caused or allegedly caused, directly or indirectly, by exposure to
products that contained lead chemicals that were manufactured, sold, supplied,
produced, distributed, or in any way marketed by any of the Debtors prior to the
Petition Date, including, without express or implied limitation, any right,
claim, remedy, liability, or Demand for compensatory damages (such as loss of
consortium, wrongful death, survivorship, proximate, consequential, general, and
special damages) and including punitive damages and any Asbestos or Lead
Contribution Claim.
1.20 New Eagle-Picher Common Stock: Voting common stock, with no par
value, of Reorganized Eagle-Picher from and after the Effective Date after
giving effect to the Amended and Restated Articles of Incorporation.
1.21 Petition Date: January 7, 1991.
1.22 PI Protected Party: Any of the following parties:
(a) the Debtors;
(b) the Reorganized Debtors;
<PAGE> 7
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(c) an Affiliate;
(d) any Entity that, pursuant to the Plan or after the
Effective Date becomes a direct or indirect transferee of, or successor to any
assets of any of the Debtors, the Reorganized Debtors, or the PI Trust (but only
to the extent that liability is asserted to exist by reason of it becoming such
a transferee or successor);
(e) any Entity that, pursuant to the Plan or after the
Effective Date, makes a loan to any of the Reorganized Debtors or the PI Trust
or to a successor to, or transferee of, any assets of any of the Debtors, the
Reorganized Debtors, or the PI Trust (but only to the extent that liability is
asserted to exist by reason of such Entity becoming such a lender or to the
extent any pledge of assets made in connection with such a loan is sought to be
upset or impaired); or
(f) any Entity to the extent he, she, or it is alleged to be
directly or indirectly liable for the conduct of, Claims against, or Demands on
any of the Debtors, the Reorganized Debtors, or the PI Trust on account of
Asbestos Personal Injury Claims or Lead Personal Injury Claims by reason of one
or more of the following:
(i) such Entity's ownership of a financial interest in
any of the Debtors or the Reorganized Debtors, a past or present
affiliate of any of the Debtors or the Reorganized Debtors, or
predecessor in interest of any of the Debtors or the Reorganized
Debtors;
(ii) such Entity's involvement in the management of any
of the Debtors or the Reorganized Debtors or any predecessor in
interest of any of the Debtors or the Reorganized Debtors;
(iii) such Entity's service as an officer, director, or
employee of any of the Debtors, the Reorganized Debtors, or Related
Parties;
(iv) such Entity's provision of insurance to any of the
Debtors, the Reorganized Debtors, or Related Parties; or
(v) such Entity's involvement in a transaction changing
the corporate structure, or in a loan or other financial transaction
affecting the financial condition, of any of the Debtors, the
Reorganized Debtors, or any of the Related Parties.
1.23 Product Liability Tort Claim: Any right to payment, claim, remedy,
liability, or Demand, now existing or hereafter arising, whether or not such
right, claim, remedy, liability, or Demand is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured,
<PAGE> 8
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unmatured, disputed, undisputed, legal, equitable, secured, or unsecured,
whether or not the facts of or legal bases for such right, claim, remedy,
liability, or Demand are known or unknown, for, under any theory of law, equity,
admiralty, or otherwise, death, bodily injury, or other personal damages
(whether physical, emotional, or otherwise) to the extent caused or allegedly
caused, directly or indirectly, by exposure to any products or byproducts that
were manufactured, sold, supplied, produced, released, distributed, or in any
way marketed by any of the Debtors prior to the Petition Date, including,
without express or implied limitation, any right, claim, remedy, liability, or
Demand for compensatory damages (such as loss of consortium, wrongful death,
survivorship, proximate, consequential, general, and special damages), including
punitive damages, and including, without express or implied limitation, any
Asbestos Personal Injury Claim or Lead Personal Injury Claim.
1.24 Related Parties: (a) Any past or present affiliate of any of the
Debtors or the Reorganized Debtors, (b) any predecessor in interest of any of
the Debtors or the Reorganized Debtors, or (c) any Entity that owned a financial
interest in any of the Debtors or the Reorganized Debtors, any past or present
affiliate of any of the Debtors or the Reorganized Debtors, or any predecessor
in interest of any of the Debtors or the Reorganized Debtors.
1.25 Reorganized Debtors: The Debtors, or any successors in interest
thereto, from and after the Effective Date.
1.26 Reorganized Eagle-Picher: Eagle-Picher, or any successor in
interest thereto, from and after the Effective Date.
1.27 Senior Unsecured Sinking Fund Debentures: Those certain Senior
Unsecured Sinking Fund Debentures in the aggregate principal amount of Two
Hundred Fifty Million and 00/100 Dollars ($250,000,000.00), bearing interest at
a rate determined by McDonald & Company Securities, Inc. on the Effective Date
as the rate such Senior Unsecured Sinking Fund Debentures should bear in order
to have a market value of one hundred percent (100%) of their principal amount
on the Effective Date, and substantially in the form set forth in Exhibit
"1.1.114" to the Plan.
All capitalized terms used herein and not defined in this Article 1 or
in another provision of this Trust Agreement shall have the meanings assigned to
them in the Plan and/or the Bankruptcy Code, which definitions are incorporated
by reference herein.
<PAGE> 9
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ARTICLE 2
AGREEMENT OF TRUST
------------------
2.1 CREATION AND NAME. The Settlor hereby creates a trust known as the
"Eagle-Picher Industries, Inc. Personal Injury Settlement Trust", which is the
PI Trust provided for and referred to in the Plan. The Trustees of the PI Trust
may transact the business and affairs of the PI Trust in the name, "Eagle-Picher
Industries Personal Injury Settlement Trust".
2.2 PURPOSE. The purpose of the PI Trust is to assume any and all
liabilities of the Debtors, their successors in interest or their affiliates,
with respect to any and all Toxic Personal Injury Claims; to use the PI Trust's
assets and income to promptly pay holders of valid Toxic Personal Injury Claims
operating through mechanisms that provide reasonable assurance that the PI Trust
will value, and be in a financial position to pay, present claims and future
demands that involve similar claims in substantially the same manner; and to
otherwise comply in all respects with the requirements of a trust set forth in
Section 524(g)(2)(B) of the Bankruptcy Code. This purpose shall be fulfilled
through the provisions of this Trust Agreement, the Eagle-Picher Industries,
Inc. Asbestos Injury Claims Resolution Procedures attached hereto as Annex B
("EPI ASBESTOS CLAIMS PROCEDURES"), and any Lead Personal Injury Claims
procedures adopted pursuant to the Trust Agreement ("EPI LEAD CLAIMS
PROCEDURES").
2.3 TRANSFER OF ASSETS. The Settlors hereby transfer and assign to the
PI Trust the property set forth in Article 10 of the Plan ( herein the
"ASSETS").
2.4 ACCEPTANCE OF ASSETS AND ASSUMPTION OF LIABILITIES.
(a) In furtherance of the purposes of the PI Trust, the Trustees,
on behalf of the PI Trust, hereby expressly accept the transfer and assignment
to the PI Trust of the Assets.
(b) In furtherance of the purposes of the PI Trust, and subject to
Article 5.4, the Trustees, on behalf of the PI Trust, expressly assume all
liability for all Toxic Personal Injury Claims as provided for in Article 10 of
the Plan. Except as otherwise provided in the EPI Asbestos Claims Procedures,
the PI Trust shall have all defenses, cross-claims, offsets, and recoupments
regarding Toxic Personal Injury Claims that Eagle-Picher has or would have had
under applicable law.
(c) Neither the Debtors nor their successors in interest or their
affiliates shall be entitled to any indemnification from the PI Trust for any
expenses, costs, and fees (including attorneys' fees), judgments, settlements,
or other liabilities arising from or incurred in connection with, any action
related to a Toxic Personal Injury Claim, including, but not limited
<PAGE> 10
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to, indemnification or contribution for Toxic Personal Injury Claims prosecuted
against Reorganized Eagle-Picher. Nothing in this section or any other section
of this Trust Agreement shall be construed in any way to limit the scope,
enforceability, or effectiveness of the Asbestos and Lead PI Permanent
Channeling Injunction issued in connection with the Plan or the PI Trust's
assumption of all liability with respect to Toxic Personal Injury Claims.
ARTICLE 3
POWERS AND TRUST ADMINISTRATION
-------------------------------
3.1 POWERS.
------
(a) Subject to the limitations set forth in this Trust
Agreement, the Trustees shall have the power to take any and all actions that,
in the judgment of the Trustees, are necessary or proper to fulfill the purposes
of the PI Trust, including, without limitation, each power expressly granted in
this Article 3.1, any power reasonably incidental thereto, and any trust power
now or hereafter permitted under the laws of the State of Ohio.
(b) Except as otherwise specified herein, the Trustees need not
obtain the order or approval of any court in the exercise of any power or
discretion conferred hereunder.
(c) Without limiting the generality of Article 3.1(a) above,
the Trustees shall have the power to:
(i) receive and hold the Assets, vote the New
Eagle-Picher Common Stock, exercise all rights with respect to, and
sell any securities issued by Reorganized Eagle-Picher that are
included in the Assets, subject to any restrictions set forth in the
articles of incorporation of Reorganized Eagle-Picher;
(ii) invest the monies held from time to time by the PI
Trust;
(iii) sell, transfer or exchange any or all of the
Assets at such prices and upon such terms as they may consider proper,
consistent with the other terms of this Trust Agreement;
(iv) pay liabilities and expenses of the PI Trust;
(v) change the state of domicile of the PI Trust;
<PAGE> 11
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(vi) establish such funds, reserves and accounts within
the PI Trust estate, as deemed by the Trustees to be useful in carrying
out the purposes of the PI Trust;
(vii) sue and be sued and participate, as a party or
otherwise, in any judicial, administrative, arbitrative or other
proceeding;
(viii) amend the Bylaws, a copy of which is annexed
hereto as Annex A (the "BYLAWS");
(ix) appoint such officers and hire such employees and
engage such legal, financial, accounting, investment and other
advisors, alternative dispute resolution panelists, and agents as the
business of the PI Trust requires, and to delegate to such persons such
powers and authorities as the fiduciary duties of the Trustees permit
and as the Trustees, in their discretion, deem advisable or necessary
in order to carry out the terms of this PI Trust;
(x) pay employees, legal, financial, accounting,
investment and other advisors and agents reasonable compensation,
including without limitation, compensation at rates approved by the
Trustees for services rendered prior to the execution hereof;
(xi) reimburse the Trustees, subject to Article 5.5, and
reimburse such officers, employees, legal, financial, accounting,
investment and other advisers and agents all reasonable out-of-pocket
costs and expenses incurred by such persons in connection with the
performance of their duties hereunder, including without limitation,
costs and expenses incurred prior to the execution hereof;
(xii) execute and deliver such deeds, leases and other
instruments as the Trustees consider proper in administering the PI
Trust;
(xiii) enter into such other arrangements with third
parties as are deemed by the Trustees to be useful in carrying out the
purposes of the PI Trust, provided such arrangements do not conflict
with any other provision of this Trust Agreement;
(xiv) in accordance with Article 5.6, indemnify (and
purchase insurance indemnifying) Trustees and TAC members, and
officers, employees, agents, advisers and representatives of the PI
Trust or the TAC to the fullest extent that a corporation or trust
organized under the law of the PI Trust's domicile is from time to time
entitled to indemnify and/or insure its directors, trustees, officers,
employees, agents, advisers and representatives;
<PAGE> 12
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(xv) indemnify (and purchase insurance indemnifying) the
Additional Indemnitees as defined in Article 5.6 hereof;
(xvi) delegate any or all of the authority herein
conferred with respect to the investment of all or any portion of the
Assets to any one or more reputable individuals or recognized
institutional investment advisers or investment managers without
liability for any action taken or omission made because of any such
delegation, except as provided in Article 5.4;
(xvii) consult with Reorganized Eagle-Picher at such
times and with respect to such issues relating to the conduct of the PI
Trust as the Trustees consider desirable;
(xviii) make, pursue (by litigation or otherwise),
collect, compromise or settle any claim, right, action or cause of
action included in the Assets; and
(xix) merge or contract with other claims resolution
facilities that are not specifically created by this Agreement or the
EPI Asbestos Claims Procedures, subject to Article 3.2(e) of this
Agreement; provided that such merger or contract shall not (a) alter
the EPI Asbestos Claims Procedures; (b) subject the Reorganized Debtors
or any successor in interest to any risk of having any Toxic Personal
Injury Claim asserted against it or them; or (c) otherwise jeopardize
the validity or enforceability of the Asbestos and Lead PI Permanent
Channeling Injunction.
(xx) enter into any contract or otherwise engage in any
transaction with any Trustee or Entity affiliated with any Trustee,
provided that (a) such contract or transaction is approved by the
unanimous vote of the disinterested Trustees upon full disclosure of
all relevant facts, and (b) the terms and conditions of such contract
or transaction are commercially reasonable.
(d) The Trustees shall promptly educate and inform themselves
as to Lead Personal Injury Claims that may be asserted against the PI Trust. To
do so, the Trustees shall expend no more than $2.5 million of PI Trust funds, in
total, for medical, scientific, and other research into diseases and conditions
allegedly caused by exposure to lead pigment-containing products. This research
shall also be used to determine what products cause such diseases and
conditions. The nature of the research conducted shall be in the Trustees' sole
discretion. This subsection shall in no way limit the Trustees' authority to
expend money as they otherwise are permitted or required by other sections of
this Trust Agreement, including, without limitation, Article 3.3 herein.
<PAGE> 13
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(e) The Trustees shall not have the power to guaranty any debt
of other persons except that the Trustees may issue a guaranty in connection
with the sale of some or all of the stock or assets of Reorganized Eagle-Picher
or any subsidiary of Reorganized Eagle-Picher.
3.2 GENERAL ADMINISTRATION.
----------------------
(a) The Trustees shall act in accordance with the Bylaws. To
the extent not inconsistent with the terms of this Trust Agreement, the Bylaws
govern the affairs of the PI Trust.
(b) The Trustees shall timely file such income tax and other
returns and statements and comply with all withholding obligations, as required
under the applicable provisions of the Internal Revenue Code and of any state
law and the regulations promulgated thereunder.
(c) The Trustees shall cause to be prepared and filed with the
Bankruptcy Court, as soon as available, and in any event within one
hundred twenty (120) days following the end of each fiscal year, an
annual report containing (1) financial statements of the PI Trust
(including, without limitation, a balance sheet of the PI Trust as of
the end of such fiscal year and a statement of operations for such
fiscal year) audited by a firm of independent certified public
accountants selected by the Trustees and accompanied by an opinion of
such firm as to the fairness of the financial statements' presentation
of the cash and investments available for the payment of claims and as
to the conformity of the financial statements with generally accepted
accounting principles and (2) such other matters as the Trustees deem
appropriate to report to the Bankruptcy Court. The Trustees shall
provide a copy of such report to the TAC and to Reorganized
Eagle-Picher.
(i) Simultaneously with delivery of each set of
financial statements referred to in Article 3.2(c) above, the Trustees
shall cause to be prepared and filed with the Bankruptcy Court a report
containing a summary regarding the number and type of claims disposed
of during the period covered by the financial statements.
(ii) All materials required to be filed with the
Bankruptcy Court by this Article 3.2 shall be available for inspection
by the public in accordance with procedures established by the
Bankruptcy Court.
(d) The Trustees shall cause to be prepared and submitted to
the TAC as soon as practicable prior to the commencement of each fiscal year
after the first fiscal year a budget and cash flow projections covering such
fiscal year and the succeeding four fiscal years.
<PAGE> 14
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(e) The Trustees shall consult with the TAC (as defined in
Article 6) on the appointment of successor Trustees, the implementation and
administration of the EPI Asbestos Claims Procedures, the expenditure of funds
for research as described in Article 3.1(d), and the adoption and
administration of the EPI Lead Claims Procedures (hereinafter the EPI Asbestos
Claims Procedures and the EPI Lead Claims Procedures are some times jointly
referred to as the "PROCEDURES"). The Trustees shall be required to obtain the
consent of a majority of the members of the TAC in order:
(i) to amend materially the Procedures, unless such
amendment relates to the specific amounts or percentages to be paid to
holders of Toxic Personal Injury Claims who have not elected discounted
payment, in which case, TAC consent is not required; or
(ii) to merge or participate with any claims resolution
facility that was not specifically created under this Trust Agreement
or the Procedures; or
(iii) to amend any provision of Article 6 herein; or
(iv) to terminate the PI Trust pursuant to Article
7.2(a)(iii) herein.
The TAC shall not unreasonably withhold any consent required hereunder, and if
ever the TAC shall withhold any consent required hereunder, at the election of
the Trustees, the dispute between the Trustees and the TAC shall be resolved by
the Bankruptcy Court or through the implementation of binding alternative
dispute resolution procedures mutually agreed to by the Trustees and the TAC.
3.3 CLAIMS ADMINISTRATION.
---------------------
(a) General Principles.
The Trustees shall proceed quickly to implement the EPI
Asbestos Claims Procedures, and they shall proceed quickly to adopt the
EPI Lead Claims Procedures when, and if, Lead Personal Injury Claims
become eligible for processing by the PI Trust. The PI Trust shall pay
holders of valid Toxic Personal Injury Claims in accordance with the
provisions hereof as promptly as reasonably practicable. In their
administration of the Procedures, the Trustees shall favor settlement
over arbitration, arbitration over resort to the tort system, and fair
and efficient resolution of claims in all cases, while endeavoring to
preserve and enhance the PI Trust estate.
(b) Asbestos Personal Injury Claims.
<PAGE> 15
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(i) The Trustees shall employ mechanisms such as the
review of estimates of the numbers and values of Asbestos Personal
Injury Claims, or other comparable mechanisms, that provide reasonable
assurance the PI Trust will value, and be in a financial position to
pay, similar present asbestos personal injury Claims and future
asbestos personal injury Demands in substantially the same manner.
(ii) The Trustees shall administer the processing and
payment of Asbestos Personal Injury Claims in accordance with the EPI
Asbestos Claims Procedures, a copy of which is annexed hereto as Annex
B, as the same may be amended from time to time, in accordance with the
provisions hereof and thereof.
(c) Lead Personal Injury Claims.
(i) The Trustees shall employ mechanisms such as the
review of estimates of the numbers and values of Lead Personal Injury
Claims, or other comparable mechanisms, that provide reasonable
assurance the PI Trust will value, and be in a financial position to
pay, similar present lead personal injury Claims and future lead
personal injury Demands in substantially the same manner.
Notwithstanding the foregoing, due to (x) the present absence of any
court judgment imposing personal injury liability upon any lead pigment
manufacturer like Eagle-Picher, and (y) the difficult, expensive, and
inherently uncertain task of estimating the amount of valid Lead
Personal Injury Claims, if any, that the PI Trust may be required to
pay some time in the future, the Trustees shall not be required to
estimate the PI Trust's possible liability for, or decide whether to
reserve funds or otherwise maintain sufficient resources for the
payment of, Lead Personal Injury Claims until the latest of the
following events:
(A) four years have passed after the Effective
Date;
(B) the PI Trust has paid One Million Dollars
($1,000,000) in indemnity costs, as opposed to claim defense
costs, for Lead Personal Injury Claims in any one calendar
year; or
(C) holders of Lead Personal Injury Claims
obtain final, non appealable liability judgments against lead
pigment manufacturers in more than one state.
(ii) The Trustees shall administer the processing and
payment of Lead Personal Injury Claims pursuant to the EPI Lead Claims
Procedures to be adopted by the Trustees. The EPI Lead Claims
Procedures shall be similar to the EPI Asbestos Claims Procedures. For
example, like the EPI Asbestos Claims Procedures, the EPI Lead
<PAGE> 16
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Claims Procedures shall provide that the holders of Lead Personal
Injury Claims shall be prevented from suing the PI Trust in the tort
system until they have exhausted their remedies against the PI Trust
under the EPI Lead Claims Procedures. However, due to (x) the present
absence of any court judgment imposing personal injury liability upon
any lead pigment manufacturer like Eagle-Picher, and (y) the difficult,
expensive, and inherently uncertain task of estimating the amount of
valid Lead Personal Injury Claims, if any, that the PI Trust may be
required to pay some time in the future, the EPI Lead Claims Procedures
shall differ from the EPI Asbestos Claims Procedures in at least the
following respect:
(A) no Lead Personal Injury Claim or any claim
for contribution, indemnification, or reimbursement of
liability for a Lead Personal Injury Claim shall be eligible
for processing by the PI Trust unless the holder can
demonstrate that either the holder or a similarly situated lead
personal injury claimant has obtained a final, nonappealable
judgment against a lead pigment manufacturer under the state
law applicable to the holder's claim;
(1) The PI Trust's determination under (A)
above as to whether a claim is eligible for processing (i) shall be
final and nonappealable and (ii) shall not be deemed to be an
exhaustion of the claim holder's remedies against the PI Trust, so that
any claims the PI Trust determines to be ineligible for processing may
be refiled against the PI Trust at such time as eligibility can be
established under (A) above.
(d) Bankruptcy Court Claims Bar Date Orders.
(i) As provided herein, the Trustees shall enforce the
Bankruptcy Court's claims' bar date orders that are applicable to Toxic
Personal Injury Claims.
(ii) The Trustees shall disallow any Toxic Personal
Injury Claim if they determine the claimant inexcusably failed to
comply with an applicable claims bar date order entered by the
Bankruptcy Court, and any such decision shall be final and
non-appealable. Notwithstanding the foregoing, the Trustees shall not
disallow a Toxic Personal Injury Claim for failure to comply with an
applicable claims bar date order if the holder of such Toxic Personal
Injury Claim demonstrates that the asbestos or lead related disease
complained of first manifested itself after the applicable claims bar
date order. For example, an asbestos disease victim (A) who first
manifested any asbestos related disease after the applicable claims'
bar date or (B) who suffered from a less serious asbestos related
disease, such as pleural thickening, at the time of the applicable bar
date and who later developed a more serious asbestos related disease,
such as cancer,
<PAGE> 17
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shall not have his claim disallowed for failure to comply with the
applicable claims bar date order.
(iii) The Trustees shall have complete discretion to
determine whether a claimant inexcusably failed to comply with an
applicable claims bar date order. In making this determination, the
Trustees may be guided by the "excusable neglect" standard developed
under federal bankruptcy law in connection with the adjudication of
late filed proofs of claim in bankruptcy cases.
ARTICLE 4
ACCOUNTS, INVESTMENTS, AND PAYMENTS
-----------------------------------
4.1 ACCOUNTS. The Trustees may, from time to time, create such accounts
and reserves within the PI Trust estate as they may deem necessary, prudent or
useful in order to provide for the payment of expenses and valid Toxic Personal
Injury Claims and may, with respect to any such account or reserve, restrict the
use of monies therein.
4.2 SEPARATE RESERVE FOR FUTURE CLAIMS. The first Fifty Million
($50,000,000) paid, in aggregate, on the Divestiture Notes and/or on the Senior
Unsecured Sinking Fund Debentures held by the PI Trust shall be segregated and
held in a separate account as a reserve for the payment of valid Toxic Personal
Injury Claims whose holders first manifest a disease after the Effective Date.
The segregation and holding of such funds, however, shall not in any way alter
the duties of the Trustees to pay similar present and future Toxic Personal
Injury Claims in substantially the same manner.
4.3 INVESTMENTS. Investment of monies held in the PI Trust shall be
administered in the manner in which individuals of ordinary prudence, discretion
and judgment would act in the management of their own affairs, subject to the
following limitations and provisions:
(a) The PI Trust may acquire and hold any stock or securities
issued by Reorganized Eagle-Picher and included in the Assets and any New
Eagle-Picher Common Stock issuable on the exercise or conversion thereof,
without regard to any of the limitations set forth in the other parts of this
Article 4.
(b) Except with respect to entities owned and controlled by the
PI Trust for purposes of carrying out provisions of this Trust Agreement, and
any company engaged in claims processing on behalf of the PI Trust, the PI Trust
shall not acquire or hold any equity in any Person or business enterprise unless
such equity is in the form of securities that are traded
<PAGE> 18
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on a national securities exchange or major international securities exchange or
over the National Association of Securities Dealers Automated Quotation System.
This subsection shall not restrict the PI Trust's ability to invest in mutual
funds.
(c) The PI Trust shall not acquire or hold any repurchase
obligations unless, in the opinion of the Trustees, they are adequately
collateralized.
4.4 SOURCE OF PAYMENTS. All PI Trust expenses, payments and all
liabilities with respect to Toxic Personal Injury Claims shall be payable solely
out of the PI Trust estate. Neither Eagle-Picher, Reorganized Eagle-Picher, any
Debtors, their subsidiaries, any successor in interest or the present or former
directors, officers, employees or agents of Eagle-Picher, Reorganized
Eagle-Picher, any Debtors or their subsidiaries, nor the Trustees, the TAC, or
any of their officers, agents, advisers or employees shall be liable for the
payment of any PI Trust expense or Toxic Personal Injury Claim or any other
liability of the PI Trust.
ARTICLE 5
TRUSTEES
--------
5.1 NUMBER; CHAIRPERSON.
-------------------
(a) Initially there shall be three (3) Trustees, one of whom
shall serve for a period of five (5) years after the effective date of the PI
Trust ("FIVE YEAR SERVICE PERIOD"). The initial Trustees shall be those persons
named on the signature page hereof, and the Trustee who shall serve for the Five
Year Service Period shall be designated as such on the signature page hereof.
Eventually, there shall be four (4) Trustees during the Five Year Service
Period. W. Thomas Stephens shall serve as the fourth Trustee upon delivering to
the initial Trustees, no later than January 3, 1997, a written acceptance of
such position. In the event that W. Thomas Stephens does not deliver such
written acceptance of such position on or before January 3, 1997 to the initial
Trustees, the initial Trustees shall promptly appoint a fourth Trustee in the
same manner that a successor Trustee would be appointed pursuant to Article
5.3(a) hereof in the event of a vacancy in the position of Trustee other than
one caused by resignation. Beginning in the sixth year after the effective date
of the PI Trust, the PI Trust will operate with three (3) Trustees until the
termination of the PI Trust pursuant to Article 7.2.
(b) There shall be a Chairperson of the Trustees. The
Chairperson shall act as the Trustees' liaison, he or she shall coordinate and
schedule meetings of the Trustees, and he or she shall handle all administrative
matters that come before the Trustees. Ruth McMullin shall serve as Chairperson
of the Trustees for a period of three (3) years from the effective date
<PAGE> 19
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of the PI Trust. Upon the earlier of the completion of the three year period
commencing on the effective date of the PI Trust, the Chairperson's resignation
or her death, the vacancy in the position of Chairperson shall be filled by the
majority vote of all of the Trustees, including the vote of the Chairperson upon
resignation or at the completion of her term as Chairperson. The Trustees may
reappoint the same Trustee to serve as Chairperson for successive terms.
5.2 TERM OF SERVICE.
---------------
(a) Trustees shall serve until the earlier of (i) the
termination of the PI Trust pursuant to Article 7.2, (ii) his or her death,
(iii) his or her resignation pursuant to Article 5.2(b), (iv) his or her removal
pursuant to Article 5.2(c), (v) his or her retirement pursuant to Article
5.2(d), at which time his or her term shall terminate automatically, or (vi) in
the case of the Trustee designated to serve during the Five Year Service Period,
the expiration of the Five Year Service Period.
(b) Any Trustee may resign at any time by written notice to
each of the remaining Trustees and the TAC. Such notice shall specify a date
when such resignation shall take effect, which shall not be less than 90 days
after the date such notice is given, where practicable.
(c) Any Trustee may be removed for any reason, without cause,
upon the unanimous decision of the other Trustees and the unanimous decision of
the members of the TAC. Any Trustee may be removed for good cause upon the
unanimous decision of the other Trustees and without the consent of members of
the TAC. Good cause shall be deemed to include, without limitation, a Trustee's
inability to discharge his or her duties hereunder due to accident or physical
or mental deterioration, any failure to comply with Article 5.9, a consistent
pattern of neglect and failure to perform or participate in performing the
duties of the Trustees hereunder, or repeated nonattendance at scheduled
meetings. Removal with or without good cause shall take effect at such time as
the other Trustees shall determine.
(d) Each Trustee must retire upon attaining the age of
seventy-two (72), by written notice to each of the remaining Trustees and the
TAC. Such notice shall specify the date when the Trustee will attain such age,
and, where practicable, shall be delivered not less than ninety (90) days prior
to the Trustee's seventy-second (72nd) birthday.
5.3 APPOINTMENT OF SUCCESSOR TRUSTEE.
--------------------------------
(a) In the event of a vacancy in the position of a Trustee, the
vacancy shall be filled by the majority vote of all of the Trustees, including
the vote of the Trustee vacating such position; provided, however, that in the
event of a vacancy in the position of a Trustee other
<PAGE> 20
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than one caused by resignation, the vacancy shall be filled by the majority vote
of the remaining Trustees. After the appointment of the fourth Trustee pursuant
to Article 5.1(a) herein and during the Five Year Service Period, the remaining
Trustees, in their discretion, may decide not to appoint a successor Trustee to
fill such a vacancy so long as the remaining Trustees number no less than three
(3). The Trustees shall refrain from making any appointment that may result in
the appearance of impropriety.
(b) Immediately upon the appointment of any successor Trustee,
all rights, titles, duties, powers and authority of the predecessor Trustee
hereunder shall be vested in, and undertaken by, the successor Trustee without
any further act. No successor Trustee shall be liable personally for any act or
omission of his or her predecessor Trustee.
5.4 LIABILITY OF TRUSTEES. No Trustee, officer, or employee of the PI
Trust shall be liable to the PI Trust, to any person holding a Toxic Personal
Injury Claim, or to any other Person except for such Trustee's, officer's or
employee's own breach of trust committed in bad faith or for willful
misappropriation. No Trustee, officer, or employee of the PI Trust shall be
liable for any act or omission of any other officer, agent, or employee of the
PI Trust, unless the Trustee acted with bad faith or willful misconduct in the
selection or retention of such officer, agent, or employee.
5.5 Compensation and Expenses of Trustees.
-------------------------------------
(a) Each of the Trustees shall receive compensation from the PI
Trust for his or her services as Trustee in the amount of $50,000 per annum. The
Chairperson of the Trustees shall receive additional compensation from the PI
Trust for his or her services as Chairperson in the amount of $50,000 per annum.
Each of the Trustees, except the Chairperson, shall receive additional
compensation for each hour that he or she works on trust related business, other
than attending Trustees' meetings, at an hourly rate determined by the Trustees.
However, if a Trustee, other than the Chairperson, devotes eight hours or more
to trust business within one calendar day, other than attending Trustees
meetings, he or she shall receive additional compensation at a per diem rate of
$2,000, rather than at an hourly rate. Trustees shall not be compensated beyond
the annual compensation for attending Trustees' meetings. The Trustees shall
determine the scope of activities that constitute "Trustees' meetings." The
hourly, per diem and per annum compensation payable to the Trustees hereunder
shall be increased annually proportionately with any increase in the Consumer
Price Index -- All Cities (or any successor index) for the corresponding annual
period. Except as provided in Section 5.10 of this Trust Agreement, any increase
in excess of that amount may be made only with the approval of the Bankruptcy
Court.
<PAGE> 21
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(b) The PI Trust will promptly reimburse the Trustees for all
reasonable out-of-pocket costs and expenses incurred by the Trustees in
connection with the performance of their duties hereunder.
5.6 Indemnification of Trustees and Others.
--------------------------------------
(a) The PI Trust shall indemnify and defend the Trustees, the
PI Trust's officers, agents, advisers or employees, to the fullest extent that a
corporation or trust organized under the laws of the PI Trust's domicile is from
time to time entitled to indemnify and defend its directors, trustees, officers,
employees, agents or advisers against any and all liabilities, expenses, claims,
damages or losses incurred by them in the performance of their duties hereunder.
Notwithstanding the foregoing, the Trustees and members of the TAC shall not be
indemnified or defended in any way for any liability, expense, claim, damage or
loss for which they have been adjudicated to be liable under Article 5.4.
Additionally, each member of the Injury Claimants' Committee and its
professionals, and the Future Representative and his professionals
(collectively, in addition to members of the TAC, each in his or her capacity as
"ADDITIONAL INDEMNITEES") who was or is a party, or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding of any
kind, whether civil, administrative or arbitrative, by reason of any act or
omission of such Additional Indemnitees in the aforementioned capacities with
respect to (i) the Chapter 11 Cases, (ii) the liquidation of any Toxic Personal
Injury Claims, or (iii) the administration of the PI Trust and the
implementation of the Procedures, shall be indemnified and defended by the PI
Trust against expenses, costs and fees (including attorneys' fees), judgments,
awards, costs, amounts paid in settlement, and liabilities of all kinds
incurred by each Additional Indemnitee in connection with or resulting from
such action, suit, or proceeding, if he or she acted in good faith and in a
manner such Additional Indemnitee reasonably believed to be in, or not opposed
to, the best interests of the holders of Toxic Personal Injury Claims.
(b) Reasonable expenses, costs and fees (including attorneys'
fees) incurred by or on behalf of a Trustee or Additional Indemnitee in
connection with any action, suit, or proceeding, whether civil, administrative
or arbitrative, may be paid by the PI Trust in advance of the final disposition
thereof upon receipt of an undertaking by or on behalf of such Trustee or
Additional Indemnitee to repay such amount unless it shall be determined
ultimately that such Trustee or Additional Indemnitee is entitled to be
indemnified by the PI Trust.
(c) The Trustees shall have the power, generally or in specific
cases, to cause the PI Trust to indemnify the employees and agents of the PI
Trust to the same extent as provided in this Article 5.6 with respect to the
Trustees.
<PAGE> 22
- 22 -
(d) Any indemnification under Article 5.6(c) of this Agreement
shall be made by the PI Trust upon a determination that indemnification of such
Person is proper in the circumstances. Such determination shall be made by a
majority vote of the Trustees who were not parties to such action, suit, or
proceeding, if at least two such Trustees were not parties; otherwise the
determination will be made by legal counsel to the PI Trust.
(e) The Trustees may purchase and maintain reasonable amounts
and types of insurance on behalf of an individual who is or was a Trustee,
officer, employee, agent or representative of the PI Trust or Additional
Indemnitee against liability asserted against or incurred by such individual in
that capacity or arising from his or her status as a Trustee, officer, employee,
agent or representative.
5.7 TRUSTEES' LIEN. The Trustees shall have a prior lien upon the PI
Trust corpus to secure the payment of any amounts payable to them pursuant to
Articles 5.5 and 5.6.
5.8 TRUSTEES' EMPLOYMENT OF EXPERTS. The Trustees may, but shall not be
required to, consult with counsel, accountants, appraisers and other parties
deemed by the Trustees to be qualified as experts on the matters submitted to
them (regardless of whether any such party is affiliated with any of the
Trustees in any manner, except as otherwise expressly provided in this Trust
Agreement), and the opinion of any such parties on any matters submitted to them
by the Trustees shall be full and complete authorization and protection in
respect of any action taken or not taken by the Trustees hereunder in good faith
and in accordance with the written opinion of any such party.
5.9 TRUSTEES' INDEPENDENCE. No Trustee shall, during the term of his or
her service, serve as director of Reorganized Eagle-Picher or act as attorney
for Reorganized Eagle-Picher or as an attorney or advisor for any person who
holds a Toxic Personal Injury Claim.
5.10 TRUSTEES' SERVICE AS OFFICERS OR CONSULTANTS TO THE TRUST. The
Trustees may, but are not required to, select any Trustee to serve as an officer
or manager of the Trust or as a consultant to the Trust. In the event any
Trustee serves the Trust in such a capacity, the Trust shall compensate the
Trustee in an amount determined by the Trustees. Compensation for a Trustee's
service as an officer or manager of the Trust or as a consultant to the Trust
shall be in addition to compensation paid pursuant to Article 5.5.
5.11 BOND. The Trustees shall not be required to post any bond or other
form of surety or security unless otherwise ordered by the Bankruptcy Court.
5.12 SETTLEMENT OF TRUSTEE'S ACCOUNTS. Notwithstanding any state law to
the contrary, the Bankruptcy Court shall have exclusive jurisdiction over the
settlement of the accounts of the
<PAGE> 23
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Trustees, whether such account is rendered by the Trustees themselves or is
sought by any other person. The Trustees shall render successive accounts
covering periods ending at the end of each calendar year consisting of the
filings required by Article 3.2(c) of this Trust Agreement. In addition, an
account shall be rendered for the period ending on the date of the death,
resignation, removal or retirement of any Trustee. Upon the approval of any such
account by the Bankruptcy Court after hearing on notice to Reorganized
Eagle-Picher, the TAC and such other parties as the Bankruptcy Court may
designate, the Trustees shall be discharged from any further liability or
responsibility, as to all matters embraced in such account.
ARTICLE 6
TRUSTEES' ADVISORY COMMITTEE
----------------------------
6.1 FORMATION; DUTIES. A Trustees' Advisory Committee (the "TAC") shall
be formed. The Trustees shall consult with the TAC on the appointment of
successor Trustees and the implementation and administration of the Procedures.
The Trustees may consult with the TAC on any matter affecting the PI Trust, and
certain actions by the Trustees are subject to the prior consent of the TAC as
provided in Article 3.2(e) hereof. The TAC shall endeavor to act in the best
interests of the holders of all Toxic Personal Injury Claims.
6.2 NUMBER; CHAIRPERSON.
-------------------
(a) There shall be three members of the TAC. The initial TAC
members shall be Gene Locks, Robert E. Sweeney and Robert B. Steinberg. The TAC
shall act in all cases by majority vote.
(b) There shall be a Chairperson of the TAC who shall be
selected by the TAC members. The Chairperson shall act as the TAC's liaison, he
shall coordinate and schedule meetings of the TAC, and he shall handle all
administrative matters that come before the TAC. Robert E. Sweeney shall serve
as the initial Chairperson of the TAC.
6.3 TERM OF OFFICE.
--------------
(a) Each member of the TAC shall serve for the duration of the
PI Trust, subject to the earlier of his or her death, resignation, or removal.
(b) Subject to Article 6.4(b) hereof, any member of the TAC may
resign at any time by written notice to each of the remaining members specifying
the date when such resignation shall take place.
<PAGE> 24
- 24 -
(c) Any member of the TAC may be removed in the event such
member becomes unable to discharge his or her duties hereunder due to accident,
physical deterioration, mental incompetence, or a consistent pattern of neglect
and failure to perform or to participate in performing the duties of such member
hereunder, such as repeated nonattendance at scheduled meetings. Such removal
shall be made by the unanimous decision of the other members of the TAC, and it
shall be effective at such time as all other members of the TAC determine.
6.4 APPOINTMENT OF SUCCESSOR.
------------------------
(a) A vacancy in the TAC caused by the resignation of a TAC
member shall be filled with an individual nominated by the resigning TAC member
and approved by a majority vote of all TAC members. The resigning TAC member's
resignation shall not be effective until such approval is obtained and the
successor TAC member has accepted the appointment.
(b) In the event of a vacancy in the membership of the TAC
other than one caused by resignation, the vacancy shall be filled by the
unanimous vote of the remaining member(s) of the TAC.
6.5 COMPENSATION AND EXPENSES OF TAC MEMBERS.
----------------------------------------
(a) Each member of the TAC, except as provided under paragraph
(d) of this Article 6.5, shall receive compensation from the PI Trust for his or
her services in the amount of $2,500.00 per diem for meetings attended by such
member, payable as determined by the Trustees, but not less frequently than
quarterly. Such per diem amount shall be increased or decreased annually
proportionally as the per annum compensation paid to the Trustees is increased
or decreased pursuant to Article 5.5(a). For purposes of determining the per
diem amount hereunder, the same definition of "meeting" shall apply to the TAC
as is adopted by the Trustees for meetings of the Trustees.
(b) The Chairperson of the TAC shall receive compensation from
the PI Trust in addition to the per diem allowance paid to each member of the
TAC, for each hour that he or she works on trust related business, other than
attending meetings, at an hourly rate commensurate with the hourly rate paid to
the Trustees. However, if the Chairperson devotes eight hours or more to trust
business within one calendar day, other than attending meetings, he or she shall
receive additional compensation at a per diem rate of $2,000, rather than at an
hourly rate. Regardless of the Chairperson's serving as a director of
Reorganized Eagle-Picher, the provisions of Article 6.5(c) shall apply to
reimbursement from the PI Trust of his or her reasonable out-of-pocket costs and
expenses.
<PAGE> 25
- 25 -
(c) All reasonable out-of-pocket costs and expenses incurred by TAC
members in connection with the performance of their duties hereunder will be
promptly reimbursed to such members by the PI Trust.
(d) Any member of the TAC who serves as a director of Reorganized
Eagle-Picher and receives an allowance from Reorganized Eagle-Picher for
attending meetings in such capacity shall not receive compensation for his or
her services on behalf of the TAC; provided, however, that the PI Trust will
promptly reimburse each member of the TAC who serves as a director of
Reorganized Eagle-Picher for all reasonable out-of-pocket costs and expenses
incurred by him or her in connection with attending and participating in
meetings relating to the performance of his or her duties as a member of the
TAC, notwithstanding the broader reimbursement provisions of Article 6.5(c).
6.6 PROCEDURE FOR OBTAINING CONSENT OF TAC. In the event a matter is
subject to the consent of the TAC pursuant to the terms hereof, the Trustees
shall provide the TAC with the appropriate information regarding the matter in
question. Upon receipt of such information, the TAC shall be given a period of
twenty (20) days (the "Period") to respond to the Trustees' request for consent.
The Period may be reduced upon unanimous consent of the TAC or extended with the
unanimous consent of the Trustees. In the event that the TAC does not respond to
the Trustees within the Period as to their approval or non-approval to such
matter, then approval by the TAC shall be deemed to have been granted. The
members of the TAC must consider in good faith any request by the Trustees prior
to any non-approval thereof, and no member of the TAC may withhold his consent
unreasonably.
ARTICLE 7
GENERAL PROVISIONS
------------------
7.1 IRREVOCABILITY. The PI Trust is irrevocable, but is subject to
amendment as provided in Article 7.3.
7.2 TERMINATION.
-----------
(a) The PI Trust shall automatically terminate on the date (the
"TERMINATION DATE") 90 days after the first occurrence of any of the following
events:
(i) the Trustees in their sole discretion decide to
terminate the PI Trust because (A) they deem it unlikely that new Toxic
Personal Injury Claims will be filed against the PI Trust and (B) all
Toxic Personal Injury Claims duly filed with the PI Trust
<PAGE> 26
- 26 -
have been liquidated and satisfied and twelve consecutive months have
elapsed during which no new Toxic Personal Injury Claim has been filed
with the PI Trust;
(ii) if the Trustees have procured and have in place
irrevocable insurance policies and have established claims handling
agreements and other necessary arrangements with suitable third
parties adequate to discharge all expected remaining obligations and
expenses of the PI Trust in a manner consistent with this Trust
Agreement and the Procedures, the date on which the Bankruptcy Court
enters an order approving such insurance and other arrangements and
such order becomes final;
(iii) if in the judgment of two/thirds of the Trustees,
with the consent of the TAC (which consent shall not be unreasonably
withheld), the continued administration of the PI Trust is uneconomic
or inimical to the best interests of the persons holding Toxic Personal
Injury Claims and the termination of the PI Trust will not expose or
subject Reorganized Eagle-Picher or any other Reorganized Debtor or any
successor in interest to any increased or undue risk of having any
Toxic Personal Injury Claims asserted against it or them or in any way
jeopardize the validity or enforceability of the Asbestos and Lead PI
Permanent Channeling Injunction; or
(iv) 21 years less 91 days pass after the death of the
last survivor of all the descendants of Joseph P. Kennedy, Sr. of
Massachusetts living on the date of this Agreement's effectiveness,
defined under Article 7.16 hereof.
(b) On the Termination Date, after payment of all the PI
Trust's liabilities have been provided for, all monies remaining in the PI Trust
estate shall be transferred to charitable organization(s) exempt from federal
income tax under Section 501(c)(3) of the Internal Revenue Code, which
tax-exempt organization(s) shall be selected by the Trustees using their
reasonable discretion; provided, however, that (i) if practicable, the
tax-exempt organization(s) shall be related to the treatment of, research, or
the relief of suffering of individuals suffering from asbestos or lead caused
disorders, and (ii) the tax-exempt organization(s) shall not bear any
relationship to Reorganized Eagle-Picher within the meaning of Section 468(d)(3)
of the Internal Revenue Code.
7.3 AMENDMENTS. The Trustees, after consultation with the TAC, and
subject to the TAC's consent when so provided herein, may modify or amend this
Trust Agreement or any document annexed to it, including, without limitation,
the Bylaws, or the Procedures, except that Articles 2.2 (Purpose), 2.4
(Acceptance of Assets and Assumption of Liabilities), 3.1(e) (precluding
guaranty of others' debt), 3.2(e) (Trustees' consultation with TAC), 3.3(a)-(c)
(claims administration), 5.1 (Number; Chairperson), 5.2 (Term of Service), 5.3
(Appointment of Successor Trustee), 5.5 (Compensation and Expenses of Trustees),
5.6 (Indemnification of
<PAGE> 27
- 27 -
Trustees and Others), 5.9 (Trustees' Independence), 6.1 (TAC Formation and
Duties), 6.2 (TAC Number and Chairperson), 6.4 (Appointment of Successor (TAC)),
7.1 (Irrevocability), 7.2 (Termination) and 7.3 (Amendments) herein shall not be
modified or amended in any respect. No consent from the Settlors shall be
required to modify or amend this Trust Agreement or any document annexed to it.
Any modification or amendment made pursuant to this section must be made in
writing. Notwithstanding anything contained herein to the contrary, neither this
Trust Agreement nor the Procedures shall be modified or amended in any way that
would jeopardize the efficacy or enforceability of the Asbestos and Lead PI
Permanent Channeling Injunction.
7.4 MEETINGS. For purposes of Articles 5.5 and 6.5 of this Trust
Agreement, a TAC member or a Trustee shall be deemed to have attended a meeting
in the event such person spends a substantial portion of the day conferring, by
phone or in person, on PI Trust matters with TAC members or Trustees. The
Trustees shall have complete discretion to determine whether a meeting, as
described herein, occurred for purposes of Articles 5.5 and 6.5.
7.5 SEVERABILITY. Should any provision in this Trust Agreement be
determined to be unenforceable, such determination shall in no way limit or
affect the enforceability and operative effect of any and all other provisions
of this Trust Agreement.
7.6 NOTICES. Notices to persons asserting claims shall be given at the
address of such person, or, where applicable, such person's legal
representative, in each case as provided on such person's claim form submitted
to the PI Trust with respect to his or her Toxic Personal Injury Claim. Any
notices or other communications required or permitted hereunder shall be in
writing and delivered at the addresses designated below, or sent by telecopy
pursuant to the instructions listed below, or mailed by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows, or to
such other address or addresses as may hereafter be furnished by any of
Reorganized Eagle-Picher, the Trustees or the TAC to the others in compliance
with the terms hereof.
To the PI Trust
or the Trustees: James J. McMonagle
24 Walnut Street
Chagrin Falls, Ohio 44022
Telecopier: (216) 844-5010
Telephone Confirmation: (216) 844-3817
and
<PAGE> 28
- 28 -
Daniel M. Phillips
2049 Delaware Drive
Ann Arbor, MI 48103-6014
Telecopier: (313) 662-4502
Telephone Confirmation (313) 662-4925
and
Ruth McMullin
274 Beacon Street
Boston, MA 02116
Telecopier: (617) 536-6223
Telephone Confirmation: (617) 536-6233
With a copy to: George A. Davidson
Hughes Hubbard & Reed L.L.P.
1 Battery Park Plaza
New York, NY 10004
Telecopier: (212) 422-4726
Telephone Confirmation: (212) 837-6000
To the TAC: Robert E. Sweeney, Esq.
Robert E. Sweeney Co., L.P.A.
Suite 1500, Illuminating Building
55 Public Square
Cleveland, Ohio 44113
Telecopier: (216) 696-0732
Telephone Confirmation: (216) 696-0606
and
<PAGE> 29
- 29 -
Robert B. Steinberg, Esq.
Rose, Klein & Marias
18th Floor
801 South Grand Avenue
Los Angeles, California 90017-4645
Telecopier: (213) 623-7755
Telephone Confirmation: (213) 626-0571
and
Gene Locks
Greitzer & Locks
1500 Walnut Street
Philadelphia, PA 19102
Telecopier: (215) 985-2960
Telephone Confirmation: (215) 893-0100
To Reorganized
Eagle-Picher: Eagle-Picher Industries, Inc.
Attention: General Counsel
IF BY HAND OR OVERNIGHT DELIVERY:
Suite 1300, 580 Building
580 Walnut Street
Cincinnati, Ohio 45202
IF BY MAIL:
Post Office Box 779
Cincinnati, Ohio 45201
Telecopier: (513) 721-3404
Telephone Confirmation: (513) 629-2400
and
<PAGE> 30
- 30 -
Weil, Gotshal & Manges, L.L.P.
767 Fifth Avenue
New York, New York 10153
Attention: Stephen Karotkin, Esq.
Telecopier: (212) 310-8007
Telephone Confirmation: (212) 310-8888
and
Frost & Jacobs
2500 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202-4182
Attention: Edmund J. Adams, Esq.
Telecopier: (513) 651-6981
Telephone Confirmation: (513) 651-6800
All such notices and communications shall be effective when
delivered at the designated addresses or when the telecopy communication is
received at the designated addresses and confirmed by the recipient by return
telecopy in conformity with the provisions hereof.
7.7 COUNTERPARTS. This Trust Agreement may be executed in any number of
counterparts, each of which shall constitute an original, but such counterparts
shall together constitute but one and the same instrument.
7.8 SUCCESSORS AND ASSIGNS. The provisions of this Trust Agreement
shall be binding upon and inure to the benefit of the Settlors, the PI Trust,
and the Trustees and their respective successors and assigns, except that
neither the Settlors nor the PI Trust nor any Trustee may assign or otherwise
transfer any of its, or his or her rights or obligations under this Trust
Agreement except, in the case of the PI Trust and the Trustees, as contemplated
by Article 3.1.
7.9 LIMITATION ON CLAIM INTERESTS FOR SECURITIES LAWS PURPOSES. Toxic
Personal Injury Claims, and any interests therein, (a) shall not be assigned,
conveyed, hypothecated, pledged or otherwise transferred, voluntarily or
involuntarily, directly or indirectly, except by will or under the laws of
descent and distribution; (b) shall not be evidenced by a certificate or other
instrument; (c) shall not possess any voting rights; and (d) shall not be
entitled to receive any dividends or interest; provided, however, that the
foregoing shall not apply to the holder of an Asbestos or Lead Contribution
Claim that is subrogated to an Asbestos Personal Injury Claim
<PAGE> 31
- 31 -
or Lead Personal Injury Claim as a result of its satisfaction of such Asbestos
Personal Injury Claim or Lead Personal Injury Claim.
7.10 ENTIRE AGREEMENT; NO WAIVER. The entire agreement of the parties
relating to the subject matter of this Trust Agreement is contained herein and
in the documents referred to herein, and this Trust Agreement and such documents
supersede any prior oral or written agreements concerning the subject matter
hereof. No failure to exercise or delay in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any further
exercise thereof or of any other right, power or privilege. The rights and
remedies herein provided are cumulative and are not exclusive of rights under
law or in equity.
7.11 HEADINGS. The headings used in this Trust Agreement are inserted
for convenience only and neither constitute a portion of this Trust Agreement
nor in any manner affect the construction of the provisions of this Trust
Agreement.
7.12 GOVERNING LAW. This Trust Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
7.13 SETTLORS' REPRESENTATIVE. Eagle-Picher is hereby irrevocably
designated as the representative of the Settlors, and it is hereby authorized to
take any action required of the Settlors in connection with the Trust Agreement.
7.14 DISPUTE RESOLUTION. Any disputes that arise under this Agreement
or under the annexes hereto shall be resolved by the Bankruptcy Court pursuant
to Article 9 of the Plan, except as otherwise provided herein or in the annexes
hereto. Notwithstanding anything else herein contained, to the extent any
provision of this Trust Agreement is inconsistent with any provision of the
Plan, the Plan shall control.
7.15 ENFORCEMENT AND ADMINISTRATION. The parties hereby acknowledge the
Bankruptcy Court's continuing exclusive jurisdiction to interpret and enforce
the terms of this Trust Agreement and the annexes hereto, pursuant to Article 9
of the Plan.
7.16 EFFECTIVENESS. This Trust Agreement shall not become effective
until it has been executed and delivered by all the parties hereto and until the
Effective Date.
<PAGE> 32
- 32 -
IN WITNESS WHEREOF, the parties have executed this Trust Agreement this
29 day of November, 1996.
SETTLORS:
EAGLE-PICHER INDUSTRIES, INC.
BY: /s/ Thomas E. Petry
----------------------------
Name: Thomas E. Petry
--------------------------
Title: Chairman & CEO
-------------------------
DAISY PARTS, INC.
BY: /s/ James A. Ralston
----------------------------
Name: James A. Ralston
--------------------------
Title: Secretary
-------------------------
TRANSICOIL, INC.
BY: /s/ James A. Ralston
----------------------------
Name: James A. Ralston
--------------------------
Title: Asst. Secretary
-------------------------
MICHIGAN AUTOMOTIVE RESEARCH CORP.
BY: /s/ James A. Ralston
----------------------------
Name: James A. Ralston
--------------------------
Title: Asst. Secretary
-------------------------
EDI, INC.
BY: /s/ James A. Ralston
----------------------------
Name: James A. Ralston
--------------------------
Title: Asst. Secretary
-------------------------
<PAGE> 33
- 33 -
EAGLE-PICHER MINERALS, INC.
BY: /s/ James A. Ralston
----------------------------
Name: James A. Ralston
--------------------------
Title: Vice President
-------------------------
HILLSDALE TOOL &
MANUFACTURING CO.
BY: /s/ James A. Ralston
----------------------------
Name: James A. Ralston
--------------------------
Title: Secretary
-------------------------
TRUSTEES:
/s/ James J. McMonagle
-------------------------------
Name: James J. McMonagle
/s/ Ruth McMullin
-------------------------------
Name: Ruth McMullin
/s/ Daniel M. Phillips
-------------------------------
Name: Daniel M. Phillips
(5 Year Term Trustee)
<PAGE> 1
Exhibit 2.7
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re )
) Civ. Action No. MS 1 96-228
)
EAGLE-PICHER INDUSTRIES, ) Judge S. Arthur Spiegel
INC., et al., )
)
Debtors )
)
- ---------------------------- )
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re )
) Consolidated Case
) Nos. 1-91-00100
EAGLE-PICHER INDUSTRIES, )
INC., et al., ) Judge Burton Perlman
)
Debtors )
)
- ---------------------------- )
ORDER ON CONFIRMATION OF PLAN
These consolidated cases having come on for hearing on confirmation of
Plan before the court, Honorable S. Arthur Spiegel, United States District
Judge, and Honorable Burton Perlman, United States Bankruptcy Judge, and the
issues having been duly heard and Findings of Fact and Conclusions of Law
having been entered simultaneously herewith,
<PAGE> 2
It is Ordered and Adjudged:
I. INJUNCTIONS
A. CLAIMS TRADING INJUNCTION
1. This Confirmation Order contains and constitutes the Claims
Trading Injunction.
2. The Claims Trading Injunction is needed so that the beneficial
interests in the PI Trust and the Asbestos PD Trust are not considered
"securities" under the federal securities laws. Without the Claims Trading
Injunction, the Debtors might not be permitted to create trusts for the benefit
of the holders of Asbestos Personal Injury Claims and Lead Personal Injury
Claims and for the benefit of the holders of Asbestos Property Damage Claims.
The Claims Trading Injunction forms an integral part of the Debtors'
reorganization.
3. The Court has jurisdiction to enter the Claims Trading
Injunction under sections 1334(a), (b), and (d) of title 28 of the United States
Code.
4. Section 105(a) of the Bankruptcy Code permits approval and
entry of the Claims Trading Injunction, especially where, as here, such
injunction is essential to the formulation and implementation of the Plan as
provided in section 1123 (a)(5) of the Bankruptcy Code, confers material
benefits on the
2
<PAGE> 3
Debtors' estates, and is in the best interests of holders of Claims against the
Debtors.
5. The Claims Trading Injunction is consistent with sections 105
and 1129 of the Bankruptcy Code and other applicable provisions of the
Bankruptcy Code, and the Claims Trading Injunction is in the best interests of
the Debtors' estates. See A.H. Robins Co., Inc. v. Piccinin, 788 F.2d 994,
1002-03 (4th Cir.), cert. denied, 479 U.S. 876 (1986); In re Johns-Manville
Corp., 801 F.2d 60, 63-64 (2d Cir. 1986).
B. SECTION 524(g) INJUNCTION
1. The Plan establishes, in Class 17, the PI Trust, to which all
Asbestos Personal Injury Claims and Lead Personal Injury Claims are being
channeled.
2. The identity of the proposed trustees of the PI Trust were
disclosed at the Confirmation Hearing and are as follows: James J.G. McMonagle,
Ruth B. McMullin, Daniel M. Phillips, and W. Thomas Stephens. The identity of
the proposed members of the Trustees' Advisory Committee (the "TAC") were
disclosed at the Confirmation Hearing and are as follows: Gene Locks, Robert E.
Sweeney, and Robert B. Steinberg.
3
<PAGE> 4
3. This Confirmation Order contains and constitutes the Asbestos
and Lead PI Permanent Channeling Injunction. The Asbestos and Lead PI Permanent
Channeling Injunction is to be implemented in connection with the PI Trust.
4. At the time of the order for relief with respect to
Eagle-Picher, Eagle-Picher had been named as a defendant in personal injury,
wrongful death, and property damage actions seeking recovery for damages
allegedly caused by the presence of, or exposure to, asbestos or
asbestos-containing products.
5. At the time of the order for relief with respect to
Eagle-Picher, Eagle-Picher had been named as a defendant in personal injury,
wrongful death, and property damage actions seeking recovery for damages
allegedly caused by the presence of, or exposure to, lead-containing chemicals.
6. The PI Trust, as of the Effective Date, will assume the
liabilities of the Debtors with respect to Asbestos Personal Injury Claims and
Lead Personal Injury Claims.
7. Pursuant to the Plan, the PI Trust will be funded with one
hundred percent (100%) of the Tax Refund Notes, the Senior Unsecured Sinking
Fund Debentures, and the New Eagle-Picher Common Stock, as well as that portion
of the Divestiture Notes and Available Cash that is not being distributed to
4
<PAGE> 5
holders of Allowed Environmental Claims and Allowed Unsecured Claims.
8. Pursuant to the Plan, the PI Trust is to be funded in whole or
in part by securities of one or more of the Debtors and by the obligations of
such Debtors to make future payments, including dividends.
9. The PI Trust is to own, or by the exercise of rights granted
under the Plan would be entitled to own if specified contingencies occur, a
majority of the voting shares of Eagle-Picher, the direct or indirect parent
corporation of each of the Debtors.
10. The Debtors are likely to be subject to substantial future
Demands for payment arising out of the same or similar conduct or events that
gave rise to the Claims that are addressed by the Asbestos and Lead PI Permanent
Channeling Injunction (the "Asbestos and Lead PI Demands").
11. The actual amounts, numbers, and timing of the future
Asbestos and Lead PI Demands cannot be determined.
12. Pursuit of the Asbestos and Lead PI Demands outside the
procedures prescribed by the Plan is likely to threaten the Plan's purpose to
deal equitably with Claims and future Demands.
5
<PAGE> 6
13. The terms of the Asbestos and Lead PI Permanent Channeling
Injunction, including any provisions barring actions against third parties
pursuant to section 524(g)(4)(A), are set out in the Plan and in the Disclosure
Statement.
14. The Plan establishes, in Class 17 (Asbestos Personal Injury
Claims and Lead Personal Injury Claims), a separate class of the claimants whose
Claims are to be addressed by the PI Trust.
15. Class 17 (Asbestos Personal Injury Claims and Lead Personal
Injury Claims) has voted, by at least 75 percent (75%) of those voting, in favor
of the Plan.
16. Pursuant to court orders or otherwise, the PI Trust will
operate through mechanisms such as structured, periodic, or supplemental
payments, pro rata distributions, matrices, or periodic review of estimates of
the numbers and values of present Claims and future Demands, or other comparable
mechanisms, that provide reasonable assurance that the PI Trust will value, and
be in a financial position to pay, present Claims and future Demands that
involve similar claims in the same manner.
17. The Future Claimants' Representative was appointed as part
of the proceedings leading to issuance of the
6
<PAGE> 7
Asbestos and Lead PI Permanent Channeling Injunction for the purpose of
protecting the rights of persons that might subsequently assert Demands that
are addressed in the Asbestos and Lead PI Permanent Channeling Injunction and
transferred to the PI Trust.
18. Identifying each PI Protected Party in the Asbestos and Lead
PI Permanent Channeling Injunction is fair and equitable with respect to persons
that might subsequently assert Demands against each such PI Protected Party, in
light of the benefits provided, or to be provided, to the PI Trust by or on
behalf of any such PI Protected Party.
19. The PI Trust satisfies the requirements for a trust under
section 524(g) of the Bankruptcy Code.
20. The Court has jurisdiction to enter the Asbestos and Lead PI
Permanent Channeling Injunction under sections 1334(a), (b), and (d) of title 28
of the United States Code.
21. Sections 105(a) and 524(g) of the Bankruptcy Code permit
approval and entry of the Asbestos and Lead PI Permanent Channeling Injunction,
especially where, as here, such injunction is essential to the formulation and
implementation of the Plan as provided in section 1123(a)(5) of the Bankruptcy
Code, confers material benefits on the Debtors' estates, is in the
7
<PAGE> 8
best interests of holders of Claims against the Debtors, and complies in all
respects with the requirements of section 524(g) of the Bankruptcy Code.
22. The Asbestos and Lead PI Permanent Channeling Injunction is
consistent with sections 105(a), 524(g), and 1129 of the Bankruptcy Code and
other applicable provisions of the Bankruptcy Code, and the Asbestos and Lead PI
Permanent Channeling Injunction is in the best interests of the Debtors'
estates. See A.H. Robins Co., Inc. v. Piccinin, 788 F.2d 994, 1002-03 (4th
Cir.), cert. denied, 479 U.S. 876 (1986); In re Johns-Manville Corp., 801 F.2d
60, 63-64 (2d Cir. 1986).
II. CONFIRMATION OF THE PLAN
1. The Third Amended Consolidated Plan of Reorganization as modified
in the manner to which reference is made in paragraph 17 hereafter be, and it
hereby is, confirmed.
2. The record of this Confirmation Hearing be, and it hereby is,
closed.
3. All objections to confirmation of the Plan that have not been
withdrawn prior to entry of this Confirmation Order or are not cured by the
relief granted herein be, and they hereby are, overruled in their entirety and
all withdrawn
8
<PAGE> 9
objections be, and they hereby are, deemed withdrawn with prejudice.
4. The provisions in Articles 5 and 7 of the Plan governing
distributions, reserves, and the procedures for resolving and treating Disputed
Claims under the Plan be, and they hereby are, approved and found to be fair and
reasonable.
5. In accordance with section 1141 of the Bankruptcy Code, the
provisions of the Plan be, and they hereby are, binding upon the Plan
Proponents, the Debtors in Possession, any other Entity giving, acquiring or
receiving property under the Plan, any lessor or lessee of property to or from
the Debtors, and any holder of a Claim against or Equity Interest in the
Debtors, whether or not the Claim or Equity Interest of such creditor or Equity
Interest holder is impaired under the Plan and whether or not such creditor or
Equity Interest holder has filed, or is deemed to have filed, a proof of Claim
or proof of Equity Interest or has accepted the Plan.
6. Nothing in this Confirmation Order shall in any way affect the
provisions of section 7.9 of the Plan, which provide that, if the Plan
Proponents unanimously decide that one of the conditions to the occurrence of
the Effective Date set forth in section 7.9 of the Plan cannot be satisfied, and
the
9
<PAGE> 10
occurrence of such condition is not waived by the Plan Proponents, then this
Confirmation Order, including all Findings of Fact and Conclusions of Law
contained herein, shall be null and void and the Plan Proponents, the UCC, and
other holders of Claims and Equity Interests shall stand in the same position as
if the Plan had never been filed and this Confirmation Order had never been
entered.
7. On the Effective Date, in accordance with section 1141 of the
Bankruptcy Code and section 12.7 of the Plan, the Reorganized Debtors be, and
they hereby are, revested with the assets of the Debtors free and clear of all
Encumbrances, Claims, Equity Interests, and other interests, except to the
extent specifically provided herein or in the Plan.
8. From and after the entry of this Order every Entity be, and it
hereby is, permanently and forever stayed, restrained, and enjoined from,
directly or indirectly, purchasing, selling, transferring, assigning,
conveying, pledging, or otherwise acquiring or disposing of any Asbestos
Personal Injury Claim, Lead Personal Injury Claim, or Asbestos Property Damage
Claim; provided, however, that the foregoing shall not apply to (i) the transfer
of an Asbestos Personal Injury Claim, Lead Personal Injury Claim, or Asbestos
Property Damage Claim to the
10
<PAGE> 11
holder of an Asbestos or Lead Contribution Claim or Asbestos Property Damage
Contribution Claim, as the case may be, solely as a result of such holder's
satisfaction of such Asbestos Personal Injury Claim, Lead Personal Injury Claim,
or Asbestos Property Damage Contribution Claim, as the case may be, or (ii) the
transfer of an Asbestos Personal Injury Claim, Lead Personal Injury Claim, or
Asbestos Property Damage Claim by will or under the laws of descent and
distribution. Any action taken in violation of this paragraph will be void ab
initio.
9. From and after the Effective Date, every Entity be, and it hereby
is, permanently and forever stayed, restrained, and enjoined from taking any of
the following actions for the purpose of, directly or indirectly, collecting,
recovering, or receiving payment of, on, or with respect to any Asbestos
Personal Injury Claims or Lead Personal Injury Claims (other than actions
brought to enforce any right or obligation under the Plan, any Exhibits to the
Plan, or any other agreement or instrument between any of the Debtors or the
Reorganized Debtors and the PI Trust, which actions shall be in conformity and
compliance with the provisions of the Plan):
a. commencing, conducting, or continuing in any manner,
directly or indirectly, any suit, action,
11
<PAGE> 12
or other proceeding (including, without express or implied
limitation, a judicial, arbitral, administrative, or other
proceeding) in any forum against or affecting any PI Protected
Party or any property or interests in property of any PI
Protected Party;
b. enforcing, levying, attaching (including, without express
or implied limitation, any prejudgment attachment),
collecting, or otherwise recovering by any means or in any
manner, whether directly or indirectly, any judgment, award,
decree, or other order against any PI Protected Party or any
property or interests in property of any PI Protected Party;
c. creating, perfecting, or otherwise enforcing in any manner,
directly or indirectly, any Encumbrance against any PI
Protected Party or any property or interests in property of
any PI Protected Party;
d. setting off, seeking reimbursement of, contribution from,
or subrogation against, or otherwise recouping in any manner,
directly or
12
<PAGE> 13
indirectly, any amount against any liability owed to any PI
Protected Party or any property or interests in property of
any PI Protected Party; and
e. proceeding in any manner in any place with regard to any
matter that is subject to resolution pursuant to the PI
Trust, except in conformity and compliance therewith.
Nothing contained in this paragaph, however, shall constitute or be deemed a
waiver of any claim, right, or cause of action that the Debtors, the Reorganized
Debtors, or the PI Trust may have against any Entity in connection with or
arising out of an Asbestos Personal Injury Claim or Lead Personal Injury Claim,
and the foregoing injunction shall not apply to the assertion of any such claim,
right, or cause of action by the Debtors, the Reorganized Debtors, or the PI
Trust.
10. In exchange for the consideration provided for under the Plan, and
in accordance with section 1141 of the Bankruptcy Code, the Debtors be, and they
hereby are, discharged and released of and from any and all Claims, including,
without limitation, Asbestos Personal Injury Claims and Lead Personal Injury
Claims, against the Debtors or any of their respective
13
<PAGE> 14
estates that arose before the Effective Date, including, without limitation, any
interest accrued or expenses incurred thereon from and after each Debtor's
respective Petition Date or any Claim of a kind specified in sections 502(g),
502(h) or 502(i) of the Bankruptcy Code, whether or not (a) a proof of Claim
based upon such Clam is filed or deemed filed under section 501 of the
Bankruptcy Code, (b) such Claim is allowed under section 502 of the Bankruptcy
Code, or (c) the holder of such Claim has accepted the Plan.
11. In accordance with section 1142 of the Bankruptcy Code, the Plan
Proponents and any other Entity designated pursuant to the Plan be, and they
hereby are, authorized, empowered and directed to execute, deliver, file and
record any document, and to take any action necessary or appropriate to
implement, consummate and otherwise effect the Plan in accordance with its
terms in all material respects, and all such entities shall be bound by the
terms and provisions of all documents executed and delivered by them necessary
or appropriate to effectuate the transactions contemplated by the Plan.
12. All entities holding Claims against or Equity Interests in the
Debtors that are treated under the Plan be, and they hereby are, directed to
execute, deliver, file or record
14
<PAGE> 15
any document, and to take any action necessary to implement, consummate and
otherwise effect the Plan in accordance with its terms, and all such entities
shall be bound by the terms and provisions of all documents executed and
delivered by them in connection with the Plan.
13. For all purposes with respect to Distributions under the Plan, the
Equity Value be, and it hereby is, $341.8 million.
14. On the Effective Date, pursuant to sections 365(a) and 365(f)(1)
of the Bankruptcy Code, all executory contracts and unexpired leases of the
Debtors identified to be assumed in accordance with section 8.1 of the Plan be,
and they hereby are, deemed assumed by the Debtors, notwithstanding any
provision in such contracts or leases prohibiting assignment or transfer.
15. On the Effective Date, pursuant to section 365(a) of the
Bankruptcy Code and in accordance with section 8.2 of the Plan, all executory
contracts and unexpired leases of any of the Debtors that (i) are not listed on
Exhibit "8.1" of the Plan, (ii) have not been assumed by any of the Debtors with
the approval of the Bankruptcy Court, and (iii) are not the subject
15
<PAGE> 16
of pending motions to assume at the Confirmation Date be, and they hereby are,
rejected.
16. Any Claims created by the expiration or termination of any
executory contract or unexpired lease prior to the date of entry of this order
or the rejection pursuant to section 8.2 of the Plan of executory contracts or
unexpired leases, if not heretofore evidenced by a filed proof of claim, be, and
they hereby shall be, filed and served on the Debtors within thirty (30) days
from the entry of this Order. Any Claims for which a proof of claim is not filed
and served within such time shall be forever barred from assertion and shall not
be enforceable against the Debtors, their estates, assets, properties, or
interests in property, or the Reorganized Debtors or their estates, assets,
properties, or interests in property.
17. The Plan Modifications, including, without limitation, the amended
Asbestos and Lead PI Trust Agreement, set forth in Debtors' Exhibit J, be, and
hereby are, deemed to be either technical changes or clarifications that do not
adversely change the treatment of the Claim of any creditor of the Debtors or
have been consented to by the entities affected thereby, and the Plan Proponents
be, and hereby are, authorized
16
<PAGE> 17
to execute and file with the Court an amended Plan which shall reflect the Plan
Modifications.
18. The Plan Proponents be, and they hereby are, subject to further
order of this Court, authorized to amend or modify the Plan at any time prior to
the Effective Date, but only in accordance with section 4.1 of the Plan and
section 1127 of the Bankruptcy Code.
19. In the event of any inconsistency between the Plan and any
agreement, instrument or document intended to implement the Plan and this
Confirmation Order, the provisions of this Confirmation Order shall govern and
shall supersede any orders of this Court issued prior to the Effective Date that
may be inconsistent herewith. Notwithstanding the foregoing, in the event of any
inconsistency between the Plan or this Confirmation Order and the Environmental
Settlement Agreement, the Environmental Settlement Agreement shall govern.
20. The parties to any agreement or other document that is an exhibit
to the Plan (the "Plan Exhibits") be, and hereby are, authorized to modify such
Plan Exhibits consistent with the terms of the Plan Exhibits without further
order of this Court or further notice to any entities.
17
<PAGE> 18
21. Until the Effective Date, the Bankruptcy Court shall retain
exclusive jurisdiction over the Debtors, their properties and operations. On and
after the Effective Date, the Bankruptcy Court retains exclusive jurisdiction
for all purposes relating to the Asbestos and Lead PI Permanent Channeling
Injunction and the Claims Trading Injunction with the effect that any party
challenging any such injunctions shall be required to raise such challenge in
the Bankruptcy Court. In addition, on and after the Effective Date, in
accordance with Article 9 of the Plan and sections 105(a) and 1142 of the
Bankruptcy Code, the Debtors, their properties and their operations shall be
released from the custody and jurisdiction of the Bankruptcy Court, except that
the Bankruptcy Court retains jurisdiction over, and if the Bankruptcy Court
exercises its retained jurisdiction, shall have exclusive jurisdiction over, all
matters arising out of or related to the Chapter 11 Cases and the Plan or
otherwise enumerated in Article 9 of the Plan. To the extent necessary to comply
with section 524(g) of the Bankruptcy Code, the District Court shall have
jurisdiction over any proceeding that involves the validity, application,
construction, or modification of the Asbestos and Lead PI Permanent Channeling
Injunction.
18
<PAGE> 19
22. In accordance with section 1145 of the Bankruptcy Code, the offer
or issuance, sale, exchange or other transfer of any security in accordance with
the Plan or this Confirmation Order ("Plan Securities"), including, without
limitation, the New Eagle-Picher Common Stock and the Divestiture Notes be, and
they hereby are, exempt from the provisions of section 5 of the Securities Act
of 1933, as amended (15 U.S.C. section 77(e), as amended), and any state or
local law requiring registration for the offer or sale of a security or
registration or licensing of the issuer, or an Affiliate thereof as an
underwriter, broker or dealer in securities.
23. In accordance with section 1146(c) of the Bankruptcy Code, the
offer or issuance, sale, exchange or other transfer of any security in
accordance with the Plan or this Confirmation Order (including, without
limitation, the New Eagle-Picher Common Stock and the Divestiture Notes ) shall
not be taxed under any federal, state or local law imposing a recording tax,
stamp tax, transfer tax or any similar tax.
24. In accordance with section 1146(c) of the Bankruptcy Code, the
making, delivery, filing or recording of various instruments and documents as
specified in or contemplated by the Plan and/or the Plan Exhibits either (i) by
or to
19
<PAGE> 20
any of the Debtors, (ii) in the case of any Security Interests, or (iii) in
connection with any Divestitures be, and they hereby are, exempt from taxation
under any law imposing a recording tax, stamp tax, transfer tax or any similar
tax. The appropriate state or local governmental officials or agents be, and
hereby are, directed to forego the collection of any such tax or governmental
assessment with respect to, and to accept for filing and recordation without the
payment of any such tax or government assessment, any such valid instrument or
other document. All filing and recording officers are hereby directed to accept
for filing or recording (i) all instruments made or delivered by or to any of
the Debtors, (ii) all mortgages and related financing documents given in
connection with any Security Interests, and (iii) all deeds or other documents
relating to any of the Divestitures without the payment of any such taxes, and
without the presentation of any affidavits, instruments, or returns otherwise
required for recording, other than this Confirmation Order. The Bankruptcy Court
retains jurisdiction to enforce the foregoing directions, by contempt or
otherwise.
25. Applications for final allowance of compensation and reimbursement
of expenses must be filed and served no later
20
<PAGE> 21
than forty-five (45) days after the last day of the calendar month in which the
Effective Date occurs.
26. Within fourteen (14) days after the entry of this Confirmation
Order, or within such further time as the Bankruptcy Court may allow, the
Debtors be, and they hereby are, directed (i) to mail to all known creditors and
other parties in interest notice of the entry of this Confirmation Order and
(ii) to publish notice of the entry of this Confirmation Order at least once in
national editions of The New York Times and The Wall Street Journal.
27. The provisions of this Confirmation Order are integrated with each
other and are nonseverable and mutually dependent.
21
<PAGE> 22
28. This Order and simultaneously filed Findings of Fact and
Conclusions of Law shall be entered both in the U. S. District Court for the
Southern District of Ohio, and the U. S. Bankruptcy Court for the Southern
District of Ohio. The Clerk of the U. S. Bankruptcy Court for the Southern
District of Ohio shall see to distribution thereof.
Dated: Cincinnati, Ohio
November 18, 1996
/s/ Arthur Spiegel
---------------------------------
THE HONORABLE S. ARTHUR SPIEGEL
United States District Judge
Cincinnati, Ohio
November 18, 1996
/s/ Burton Perlman
---------------------------------
THE HONORABLE BURTON PERLMAN
United States Bankruptcy Judge
22
<PAGE> 1
Exhibit 2.8
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re )
) Civ. Action No. MS 1 96-288
)
EAGLE-PICHER INDUSTRIES, ) Judge S. Arthur Spiegel
INC., et al., )
)
Debtors )
)
- ---------------------------- )
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In re )
) Consolidated Case
) Nos. 1-91-00100
EAGLE-PICHER INDUSTRIES, )
INC., et al., ) Judge Burton Perlman
)
Debtors )
)
- ---------------------------- )
FINDINGS OF FACT AND CONCLUSIONS OF LAW RE
CONFIRMATION OF THE THIRD AMENDED CONSOLIDATED
PLAN OF REORGANIZATION OF THE DEBTORS, AS MODIFIED
--------------------------------------------------
INTRODUCTION
------------
Eagle-Picher Industries, Inc. ("Eagle-Picher"), Daisy Parts, Inc.,
Transicoil Inc., Michigan Automotive Research Corporation, EDI, Inc.,
Eagle-Picher Minerals, and Hillsdale Tool and Manufacturing Co. (collectively,
the "Debtors"), to-
<PAGE> 2
gether with the Injury Claimants' Committee appointed in the above-captioned
chapter 11 cases (the "ICC") and James J.G. McMonagle, the Legal Representative
for Future Claimants in the above-captioned chapter 11 cases (the "Future
Claimants' Representative"; the Debtors, the ICC, and the Future Claimants'
Representative being collectively referred to herein as the "Plan Proponents")
having proposed that certain Third Amended Consolidated Plan of Reorganization
for the Debtors, dated August 28, 1996 (as modified by the Plan Modifications,
as hereinafter defined, and any further modifications announced at the
Confirmation Hearing, as hereinafter defined, the "Plan");(1) and the United
States Bankruptcy Court for the Southern District of Ohio (the "Bankruptcy
Court") and the United States District Court for the Southern District of Ohio
(the "District Court;" the Bankruptcy Court and the District Court being
referred to collectively as the "Court"), sitting jointly, having conducted a
hearing to consider confirmation of the Plan on November 13, 1996 (the
"Confirmation Hearing"); and the Court having reviewed and considered the Plan,
the Statement of Proponents of the Third Amended Consolidated Plan of
Reorganiza-
- --------
(1)
All capitalized terms used but not defined herein shall have the respective
meanings ascribed to such terms in the Plan.
2
<PAGE> 3
tion Pursuant to Sections 1129(a)(4), 1129(a)(5), 1129(a)(12), and 1123(a)(6) of
the Bankruptcy Code, the Certification of Class 20 Votes Tabulated by Hill and
Knowlton, Inc., dated November 8, 1996, the Certification of Votes Tabulated by
Federated Claims Services Group, dated November 12, 1996, as well as the
testimony proffered and adduced and the exhibits admitted into evidence at the
Confirmation Hearing and the arguments of counsel presented at the Confirmation
Hearing; and the Court having also considered all of the objections to
confirmation of the Plan filed by certain creditors, holders of Equity
Interests, and other parties in interest; and the Court being familiar with the
Plan and other relevant factors affecting the chapter 11 cases of the Debtors
(the "Chapter 11 Cases"), the Court having taken judicial notice of the entire
record of the Chapter 11 Cases since the Petition Date, including, but not
limited to, all pleadings filed by the Plan Proponents and other parties in
interest and all documentary evidence and testimony presented by the Plan
Proponents in the Chapter 11 Cases before the Bankruptcy Court, and, in
particular, the Court having taken judicial notice of (I) the orders entered by
the Bankruptcy Court on July 19, 1991 and June 11, 1992 establishing the
General Bar Date and the Asbestos Bar Date, respec-
3
<PAGE> 4
tively, (ii) the order of the Bankruptcy Court, dated May 20, 1996 (the "Notice
Order") establishing various dates in connection with approval of the Joint
Disclosure Statement with respect to the Plan (the "Disclosure Statement"),
(iii) the order of the Bankruptcy Court, dated August 28, 1996, approving the
Disclosure Statement and establishing various dates in connection with the
solicitation of votes on and confirmation of the Plan, (iv) the order of the
Bankruptcy Court, dated July 23, 1996, approving proposed Ballot Tabulation and
Solicitation Procedures, and (v) the order of the Bankruptcy Court, dated
December 4, 1995 (as amended by order of the Bankruptcy Court dated December 14,
1995, the "Estimation Order"), as affirmed by the District Court by order and
decision entered on or about September 23, 1996 (the "Estimation Appeal Order");
and based upon the entire record, the Court makes the following:
FINDINGS OF FACT AND CONCLUSIONS OF LAW
---------------------------------------
In accordance with Bankruptcy Rules 7052 and 9014, the Court makes the
following findings of fact and conclusions of law in support of confirmation of
the Plan (collectively, the "Findings").
4
<PAGE> 5
I.
JURISDICTION AND VENUE
----------------------
A. JURISDICTION.
1. Pursuant to sections 1334 and 157 of title 28 of the United
States Code, the Court has jurisdiction to consider confirmation of the Plan.
2. The Confirmation Hearing is a core proceeding under section
157(b)(2)(L) of title 28 of the United States Code.
3. The Debtors are entities eligible for relief under section 109
of title 11 of the United States Code (the "Bankruptcy Code").
B. VENUE OF THE CHAPTER 11 CASES.
1. The principal place of business of Eagle-Picher is Cincinnati,
Ohio. Each of the other Debtors is an affiliate of Eagle-Picher within the
meaning of section 101(2) of the Bankruptcy Code.
2. Venue in the Southern District of Ohio for the Chapter 11 Cases
was proper as of the Petition Date pursuant to 28 U.S.C. Section 1408 and
continues to be proper.
5
<PAGE> 6
II.
BACKGROUND
----------
1. On January 7, 1991, each of the Debtors filed a voluntary
petition for relief under chapter 11 of title 11 of the Bankruptcy Code with the
Bankruptcy Court.
2. Each of the Debtors continues to operate its business and
manage its properties as a debtor in possession pursuant to sections 1107(a) and
1108 of the Bankruptcy Code, except that substantially all of the assets of EDI,
Inc. were sold on or about November 30, 1991, and EDI, Inc. no longer owns any
property or operates any business.
3. By order of the Bankruptcy Court dated January 7, 1991, the
Chapter 11 Cases were consolidated for procedural purposes only pursuant to
Bankruptcy Rule 1015(b).
4. On January 14, 1991, the United States Trustee for the Southern
District of Ohio (the "United States Trustee") appointed an official committee
of unsecured creditors in the Chapter 11 Cases (the "UCC") pursuant to section
1102(a) of the Bankruptcy Code, the membership of which has been amended or
reconstituted from time to time during the Chapter 11 Cases.
5. On January 14, 1991, the United States Trustee appointed the
ICC pursuant to section 1102(a) of the Bankruptcy
6
<PAGE> 7
Code, the membership of which has been amended or reconstituted from time to
time during the Chapter 11 Cases.
6. In late April, 1991, certain shareholders of Eagle-Picher filed
a motion seeking the appointment of a Committee of Equity Security Holders. By
order entered on or about June 24, 1991, the Bankruptcy Court directed the
United States Trustee to appoint an equity committee. On July 26, 1991, the
United States Trustee appointed an Equity Security Holders' Committee (the
"Equity Committee"). After a hearing held by the Bankruptcy Court on January 24,
1996, the Bankruptcy Court ordered that the Equity Committee would remain in
place only for the purpose of pursuing the Equity Committee's appeal of the
Estimation Order to the District Court. On or about October 11, 1996, the Equity
Committee filed Stipulation and Order Disbanding the Official Committee of
Equity Security Holders and Permitting the Withdrawal of Marcus Montgomery P.C.
and Harris, Harris & Field as its Counsel.
7. On or about October 1, 1991, the United States Trustee filed a
motion with the Bankruptcy Court requesting that the Bankruptcy Court appoint
James J.G. McMonagle "as legal representative for future personal injury and
property damage claimants." On or about October 31, 1991, the Bank-
7
<PAGE> 8
ruptcy Court entered an order approving the appointment of the Future Claimants'
Representative, which order was modified by the Bankruptcy Court by order
entered on or about March 17, 1992.
8. Prior to the Petition Date, Eagle-Picher had been named as a
co-defendant in a substantial number of law suits alleging personal injury
and/or wrongful death from exposure to asbestos-containing insulation products.
The lawsuits, which were pending in 48 states, British Columbia, Guam, the
Virgin Islands, and the District of Columbia, alleged, in general, that
Eagle-Picher and other defendant manufacturers of asbestos and
asbestos-containing products failed to warn of the potential hazard to health
from the inhalation of asbestos fibers in their products. From 1966 (the date
the first asbestos-related case was filed) until the Petition Date, Eagle-Picher
disposed of approximately 73,500 claims through trial, dismissal, or settlement.
On average Eagle-Picher spent approximately $7,800 per claim, including
attorneys' fees and defense costs, to dispose of these claims.
9. As of the Petition Date, approximately 67,800 lawsuits on
account of Asbestos Personal Injury Claims were outstanding against
Eagle-Picher.
8
<PAGE> 9
III.
CRITICAL EVENTS IN THE CHAPTER 11
CASES RELATING TO THE PLAN
--------------------------
A. THE DEBTORS' LIABILITY ON ACCOUNT OF ASBESTOS PERSONAL
INJURY CLAIMS
1. On June 5, 1992, the Bankruptcy Court appointed Jerry Lawson
(the "Mediator") as a mediator to assist in the negotiation of a consensual plan
of reorganization in the Chapter 11 Cases. Early in 1993, the Mediator focused
the discussions among the Debtors, the ICC, and the Future Claimants'
Representative because, in the aggregate, the ICC and the Future Claimants'
Representative represent the holders of the most significant claims that must be
addressed in the Chapter 11 Cases.
2. On November 10, 1993, the Debtors announced that, under the
auspices of the Mediator, the Debtors, the ICC, and the Future Claimants'
Representative reached an agreement on the principal elements of a plan of
reorganization (the "Agreement in Principle").
3. As a result of the Agreement in Principle, Eagle-Picher
recorded a provision in the fourth quarter of 1993 of $1.135 billion to increase
the asbestos liability subject to compromise on its books to $1.5 billion.
Eagle-Picher viewed
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<PAGE> 10
the $1.5 billion value as a compromise and settlement of its liability on
account of Asbestos Personal Injury Claims and Lead Personal Injury Claims.
4. On or about February 28, 1995, the Plan Proponents filed a
consolidated plan of reorganization for the Debtors (the "Original Plan"),
which was premised on the essential elements of the Agreement in Principle. The
Original Plan proposed to channel all Asbestos Personal Injury Claims and Lead
Personal Injury Claims to the PI Trust for allowance and distribution. Under the
Original Plan, the Plan Proponents proposed to use the $1.5 billion value
assigned to Eagle-Picher's aggregate liability on account of Asbestos Personal
Injury Claims and Lead Personal Injury Claims to determine the extent to which
the PI Trust would share in the Distribution Value.
5. Both the UCC and the Equity Committee objected to the use of
the $1.5 billion value in the Original Plan on the ground that such figure
placed too high an estimate on the value of present and future Asbestos Personal
Injury Claims.
6. To resolve the dispute among the parties over the value of
present and future Asbestos Personal Injury Claims, on July 12, 1995, the
Debtors filed with the Bankruptcy
10
<PAGE> 11
Court a motion (the "Estimation Motion") requesting the Bankruptcy Court to
estimate the value of Asbestos Personal Injury Claims, in the aggregate, for
purposes of determining the relative distributions of value in the Original
Plan, as it might be modified.
7. In September and October of 1995, the Bankruptcy Court held
hearings on the Estimation Motion. On December 4, 1995, the Bankruptcy Court
entered the Estimation Order, in which it estimated the aggregate value of
Asbestos Personal Injury Claims as of the Petition Date. The Bankruptcy Court
valued claims lodged against Eagle-Picher prior to the Petition Date at $478
million and valued all claims filed and expected to be filed against
Eagle-Picher after the Petition Date to be $2,024,511,000. Accordingly, the
Bankruptcy Court estimated the aggregate value of all Asbestos Personal Injury
Claims as of the Petition Date to be $2,502,511,000.
8. Following the entry of the Estimation Order, notices of appeal
from the Estimation Order were filed by the UCC, the Equity Committee, and two
members of the UCC that had filed an objection to the Estimation Motion,
Teachers Insurance and Annuity Associations and The Baupost Group, Inc.
("Baupost").
11
<PAGE> 12
9. On June 14, 1996, the District Court heard oral argument with
respect to the appeals of the Estimation Order. At the conclusion of such
hearing the District Court reserved decision.
10. As a result of the Estimation Order, the Plan Proponents
revised the Original Plan to take into account the Bankruptcy Court's estimate
of the aggregate value of Asbestos Personal Injury Claims. On July 15, 1996, the
Plan Proponents filed with the Bankruptcy Court a Second Amended Consolidated
Plan of Reorganization for the Debtors (the "Second Amended Plan"). The Second
Amended Plan used the value of $2,502,511,000, not the $1.5 billion used in the
Original Plan, to determine the PI Trust's allocable share of the Distribution
Value.
11. Subsequent to the filing of the Second Amended Plan and while
the appeals of the Estimation Order to the District Court were sub judice, the
Plan Proponents and the UCC engaged in further negotiations in an effort to
resolve the issues raised by the appeals of the Estimation Order. As a result of
such negotiations, the parties reached a compromise and settlement pursuant to
which the parties agreed (I) to fix the PI Trust Share at $2 billion, (ii) to
deem the appeal of
12
<PAGE> 13
the Estimation Order by the UCC dismissed with prejudice upon the Effective
Date, and (iii) to allow the financial advisers to the UCC to consult with the
Debtors' financial advisers in determining the interest rate on certain notes to
be issued under the Plan, the Divestiture Notes.
12. Following this compromise and settlement, on or about
September 23, 1996, the District Court entered the Estimation Appeal Order. In
the Estimation Appeal Order, the District Court held (I) the hearings on the
Estimation Motion constituted a core proceeding under section 157(b)(2)(B), (ii)
future, unknown Asbestos Personal Injury Claims constitute "claims" within the
meaning of section 101(5) of the Bankruptcy Code, (iii) in light of the
settlement between the Plan Proponents and the UCC on the use of $2 billion to
determine the PI Trust Share, the issue of whether the Bankruptcy Court properly
"present-valued" future Asbestos Personal Injury Claims was moot, and (v) the
Bankruptcy Court was not clearly erroneous in its factual determinations
regarding the use of a discount rate.
13. The deadline for appealing from the Estimation Appeal Order
was October 22, 1996. No party appealed from the
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<PAGE> 14
Estimation Appeal Order by such date, and the Estimation Order is now a final,
non-appealable order.
B. THE HILLSDALE SUBSTANTIVE CONSOLIDATION PROCEEDING
1. On or about August 23, 1995, Smith Factors, Inc., BDS Special
Opportunities Fund, L.P., and Ross Investment Partners, entities that had,
during the Chapter 11 Cases, purchased Unsecured Claims held by certain trade
creditors of Hillsdale, filed with the Bankruptcy Court a complaint (the
"Substantive Consolidation Complaint") seeking declaratory or injunctive relief
that would preclude the use of substantive consolidation as an element of any
plan of reorganization of the Debtors. The Plan, in essence, effects a
substantive consolidation of the Debtors' estates for the purposes of
satisfaction of claims.
2. In their answer to the Substantive Consolidation Complaint, the
Debtors denied the essential allegations of the Substantive Consolidation
Complaint.
3. The Bankruptcy Court conducted a trial on the Substantive
Consolidation Complaint on March 4, 1996, at the conclusion of which the
Bankruptcy Court reserved ruling. On or about March 15, 1996, the Bankruptcy
Court issued an order and decision in which the Bankruptcy Court ruled that the
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<PAGE> 15
Debtors had met their burden of proving that the substantive consolidation of
Hillsdale and Eagle-Picher was appropriate. No timely appeal was taken from such
order, and such order is now a final order.
4. No party in interest has objected to the substantive
consolidation features of the Plan.
IV.
VOTING PROCEDURES
-----------------
1. By order entered on or about July 23, 1996, the Bankruptcy
Court approved the Voting Procedures. The Voting Procedures provide for, inter
alia, the tabulation of votes with respect to the Plan.
2. After a hearing held on August 28, 1996, at which time all
pending objections to the Disclosure Statement were withdrawn, the Bankruptcy
Court, among other things, found that (a) sufficient and timely notice of the
hearing to consider approval of the Disclosure Statement was given in accordance
with the Bankruptcy Rules and the orders of the Bankruptcy Court, and (b) based
upon the information contained in the Disclosure Statement, the Disclosure
Statement contained "adequate information" pursuant to section 1125 of the
Bankruptcy Code. On the same date, the Court entered an order,
15
<PAGE> 16
inter alia, approving the Disclosure Statement (the "Disclosure Statement
Order").
3. Pursuant to the Disclosure Statement Order and the Voting
Procedures, the record date for determining creditors entitled to vote on the
Plan (the "Voting Record Date") was September 5, 1996.
4. The Debtors caused to be served copies of the appropriate
solicitation materials with respect to the Plan (the "Solicitation Packages") on
each of the entities entitled to receive such packages, substantially in
accordance with the Disclosure Statement Order.
5. The Disclosure Statement Order required the Debtors to publish
notice of the Confirmation Hearing in the form annexed as Exhibit "A" to Exhibit
"B" to the Disclosure Statement at least two times no later than thirty (30)
days prior to the date scheduled for the Confirmation Hearing in the national
editions of The New York Times and The Wall Street Journal.
6. The Debtors complied with the publication requirements of the
Disclosure Statement Order.
7. The Debtors complied in all material respects with the Notice
Order, the Disclosure Statement Order, and the
16
<PAGE> 17
Voting Procedures in providing notice of the hearing to consider approval of
the Disclosure Statement (the "Disclosure Statement Hearing") and the
Confirmation Hearing in the method and manner as prescribed in those orders. All
entities entitled to and required to receive notice of the Disclosure Statement
Hearing and the Confirmation Hearing pursuant to the Bankruptcy Code,
applicable non-bankruptcy law, and the Voting Procedures have received due,
proper, and adequate notice of such hearings and have had an opportunity to
appear at and be heard at such hearings. Mullane v. Central Hanover Bank & Trust
Co., 339 U.S. 306, 314 (1950).
8. The Disclosure Statement Order fixed November 4, 1996, at 5:00
p.m., Cincinnati, Ohio time, as the time and date by which all Ballots must be
completed, executed, and received by (I) in the case of Registered Unsecured
Debt Securities and Bearer Unsecured Debt Securities, Hill and Knowlton, Inc.
("H&K") and (ii) in the case of all other Claims entitled to vote, the Federated
Claims Service Group ("FCSG") in order to be counted as acceptances or
rejections of the Plan.
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<PAGE> 18
V.
OBJECTIONS TO CONFIRMATION
--------------------------
A. PROCEDURE ON OBJECTIONS TO CONFIRMATION
1. The Disclosure Statement Order fixed November 4, 1996, at 4:00
p.m., Cincinnati, Ohio time (the "Objection Deadline"), as the last day for
creditors and other parties in interest to file and serve objections to
confirmation of the Plan.
2. By the Objection Deadline, objections to confirmation of the
Plan were filed by or on behalf of the following entities: The Baupost Group,
Inc.; Comerica Bank; Stanley Levy, Trustee Beneficiary; Bruce and Dellia McGraw;
Dial-X Automated Equipment; Michael Egan; James C. Nalder; Barbara Beukelman;
Stanley E. And Virda A. Nunn; Delbert D. Nalder; Lee and M. Grace Tyrell; Orval
J. And Anna L. Lair; Eugene D. Ewing; Doug A Burks; Charles and Dalene Clayton;
Charles B. Bugger; Blaine C. Nalder; Jane A. Madison; Lynne Ledingham.
Additionally, an objection to confirmation of the Plan was filed on behalf of
the Cincinnati School District and the Mayor and City Council of Baltimore after
the Objection Deadline.
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<PAGE> 19
3. The Disclosure Statement Order fixed November 8, 1996, at 4:00
p.m., Cincinnati, Ohio time, as the last day for the Debtors and other parties
in interest to file responses to objections to confirmation of the Plan (the
"Reply Deadline").
4. The Plan Proponents filed a joint reply to the objections to
confirmation of the Plan (the "Joint Reply") by the Reply Deadline and served
all entities required to be served with the Joint Reply by telecopy or hand
delivery by the Reply Deadline, except for the entities that filed objections on
behalf of holders of Equity Interests, which were served with the Joint Reply by
telecopy or, if no telecopy number was available, by overnight delivery for
delivery on November 9, 1996.
5. In addition to joining in the Joint Reply, the Future
Claimants' Representative also filed and served by the Reply Deadline separate
responses to objections filed by or on behalf of the various entities.
6. Prior to the conclusion of the Confirmation Hearing, the
objections to confirmation of the Plan filed by or on behalf of the following
entities were withdrawn pursuant to agreements in the record: Comerica Bank and
Bruce and Dellia McGraw.
19
<PAGE> 20
B. DISCUSSION OF OBJECTIONS TO CONFIRMATION
1. Objections of Baupost.
The Baupost Group, Inc. ("Baupost") is a creditor which holds claims
classified in Class 20 of the Plan in the aggregate amount of $22,500,000.00.
Class 20 is the general class of unsecured claims. It was established at the
Confirmation Hearing that Baupost acquired its claims by purchase. Baupost voted
its claims against acceptance of the Plan, and Class 20 did not accept the Plan.
Additionally, Baupost filed objections to confirmation with which we now deal.
In its statement of objections, Baupost set forth eight objections. The first,
however, is not a true objection, but simply records that Class 20 has rejected
the Plan. Counsel for Baupost appeared at the Confirmation Hearing and
participated in the examination of witnesses, though Baupost did not offer any
witnesses of its own. We discuss seriatim the objections in Baupost's
memorandum, as amplified by the arguments of counsel at the hearing.
a. Discounted Cash Payment Election.
Because an impaired class, Class 20, in which Baupost belongs, has not
accepted the Plan, the Plan Proponents seek confirmation pursuant to 11 U.S.C.
Section 1129(b) which prescribes
20
<PAGE> 21
criteria for confirmation notwithstanding that not all impaired classes have
accepted the Plan. That Code section is what is known as the "cramdown." Section
1129(b)(1) requires that in order to qualify for cramdown, a plan must not
discriminate unfairly, and must be fair and equitable "with respect to each
class of claims or interests that is impaired under, and has not accepted, the
plan." Baupost contends that the Plan discriminates unfairly and is not fair
and equitable with respect to it. This is so, it says, because of the provision
in the PI Trust pursuant to which compensation will be paid to personal injury
claimants in Class 19 which gives claimants thereunder the opportunity to make a
"Discounted Payment Election." Claimants which make that election will cause
there to be a benefit to nonelecting asbestos claimants, a benefit in which
other unsecured creditors will not participate. The focus of this argument is
that nonelecting asbestos claimants will be preferred over other unsecured
creditors. Baupost adds to this objection that a more equitable arrangement
could be reached if the payment of discounted amounts to electing creditors were
made from general assets of the estate. The savings could then be distributed on
a ratable basis among the PI Trust and general creditors. Baupost sums its
position up by saying that
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<PAGE> 22
the Plan "does not allocate the benefit of discounted payments among all
creditors in an equitable manner."
This objection by Baupost fails. First, the Plan allocates fairly and
equitably between Class 17 and Class 20 and that is what the law requires. That
is, total consideration is prorated between the two classes on the basis of
their respective values. Second, Section 1123(a)(4) expressly provides that a
plan must provide the same treatment for all the claims in a particular class
"unless the holder of a particular claim or interest agrees to a less favorable
treatment of such claim or interest." The statute does not require adjustment
among all classes where such an agreement by a creditor within a class occurs.
Claimants taking the discounted payment election clearly are such holders.
In support of its argument that discounted payments result in unfair
discrimination to it, Baupost cites IN RE MORTGAGE INV. CO., 111 B.R. 604, 615
(Bankr. W.D. Tex. 1990). In that case, the plan had several classes of unsecured
claims. The court dealt first with the allowability of separate classifications
of unsecured claims and found that trade creditors could be separately
classified from other unsecured creditors. The court did not, however, accept
the provision
22
<PAGE> 23
that trade creditors be paid in full while other unsecured creditors received
payment only up to a maximum dollar amount. No reason for the disparity was
offered. The case here is distinguishable. In our case, no contention has ever
been offered that it was improper to separately classify personal injury claims
from other unsecured claims. That MORTGAGE INVESTMENT has no bearing here is
clear from the fact that the technique employed in the Plan before us is to
allocate available consideration on a rational basis between the trust created
for personal injury claimants and other unsecured creditors.
b. Lead Personal Injury Claims.
Baupost also objects that the Plan unfairly discriminates and is not
fair and equitable with respect to Class 20, because lead claims may be asserted
in the PI Trust created for asbestos and lead claimants pursuant to Section
524(g). It is unfair to permit this because, says Baupost, this is an advantage
to lead claimants who are unsecured creditors, but the same opportunity is not
open to other unsecured creditors. Baupost says that there is unfair
discrimination because lead claimants could benefit from the discounted payment
election, while other
23
<PAGE> 24
unsecured creditors could not. This objection is without merit.
Baupost's argument fails, for far from discriminating unfairly, in fact
inclusion of lead claims in the trust benefits Baupost. No additional value was
ascribed to lead personal injury claims in determining the percentage
distribution to be paid to the PI Trust.
c. Charitable Remainder.
The PI Trust Agreement created pursuant to Section 524(g) provides that
all monies remaining in the trust after payment of trust liabilities shall be
paid to unspecified charities. Baupost objects to this provision, saying that it
is violative of Section 1129(b)(1) of the Bankruptcy Code because it is not fair
and equitable. Baupost says that in order for a plan to be fair and equitable it
must not violate the absolute priority rule which requires that a dissenting
class be paid in full before any junior class may receive a distribution.
In response to this, the Plan Proponents point out that the PI Trust
has been carefully structured with periodic adjustments in the distribution
formula so that there is no reasonable expectation that at the end of the
trust, some 40 years in the future, any assets will remain in the trust.
24
<PAGE> 25
Further, the Plan Proponents argue that such a provision is essential in order
that the trust qualify as a qualified settlement fund under the Internal Revenue
Code whereby the debtor will receive a substantial tax benefit amounting to
approximately $70 million. This tax benefit will inure to the benefit of all
creditors, including Baupost in the form of the Tax Refund Notes to be
distributed under the Plan. Thus, if this provision is omitted, Baupost would
suffer, as would other creditors.
It is our conclusion that the Baupost objection on this score is not
well founded, for this technical provision does not in fact adversely impact the
fair and equitable requirement of Section 1129(b)(1).
d. Best Interest of Creditors.
Section 1129(a)(7)(A)(ii) of the Bankruptcy Code requires that a
creditor such as Baupost "receive or retain under the plan on account of such
claim or interest property of a value, as of the effective date of the plan that
is not less than the amount that such holder would receive or retain" upon
liquidation of the debtor. This statement is what is familiarly known as the
"best interest of creditors test." This test must be met even in a cramdown
situation. The essence of the Baupost
25
<PAGE> 26
position in this regard is that future claims are not claims in contemplation of
the bankruptcy law, and if they are disregarded and liquidation were to occur,
those holding claims properly so regarded under the bankruptcy law would receive
a greater distribution than now contemplated by the Plan.
This objection is without merit. The reason that the objection must be
overruled is that the United States District Court in a prior appeal in this
case expressly held that "future asbestos Claims are therefore cognizable under
the Bankruptcy Code." Order, Case No. C-1-96-206, at 17 (S.D. Ohio Sept. 25,
1996). No appeal was taken from that order. It states the law of the case for
this case.
e. The Requirements of 11 U.S.C. Section 524(g).
Here, Baupost contends that the Plan does not comply with the
requirements of Section 524(g) of the Bankruptcy Code, which provides for a
Channeling Injunction in a case such as this. Thus, says Baupost, the
requirement of Section 1123(a)(5) are not met. There the Bankruptcy Code
requires that a plan must "provide adequate means for the plan's
implementation." This clause is followed in the statute with a list of ten such
"adequate means." The Baupost objection does not assert that the Plan is
deficient in any of the means stated in the statute, but rather
26
<PAGE> 27
finds fault with several aspects of the Plan provisions regarding Section
524(g). Specifically, Baupost says that it is improper to include lead claims in
the PI Trust; the trust is inadequate to meet the requirements of the statute
regarding ability to pay future claims; and the absence of specific procedures
for claims adjustment.
We disagree with the premises advanced by Baupost here and overrule the
objection. The Bankruptcy Code, Section 524(g)(2)(B), says:
* * *
(B) The requirements of this subparagraph are that
--
(I) the injunction is to be implemented in connection with a
trust that, pursuant to the plan of reorganization --
(I) is to assume the liabilities of a debtor which at
the time of entry of the order for relief has been named as a
defendant in personal injury, wrongful death, or
property-damage actions seeking recovery for damages allegedly
caused by the presence of, or exposure to, asbestos or
asbestos-containing products;
* * *
While it is true that the provisions of Section 524(g) were enacted to
deal with the overwhelming problems facing industry and society because of
asbestos claims, the language of the statute itself contains no requirement that
claims of another
27
<PAGE> 28
sort must be excluded from the trust. Further, inclusion of lead claims in the
trust is beneficial to Baupost, for the allocation of Plan consideration to
Class 17, funding the PI Trust was based entirely upon the valuation of asbestos
claims, and no additional valuation was included by reason of lead claims. Thus,
a different treatment of lead claims could reduce distributions to Class 20
claimants such as Baupost.
The other two aspects of Baupost's objection to the trust as provided
for in the Plan likewise are without merit. The trust provided for does comply
with the requirements of the statute. A particular dimension of the trust
provisions calculated to assure such compliance is the requirement for periodic
adjustment of parameters employed in order to assure compliance with current
realities.
f. Property Damage Claims.
Baupost contends that the provisions of the Plan with respect to
compensation of property damage claims are not adequate, thus, presumably,
offending Section 1123(a)(5) of the Bankruptcy Code which, as earlier stated,
requires that a plan provide adequate means for the plan's implementation.
Class 16 of the Plan relates to the treatment of property damage
claims. Class 16 has voted to accept the Plan. Such
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<PAGE> 29
acceptance moots the objection as stated by Baupost. It is therefore overruled.
g. Trustee's Advisory Committee.
Here Baupost calls into play the provision of Section 1129(a)(5) which
deals with "a director, officer, or voting trustee of the debtor." This section
requires that the identity and affiliations of such individuals be disclosed and
that their appointment be "consistent with the interests of creditors and equity
security holders and with public policy." It is the position of Baupost as
stated in its objection and as amplified upon oral argument that the members of
the Trustee's Advisory Committee ("TAC") established under the Plan are subject
to this statutory provision, and fail to meet its requirements. Specifically,
Baupost says that the members of the TAC are personal injury lawyers with
obligations to their personal injury clients, and a conflict of interest exists
when they exercise powers as members of the TAC. Baupost asserts that the court
in IN RE NATIONAL GYPSUM CO., Case No. 390-37213-SAF-11 (Bankr. N.D. Tex. Jan.
29, 1993), rejected an arrangement for such a Committee as being contrary to
public policy in that case.
29
<PAGE> 30
We overrule this objection. The trustees of the Section 524(g) trust in
this case are not subject to the statutory provision relied upon by Baupost.
They are not directors, officers or voting trustees of the debtor. If this is
true of the trustees themselves, it is far clearer that this Code provision has
no application to the TAC. With respect to the contention of Baupost that the
court in NATIONAL GYPSUM refused confirmation of a plan containing a TAC, the
contention is simply incorrect. The Plan Proponents have furnished the court
with a transcript of the ruling by the court in NATIONAL GYPSUM. No mention is
made of a conflict of interest. The court there required that the TAC not be
able to "frustrate the trustees' ability to perform their fiduciary obligations.
If the TAC does not consent to a trustee decision made subject to the trust's
consent provisions, the trustees may apply to this Court for approval. If the
trustees and the TAC reach an impasse on any matter, the trustees may apply to
this court for resolution."
Plan Proponents point out that here it is required that the TAC not
unreasonably withhold any consent required under the trust, and, by amendment,
disputes in this regard may be resolved by the bankruptcy court. This is
consistent with the holding of the court in NATIONAL GYPSUM.
30
<PAGE> 31
In conclusion, we hold that the members of the TAC are not subject to
the provisions of Section 1129(a)(5)(A)(I) and even if they were, the Plan
provisions are consistent with the requirements of that section.
2. Objection of Comerica Bank.
This objection has been settled and is withdrawn.
3. Objection of Stanley Levy, trustee beneficiary.
Mr. Levy is a trustee beneficiary for certain holders of asbestos
personal injury claims. In that capacity, Levy is defendant in an adversary
proceeding pending in the bankruptcy court in which Eagle-Picher seeks to
recover as a preference the value of certain letters of credit. If plaintiff is
successful in that preference action, funds might be ordered paid to the
successful plaintiff. It is the position of Levy in objecting to the Plan that
any such recovery by plaintiff should be paid to the PI Trust created by the
Plan, and in the absence of such a provision the Plan is not fair and equitable.
We are unable to perceive in these statements a valid basis for
objection to confirmation. The litigation in question is being held in abeyance
by agreement of the parties pursuant to an order which includes a provision that
either party may request that the proceeding go forward. In
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<PAGE> 32
developing the present Plan, it is essential that there be a fixed point as of
which values to be distributed under the Plan be established, for the Plan
participants must know what to expect on the Effective Date of the Plan. The
personal injury claimants in Class 17 could have required that outstanding
contingent claims be included in the Plan, but that class has overwhelmingly
accepted the Plan as formulated. The objection of Levy is overruled.
4. Objection of McGraw.
This objection was resolved in open court and was withdrawn upon the
assurance by debtors' counsel that the controversy as to whether the McGraw
claim was an administrative claim or prepetition claim had yet to be resolved,
and would be unaffected by confirmation of the Plan.
5. Objections by Equity Interest Holders or Advocates.
Letters have been received from a number of individuals and entities
who identify themselves as stockholders, or advocates on behalf of
stockholders. We construe these communications as objections. The objectors
are: James C. Nalder, Stanley and Virda Nunn, Delbert Nalder, Lee and M. Grace
Tyrrell, Orval J. Lair and Anna Lair, Eugene Ewing, Doug Burks, Charles
32
<PAGE> 33
and Dalene Clayton, Charles Bugger, Lynne Ledingham, Blaine Nalder, James
Nalder, Jane Madison, Dial-X Automated Equipment, Michael Eagen, Barbara
Beukelman and Delbert Nalder. The Plan provides that existing equity interests
be canceled upon the effective date of the Plan. These various objectors take
issue with that provision.
It is regrettable that substantial values will be lost upon the
cancellation of outstanding equity interests or stock. Holders of equity
interests, however, are those most at risk in the corporate structure. In the
present case, because of the overwhelming asbestos claims, there is simply no
value which can be allocated to equity interest holders. Here, creditors will
not be receiving full payment, and in order for the Plan here presented to be
confirmed it is unavoidable that equity interests be canceled. These objections
must be overruled.
6. Objections by Cincinnati School District and City of
Baltimore, Maryland.
The objection by these property damage claimants was filed late and for
that reason alone is overruled. Even if we were to consider the substance of
this objection, no merit can be found in it. The objection goes to the process
provided in the Plan for selecting trustees for the PD Trust to be created
33
<PAGE> 34
pursuant to the Plan in view of the acceptance of the Plan by property damage
claimants, Class 16. Particularly, issue is taken by these objectors with the
voting procedures employed in the case. These objectors were represented by
counsel at the Confirmation Hearing, who offered argument in support of their
position.
Their objections must be overruled because the voting procedures
employed in the case were the subject of a hearing before the court, and no
objection to those procedures was lodged by these objectors thereto. At the
Confirmation Hearing, counsel for these objectors took the position that only
their clients should be participants in the administration of the PD Trust
because only they could establish that debtors' product was present in their
buildings. Suffice it to say that with respect to Baltimore, debtor has objected
to the claim of that municipality, and upon argument debtors' counsel expressed
unwillingness to agree with counsel that it was established that there was
property damage liability to Cincinnati. No basis appears for the contention of
these objectors that they should control the PD Trust to the exclusion of other
property damage claimants and their objection is overruled.
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<PAGE> 35
VI.
THE VOTING
----------
1. H&K, as the Debtors' agent, received approximately 631 returned
voting Solicitation Packages. The Debtors and H&K attempted to locate correct
addresses for each of the returned Solicitation Packages and, when possible,
sent such packages to the new addresses.
2. Following dissemination of the Solicitation Packages as provided in
the Disclosure Statement Order, FCSG & H&K properly assisted the Plan Proponents
in soliciting votes for the Plan from the impaired classes of Claims by
answering various questions from holders of Claims regarding the Plan, with the
guidance and advice of the Debtors' counsel, and appropriately soliciting the
votes of the impaired classes of Claims in good faith in a manner consistent
with the Bankruptcy Code.
3. There are no holders of Clams in Class 18 (Other Product Liability
Tort Claims).
4. Pursuant to section 1126(g) of the Bankruptcy Code and sections
3.2.23 and 3.2.24 of the Plan, Class 23 (Penalty Claims) and Class 24 (Equity
Interests) are conclusively deemed to have rejected the Plan.
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5. Section 3.1 of the Plan identifies each of the following Classes as
unimpaired and are conclusively presumed to have accepted the Plan pursuant to
section 1126(f) of the Bankruptcy Code: Class 1 (Priority Claims), Class 2
(Amplicon Lease Secured Claim), Class 5 (First Fidelity Lease Secured Claim),
Class 6 (Fleet Credit Secured Claim), Class 7 (GE Capital Secured Claim), Class
8 (Grove IRB Secured Claim), Class 9 (IBM Credit Corporation Secured Claim),
Class 11 (Leesburg Secured Claim), Class 13 (Vale EDBs Claims), Class 14 (Other
Secured Claims), and Class 15 (Convenience Claims).
6. H&K has made a final determination of the validity of, and
tabulation respecting, all acceptances and rejections of the Plan by the
holders of Bearer Unsecured Debt Securities and Registered Unsecured Debt
Securities entitled to vote on the Plan and has submitted a written report of
such determination.
7. Taking into account the final determination of H&K of the vote on
the Plan by the holders of Bearer Unsecured Debt Securities and Registered
Unsecured Debt Securities, as well as the properly completed Ballots received by
FCSG by the Voting Deadline, FCSG has made a final determination of the validity
of, and tabulation respecting, all acceptances and
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rejections of the Plan by the impaired classes of Claims entitled to vote on
the Plan, and FCSG has submitted to the Court a written report of the results,
which report includes the amount and number of Claims of each class accepting or
rejecting the Plan, and which report concludes as follows:
a. With respect to impaired classes of Claims
entitled to vote on the Plan, each of the
following classes has accepted the Plan by at
least two-thirds in amount and a majority in
number of the Claims in each such class actually
voting: Class 3 (Connecticut Mutual Note Secured
Claim); Class 10 (Inter-Market Note Secured
Claim); Class 12 (Northwestern Group Secured
Claims); Class 16 (Asbestos Property Damage
Claims); Class 17 (Asbestos Personal Injury
Claims and Lead Personal Injury Claims); Class
19 (Environmental Claims); and Class 21 (Specified
Treatment Claims).
b. Class 17 (Asbestos Personal Injury Claims and Lead Personal
Injury Claims) has voted, by at least 75 percent (75%) of
those voting, in favor of the Plan.
c. With respect to impaired classes of Claims, the following
classes have failed to accept the Plan: Class 4 (Designated
Real Property Tax Claims); Class 18 (Other Product Liability
Tort Claims), and Class 20 (Unsecured Claims other than
Convenience Claims and Specified Treatment Claims).
8. The respective determinations of H&K and FCSG are valid and
correctly set forth the tabulation of votes required under the Bankruptcy Code.
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9. All holders of Claims who are impaired under the Plan and whose
Claims were not the subject of an objection as of the Voting Record Date were
mailed Ballots in the amount specified on such holder's Ballot substantially in
accordance with the Voting Procedures.
VII.
COMPLIANCE WITH THE REQUIREMENTS OF
SECTION 1129 OF THE BANKRUPTCY CODE
-----------------------------------
A. SECTION 1129(a)(1) COMPLIANCE OF THE PLAN WITH THE APPLICABLE PROVISIONS
OF THE BANKRUPTCY CODE.
The Court finds and concludes that the Plan satisfies all the applicable
provisions of the Bankruptcy Code.
1. SECTION 1123(a)(1) DESIGNATION OF CLAIMS AND INTERESTS
Section 1123(a)(1) of the Bankruptcy Code provides that a plan must
designate classes of claims and interests. In accordance with section 1123(a)(1)
of the Bankruptcy Code, section 3.2 of the Plan designates classes of Claims
against and Equity Interests in the Debtors other than Administrative Expenses
and Tax Claims. Classes of Administrative Expenses and Tax Claims are not
required to be designated pursuant to section 1123(a)(1) of the Bankruptcy Code.
The Plan adequately and properly classifies all Claims and Equity Interests and,
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accordingly, satisfies section 1123(a)(1) of the Bankruptcy Code.
2. SECTION 1122(a) CLASSIFICATION
a. Section 1122(a) of the Bankruptcy Code provides that a plan
may place a claim or interest in a particular class if such claim or interest
is substantially similar to the other claims or interests of such class. A
classification scheme satisfies section 1122(a) of the Bankruptcy Code when a
reasonable basis exists for the classification scheme, and the claims or
interests within each particular class are substantially similar. See In re
Boston Post Road Ltd. Partnership, 21 F.3d 477 (2d Cir. 1994), cert. denied,
115 S. Ct. 897 (1995); In re Jersey City Medical Ctr., 817 F.2d 1055, 1060-61
(3d Cir. 1987); In re U.S. Truck Co., 800 F.2d 581, 586 (6th Cir. 1986); In re
LeBlanc, 622 F.2d 872, 879 (5th Cir. 1980).
b. In accordance with section 1122(a)(1) of the Bankruptcy Code,
the Court concludes that section 3.2 of the Plan separately classifies Claims
against and Equity Interests in the Debtors together with Claims against or
Equity Interests that are substantially similar to the other Claims or
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Equity Interests of such class. The Plan accordingly satisfies section 1122(a)
of the Bankruptcy Code.
3. SECTION 1122(b) ADMINISTRATIVE CONVENIENCE CLASS
a. Section 3.2.15 of the Plan provides each holder of an
Unsecured Claim with the option of electing to have its Unsecured Claim treated
as a Convenience Claim.
b. In accordance with section 1122(b) of the Bankruptcy
Code, the convenience class established in section 3.2.15 of the Plan is
reasonable and necessary for administrative convenience.
4. SECTION 1123(a)(2) SPECIFICATION OF IMPAIRED CLASSES
a. Section 1123(a)(2) of the Bankruptcy Code provides
that a plan must specify any class of claims or interests that is not impaired
under the Plan. The Plan identifies impaired classes of Claims and Equity
Interests and provides for their treatment.
b. Sections 3.1 and 3.2 of the Plan identify the
following classes as unimpaired, and such classes are conclusively presumed to
have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code:
Class 1 (Priority Claims), Class 2 (Amplicon Lease Secured Claim), Class 5
(First
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Fidelity Lease Secured Claim), Class 6 (Fleet Credit Secured Claim), Class 7 (GE
Capital Secured Claim), Class 8 (Grove IRB Secured Claim), Class 9 (IBM Credit
Corporation Secured Claim), Class 11 (Leesburg Secured Claim), Class 13 (Vale
EDBs Claims), Class 14 (Other Secured Claims), and Class 15 (Convenience
Claims).
c. Sections 3.2.23 and 3.2.24 of the Plan, respectively,
provide that the holders of Penalty Claims and Equity Interests will receive no
distribution under the Plan, and each of such classes is conclusively deemed to
have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code.
d. Each of the remaining classes is identified under sections
3.1 and 3.2 of the Plan as impaired.
e. The Plan satisfies section 1123(a)(2) of the Bankruptcy
Code.
5. SECTION 1123(a)(3) SPECIFICATION OF IMPAIRED
CLASSES
a. Section 1123(a)(3) of the Bankruptcy Code provides that a
plan must specify the treatment of each impaired class of claims and interests.
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b. Section 3.2 of the Plan specifies the treatment of each
impaired class of Claims and Equity Interests.
c. The Plan satisfies section 1123(a)(3) of the Bankruptcy
Code.
6. SECTION 1123(a)(4) SAME TREATMENT WITHIN EACH
CLASS UNLESS AGREES TO DIFFERENT TREATMENT
a. Section 1123(a)(4) of the Bankruptcy Code requires a plan
to provide the same treatment for each claim or interest of a particular class,
unless the holder of the claim or interest agrees to less favorable treatment of
such particular claim or interest.
b. With respect to each class of Claims and Equity Interests
under the Plan, the Plan provides the same treatment for each Claim or Equity
Interest in each such class.
7. SECTION 1123(a)(5) MEANS OF IMPLEMENTATION
a. Section 1123(a)(5) of the Bankruptcy Code provides that a
plan must provide adequate means for its implementation.
b. Article 7 of the Plan provides adequate means for
implementation of the Plan. The provisions contained in Article 7 of the Plan
relate to, among other things, the following: (I) the amendment of
Eagle-Picher's articles of
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incorporation, code of regulations, and other similar constituent documents;
(ii) the distribution of property of the Debtors' estates to those creditors
entitled to Distributions under the Plan; (iii) the cancellation of Existing
Eagle-Picher Common Stock on the Effective Date; and (iv) the dissolution of
EDI, Inc. on the Effective Date.
c. Article 10 of the Plan provides adequate means
for implementation of the Plan relating to the establishment of the PI Trust.
d. Article 11 of the Plan provides adequate means
for implementation of the Plan relating to the establishment of the Asbestos PD
Trust.
e. The Plan satisfies section 1123(a)(5) of the
Bankruptcy Code.
8. SECTION 1123(a)(6) PROHIBITION AGAINST THE ISSUANCE OF
NONVOTING EQUITY SECURITIES
a. Section 1123(a)(6) of the Bankruptcy Code requires a
plan to provide for the inclusion in the charter of the debtor, if the debtor is
a corporation, or of any corporation to which the debtor transfers all or any
part of the debtor's estate or with which the debtor has merged or consolidated,
of a provision prohibiting the issuance of non-voting equity securities.
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b. Sections 7.1 and 7.13 of the Plan provide for the
amendment of the Articles of Incorporation on the Effective Date, among other
things, to prohibit the issuance of nonvoting equity securities, subject to
further amendment of the Amended and Restated Articles of Incorporation as
permitted by applicable law. Eagle-Picher is the sole stockholder of the
stock of the other Debtors.
c. Section 1123(a)(6) is not applicable to the PI Trust
because the PI Trust does not have a corporate charter.
9. SECTION 1123(a)(7) SELECTION OF OFFICERS AND
DIRECTORS
a. Section 1123(a)(7) of the Bankruptcy Code requires
that the manner of selection of any director, officer, or trustee of the
reorganized debtor, or any successor to such officer, director, or trustee, be
consistent with the interests of creditors and equity interest holders and with
public policy.
b. In accordance with section 1123(a)(7) of the
Bankruptcy Code, section 7.11 of the Plan provides that the employment contracts
substantially in the form of Exhibit "7.11" to the Plan automatically shall
become effective on the Effective Date (collectively, the "Employment
Contracts"). The
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Employment Contracts cover the following officers of Eagle-Picher: Thomas E.
Petry (Chairman of the Board of Directors and Chief Executive Officer), Andries
Ruijssenaars (President and Chief Operating Officer), David N. Hall (Senior Vice
President-Finance), Wayne R. Wickens (Senior Vice President), Carroll D. Curless
(Vice President and Controller), and James A. Ralston (Vice President, General
Counsel, and Secretary). The Employment Contracts and the compensation provided
therein are approved by the Court as reasonable and within the Debtors' sound
business judgment.
c. In accordance with section 1123(a)(7) of the
Bankruptcy Code, section 7.11 further provides for the continuation of the
existing Board of Directors of Eagle-Picher until the first meeting of
shareholders of Reorganized Eagle-Picher.
d. Section 1123(a)(7) does not apply to either the
trustees of the PI Trust or the members of the Trust Advisory Committee
established thereunder.
e. The Plan complies with section 1123(a)(7) of the
Bankruptcy Code.
10. SECTION 1123(b)(1) IMPAIRMENT
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Section 3.2 of the Plan impairs or leaves unimpaired,
as the case may be, each class of Claims or Equity Interests.
11. SECTION 1123(b)(2) EXECUTORY CONTRACTS AND UNEXPIRED
LEASES
a. The Debtors have engaged in a thorough
review of the executory contracts and unexpired leases to which
any of the Debtors is a party.
b. Section 8.1 of the Plan provides for the assumption
of the executory contracts and unexpired leases listed on Exhibit "8.1" to the
Plan. Exhibit "8.1" was prepared after a thorough review of the executory
contracts and unexpired leases by the Debtors. There are no defaults under any
of the executory contracts and unexpired leases set forth on Exhibit "8.1" of
the Plan except as otherwise provided in Exhibit "8.1" of the Plan. Any such
defaults will be cured promptly after the Effective Date.
c. The assumption pursuant to the Plan of the
executory contracts and unexpired leases set forth on Exhibit "8.1" to the Plan
is (I) in the best interests of the Debtors, their estates, and their creditors,
(ii) based upon and within the Debtors' sound business judgment, and (iii)
necessary to the implementation of the Plan.
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d. In accordance with section 8.2 of the Plan, all
executory contracts and unexpired leases of any of the Debtors that (I) are not
listed on Exhibit "8.1" of the Plan, (ii) have not been assumed by any of the
Debtors with the approval of the Bankruptcy Court, and (iii) are not the
subject of pending motions to assume at the Confirmation Date are rejected
because the Debtors have made a determination that they would impose an onerous
burden on the Debtors' estates.
e. The rejection of the executory contracts and
unexpired leases pursuant to section 8.2 of the Plan is (I) in the best
interests of the Debtors, their estates, and their creditors, (ii) based upon
and within the Debtors' sound business judgment, and (iii) necessary to the
implementation of the Plan.
12. SECTION 1123(b)(3) RETENTION, ENFORCEMENT, AND
SETTLEMENT OF CLAIMS ASSERTED AGAINST AND HELD
BY THE DEBTORS
a. Section 5.2 of the Plan provides for the amendment
of the Claims Settlement Guidelines as set forth on Exhibit "5.2" to the Plan.
Such amendment is (I) in the best interests of the Debtors, their estates, and
their creditors and (ii) necessary to the implementation of the Plan.
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b. Section 12.3 of the Plan provides that the
Reorganized Debtors shall succeed to the right to pursue, litigate, and
compromise and settle, on behalf of themselves and their respective estates, any
avoidance or recovery actions under sections 542, 544, 545, 547, 548, 549, 550,
551, and 553 of the Bankruptcy Code and any rights to, claims, or causes of
action for recovery under any policies of insurance issued to or on behalf of
any of the Debtors or Debtors in Possession.
13. SECTION 1123(b)(6) OTHER PROVISIONS NOT INCONSISTENT
WITH APPLICABLE PROVISIONS OF THE BANKRUPTCY CODE
The Plan includes additional appropriate provisions
that are not inconsistent with applicable provisions of the Bankruptcy Code.
B. SECTION 1129(a)(2) COMPLIANCE WITH APPLICABLE PROVISIONS
OF THE BANKRUPTCY CODE
1. Section 1129(a)(2) of the Bankruptcy Code requires the proponent
of a plan to comply with all of the applicable provisions of the Bankruptcy
Code.
2. The Debtors have complied with the operating guidelines and
financial reporting requirements enacted by the United States Trustee by (I)
timely filing all operating reports and consolidated financial statements and
(ii) maintaining and providing proof of insurance.
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3. The Debtors have paid all statutory fees required to be paid
during the Chapter 11 Cases and filed all fee statements required to be filed.
4. The Debtors have timely filed with the Bankruptcy Court all
schedules, lists of executory contracts, and statements of financial affairs.
5. The Plan Proponents and their respective directors, officers,
employees, agents, and professionals have acted in "good faith" within the
meaning of sections 1125(e), 1126(e), and 1129(a)(3) of the Bankruptcy Code.
6. The Plan Proponents have complied with the provisions of the
Bankruptcy Code, the Bankruptcy Rules, applicable non-bankruptcy law, the Local
Bankruptcy Rules, and the specific rules of the Bankruptcy Court throughout the
Chapter 11 Cases.
7. The solicitation of votes from holders of Claims was made
following approval and dissemination of the Disclosure Statement to holders of
Claims and Equity Interests in classes that are impaired under the Plan and was
made in good faith and in compliance with the applicable provisions of the
Bankruptcy Code and the Bankruptcy Rules. The Ballots of holders of
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Claims entitled to vote on the Plan were properly solicited and tabulated.
8. The Plan Proponents have complied with all orders of the
Bankruptcy Court and have fulfilled all of the obligations and duties owed to
their respective estates as required by and set forth in sections 1107 and 1108
of the Bankruptcy Code.
9. The Plan Proponents have complied with all applicable provisions
of the Bankruptcy Code, as required by section 1129(a)(2) of the Bankruptcy
Code, including the provisions governing notice, disclosure, and solicitation
in connection with the Plan, the Disclosure Statement, and all other matters
considered by the Bankruptcy Court in connection with the Chapter 11 Cases.
10. Good, sufficient, and timely notice of the Confirmation Hearing
and all other hearings in the Chapter 11 Cases has been given to all holders of
Claims and Equity Interests and all other parties in interest to whom notice
was required to have been given.
11. The Plan Proponents have satisfied section 1129 a)(2) of the
Bankruptcy Code.
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C. SECTION 1129(a)(3) PROPOSAL OF THE PLAN IN GOOD FAITH
1. Section 1129(a)(3) of the Bankruptcy Code states that a plan must
be proposed in good faith and not by any means forbidden by law.
2. The Plan Proponents and the UCC have been closely involved in all
negotiations regarding the Plan.
3. The Court has examined the totality of the circumstances
surrounding the formulation of the Plan. The Plan is based on extensive
arm's-length negotiations among the Plan Proponents, the UCC, and other parties
in interest.
4. The Plan has been proposed with the legitimate and honest purpose
of reorganizing the Debtors' businesses and affairs, restructuring its
asbestos-related liability, and maximizing the value available to creditors.
5. The Plan was proposed in good faith and not by any means forbidden
by law.
D. SECTION 1129(a)(4) BANKRUPTCY COURT APPROVAL OF CERTAIN
PAYMENTS AS REASONABLE
1. Section 1129(a)(4) of the Bankruptcy Code requires that all
payments made or to be made by the plan proponent, by the debtor, or by a
person issuing securities or acquiring property under the plan, for services or
for costs
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and expenses in or in connection with the case, or in connection with the plan
and incident to the case, have been approved by, or are subject to the approval
of, the court as reasonable.
2. The Employment Contracts are a matter of public record. The
Employment Contracts and the compensation provided therein are approved by the
Court as reasonable and within the Debtors' sound business judgment.
3. Pursuant to section 2.1 of the Plan, all payments to
professionals will be (I) subject to review and approval by the Bankruptcy
Court upon final application pursuant to sections 327, 328, 330, 331, 503(b), or
1103 of the Bankruptcy Code, or (ii) paid in accordance with prior orders of
the Bankruptcy Court approving the retention of certain professionals.
4. The Plan satisfies section 1129(a)(4) of the Bankruptcy Code.
E. SECTION 1129(a)(5) DISCLOSURE OF IDENTITY AND AFFILIATIONS
OF PROPOSED MANAGEMENT, COMPENSATION OF INSIDERS AND
CONSISTENCY OF MANAGEMENT PROPOSALS WITH THE INTERESTS
OF CREDITORS AND PUBLIC POLICY
1. The Debtors have disclosed in the Disclosure Statement the
identity of the individuals who will hold positions with the Debtors
immediately after confirmation of
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the Plan and have shown that the service of such individuals is consistent with
the interests of creditors and with public policy.
2. The Debtors have disclosed in the Disclosure Statement the
identity of any insider who will be employed or retained by the Debtors
immediately after confirmation of the Plan and the nature of any compensation
for such insider.
3. The Plan satisfies section 1129(a)(5) of the Bankruptcy Code.
F. SECTION 1129(a)(6) APPROVAL OF RATE CHANGES
1. Section 1129(a)(6) of the Bankruptcy Code requires a debtor to
obtain the approval of any governmental regulatory commission, with jurisdiction
over the debtor, with respect to any rate changes provided for in the debtor's
plan of reorganization.
2. The Plan does not provide for any changes in rates that require
regulatory approval of any governmental agency.
3. The Plan satisfies section 1129(a)(6) of the Bankruptcy Code.
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G. SECTION 1129(a)(7) BEST INTERESTS OF CREDITORS
1. Section 1129(a)(7) of the Bankruptcy Code requires that each
creditor or equity interest holder in an impaired class must either have voted
to accept the plan of reorganization, or will receive or retain under such plan
on account of such claim or interest property of a value, as of the effective
date of such plan, that is not less than the amount that such holder would
receive or retain if the debtor were liquidated under chapter 7 of the
Bankruptcy Code.
2. In accordance with the Estimation Appeal Order, future, unknown
Asbestos Personal Injury Claims are "claims" within the meaning of section
101(5) of the Bankruptcy Code. Accordingly, it is appropriate to take the value
of future Asbestos Personal Injury Claims into account in determining the Claims
that would be required to be paid in a liquidation under chapter 7 of the
Bankruptcy Code.
3. Based upon the evidence presented at the Confirmation Hearing and
the Financial Appendix to the Disclosure Statement, with respect to each
impaired class of Claims and Equity Interests for each Debtor, each holder of a
Claim or Equity Interest will receive or retain under the Plan on account of
such Claim or Equity Interest property of a
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value, as of the Effective Date, that is not less than the amount that such
holder would receive or retain if the Debtors were liquidated on the Effective
Date under chapter 7 of the Bankruptcy Code.
4. The Plan satisfies section 1129(a)(7) of the Bankruptcy Code.
H. SECTION 1129(a)(8) ACCEPTANCE OF THE PLAN BY EACH IMPAIRED
CLASS
1. Section 1129(a)(8) of the Bankruptcy Code requires that, with
respect to each class of claims or interests under a plan, such class has either
accepted the plan or is not impaired under the plan.
2. All impaired classes of Claims and Equity Interests, other than
Class 4 (Designated Real Property Tax Claims), Class 18 (Other Product Liability
Tort Claims), Class 20 (Unsecured Claims other than Convenience Claims and
Specified Treatment Claims), Class 23 (Penalty Claims), and Class 24 (Equity
Interests), have either voted to accept the Plan or are not impaired under the
Plan.
3. The only holder of a Claim in Class 4 (Designated Real Property
Tax Claims) did not vote on the Plan and, thus, such class has not accepted the
Plan. There are no known members of Class 18 (Other Product Liability Tort
Claims)
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and, therefore, no votes on the Plan with respect to Class 18 were solicited, no
member of Class 18 voted on the Plan, and such class has not accepted the Plan.
4. Each of Class 23 (Penalty Claims) and Class 24 (Equity Interests)
is conclusively deemed to have rejected the Plan pursuant to section 1126(g) of
the Bankruptcy Code.
5. Each of the unimpaired classes of Claims and Equity Interests
under the Plan and each holder of a Claim or Equity Interest in each such class
is conclusively presumed to have accepted the Plan, and, in accordance with
section 1126(f) of the Bankruptcy Code, solicitation of acceptance with respect
to each such class is not required.
6. The Plan does not satisfy the requirements of section 1129(a)(8)
of the Bankruptcy Code; however, the treatment provided to the holders of
Claims and Equity Interests in Class 4 (Designated Real Property Tax Claims),
Class 18 (Other Product Liability Tort Claims), Class 20 (Unsecured Claims other
than Convenience Claims and Specified Treatment Claims), Class 23 (Penalty
Claims), and Class 24 (Equity Interests) complies with the requirements of
section 1129(b) of the Bankruptcy Code.
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I. SECTION 1129(a)(9) TREATMENT OF CLAIMS ENTITLED TO PRIORITY
PURSUANT TO SECTION 507(a) OF THE BANKRUPTCY CODE
1. Section 1129(a)(9) of the Bankruptcy Code provides for certain
mandatory treatment of claims entitled to priority under the Bankruptcy Code.
2. Section 2.1 of the Plan provides that each holder of an Allowed
Administrative Expense will be paid in full, in cash, on the Effective Date;
provided, however, that (I) Administrative Expenses representing (a) liabilities
incurred in the ordinary course of business by any of the Debtors in Possession
or (b) liabilities arising under loans or advances to the Debtors in
Possession, whether or not incurred in the ordinary course of business, shall be
assumed and paid by the respective Reorganized Debtors in accordance with the
terms and conditions of the particular transactions and any agreements relating
thereto, (ii) the Bankruptcy Court shall fix in the Confirmation Order a date
for the filing of and a date to hear and determine all applications for final
allowances of compensation or reimbursement of expenses under section 330 of the
Bankruptcy Code, and (iii) if an Administrative Expense, other than a trade
payable incurred in the ordinary course of business by any of the Debtors in
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Possession and other than a DIP Credit Facility Claim, is a Contingent Claim or
Unliquidated Claim as of the Effective Date, the Debtors may request the
Bankruptcy Court to estimate such Administrative Expense pursuant to section
502(c) of the Bankruptcy Code, in which case the Allowed Amount of such
Administrative Expense shall be paid in full, in cash, on the date that an order
estimating such Administrative Expense becomes a Final Order.
3. As required by section 1129(a)(9)(C) of the Bankruptcy Code,
section 2.2 of the Plan provides that, on the Effective Date, each holder of an
Allowed Tax Claim shall be paid the Allowed Amount of its Allowed Tax Claim, at
the option of the Reorganized Debtors, either (a) in full, in cash, on the
Effective Date or (b) upon such other terms as may be mutually agreed upon
between each holder of a Tax Claim and the Reorganized Debtors.
4. The Debtors have sufficient cash to fund payments of Allowed
Administrative Expenses and Allowed Tax Claims.
5. The Plan satisfies the requirements of section 1129(a)(9) of the
Bankruptcy Code.
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J. SECTION 1129(a)(10) ACCEPTANCE BY AT LEAST ONE IMPAIRED
CLASS
1. Section 1129(a)(10) of the Bankruptcy Code provides that at least
one impaired class of claims must accept a plan of reorganization, determined
without including any acceptance of such plan by any insider.
2. At least one impaired class in the Plan has voted to accept the
Plan determined without including any acceptance of the Plan by an insider
holding a Claim in each such class.
3. The Plan satisfies the requirements of section 1129(a)(10) of the
Bankruptcy Code.
K. SECTION 1129(a)(11) FEASIBILITY OF THE PLAN
1. Section 1129(a)(11) of the Bankruptcy Code requires that a plan
be "feasible" and that the debtor or its successor under such plan is not likely
to require liquidation or further financial reorganization, except as provided
under such plan.
2. On the basis of the information presented in the Plan, the record
of the Confirmation Hearing, and as detailed in the Disclosure Statement, the
Court concludes that confirmation of the Plan is not likely to be followed by
the
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liquidation of, or the need for further financial reorganization of, any of the
Debtors, except to the extent that such liquidation is required by or
contemplated under the Plan.
3. It is a condition to the occurrence of the Effective Date that
the Reorganized Debtors shall have entered into and shall have credit
availability under a credit facility to provide the Reorganized Debtors with
working capital (including letters of credit) in an amount sufficient to meet
the needs of the Reorganized Debtors, as determined by the Reorganized Debtors.
The Debtors have been engaged in discussions with PNC Bank regarding such a
credit facility and believe that a commitment letter offering to provide such
financing will be forthcoming shortly after the Confirmation Date.
4. For all purposes with respect to distributions to creditors under
the Plan, the Equity Value is $341.8 million.
5. The Plan satisfies the requirements of section 1129(a)(11) of the
Bankruptcy Code.
L. SECTION 1129(a)(12) PAYMENT OF BANKRUPTCY FEES
1. Section 1129(a)(12) of the Bankruptcy Code requires that either
all fees payable under 28 U.S.C. section 1930, as
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determined by the court at the hearing on confirmation of the plan, have been
paid or that the plan provides for the payment of all such fees on the effective
date of the plan.
2. Section 12.1 of the Plan provides that all fees payable pursuant
to 28 U.S.C. section 1930 shall be paid by the Reorganized Debtors on the
Effective Date.
3. The Plan satisfies the requirements of section 1129(a)(3) of the
Bankruptcy Code.
M. SECTION 1129(a)(13) RETIREE BENEFITS
1. Section 1129(a)(13) of the Bankruptcy Code requires the
continuation of payment of all retiree benefits, at the level established
pursuant to section 1114 of the Bankruptcy Code at any time prior to
confirmation of the plan, for the duration of the period for which the debtor
has obligated itself to provide such benefits.
2. Section 8.7 of the Plan provides that all employment and
severance policies shall be deemed to be, and shall be treated as though they
are, executory contracts that are deemed assumed under the Plan, and the
Debtors' obligations under such plans, policies, and programs shall be deemed
assumed pursuant to section 365(a) of the Bankruptcy Code, survive confirmation
of the Plan, remain unaffected thereby, and
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not be discharged in accordance with section 1141 of the Bankruptcy Code.
3. The Plan accordingly satisfies the requirements of section
1129(a)(13) of the Bankruptcy Code.
N. BANKRUPTCY RULE 3016(b)
The Plan is dated and identifies the entities submitting the Plan.
O. SECTION 1129(b) CONFIRMATION OF THE PLAN OVER THE NONACCEPTANCE
OF CERTAIN IMPAIRED CLASSES
1. Class 4 (Designated Real Property Tax Claims), Class 18 (Other
Product Liability Tort Claims), Class 20 (Unsecured Claims other than
Convenience Claims and Specified Treatment Claims), Class 23 (Penalty Claims),
and Class 24 (Equity Interests) rejected or are deemed to have rejected the
Plan.
2. The Plan satisfies the requirements of section 1129(b) of the
Bankruptcy Code because, with respect to each class of Claims and Equity
Interests that has failed to accept the Plan or is deemed to have rejected the
Plan, the Plan does not discriminate unfairly and is fair and equitable with
respect to such classes.
3. The Designated Real Property Tax Claim is a non-recourse, in rem
obligation to the holder of the Designated
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Real Property Tax Claim, and, pursuant to section 3.2.4 of the Plan, the holder
of the Designated Real Property Tax Claim will receive the property securing the
Designated Real Property Tax Claim. Pursuant to section 1129(b)(2)(A)(iii), the
holder of the Designated Real Property Tax Claim will realize the indubitable
equivalent of its Claim.
4. No holder of a Claim or Equity Interest junior to the Claims in
each of Class 18 (Other Product Liability Tort Claims), Class 20 (Unsecured
Claims other than Convenience Claims and Specified Treatment Claims), and Class
23 (Penalty Claims), and the Equity Interests in Class 24 (Equity Interests)
will receive or retain any property under the Plan on account of such junior
Claims or Equity Interests, and no class of Claims senior to such classes is
receiving more than full payment on account of the Claims or Equity Interests in
such classes.
5. All holders of Claims or Equity Interests in the same class under
the Plan are receiving the same treatment under the Plan, unless such holder has
made an election under the Plan to be treated as a Convenience Claim.
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6. The Plan satisfies the requirements of section 1129(b) of the
Bankruptcy Code with respect to each class of Claims and Equity Interests that
did not accept the Plan..
P. SECTION 1129(d) TAX AVOIDANCE
1. No objection has been filed by any governmental unit or any party
in interest alleging that the principal purpose of the Plan is avoidance of
taxes or avoidance of the requirements of section 5 of the Securities Act of
1933, as amended.
2. The principal purpose of the Plan is not avoidance of taxes or
avoidance of the requirements of section 5 of the Securities Act of 1933, as
amended.
IX.
DISTRIBUTIONS
-------------
Sections 5.3, 7.3, 7.4, 7.5, 7.7, and 7.10 of the Plan contain the
provisions governing distributions under the Plan, and such provisions are fair
and reasonable.
X.
PLAN MODIFICATIONS
------------------
1. On November 13, 1996, the Plan Proponents filed modifications to
the Plan, which effect certain technical
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amendments to Plan and resolve certain objections to confirmation of the Plan
(the "Plan Modifications").
2. The Plan Modifications do not adversely change the treatment of
the Claim of any creditor. To the contrary, the Plan Modifications clarify
certain provisions of the Plan. The Plan Modifications preserve the Plan, as
negotiated, and the rights of all parties set forth therein.
3. Disclosure of the Plan Modifications at the Confirmation Hearing
constituted adequate and appropriate notice of the Plan Modifications under the
circumstances, and no further notice of the Plan Modifications is necessary. The
Plan Modifications comply in all respects with section 1127 of the Bankruptcy
Code, Bankruptcy Rule 3019, and all other provisions of the Bankruptcy Code. No
additional disclosure under section 1125 of the Bankruptcy Code is required with
respect to the Plan Modifications.
4. Accordingly, pursuant to section 1127 of the Bankruptcy Code and
Bankruptcy Rule 3019, all holders of Claims that have accepted or are
conclusively presumed to have accepted the Plan are deemed to have accepted the
Plan Modifications.
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XI.
CONDITIONS PRECEDENT TO CONFIRMATION DATE
-----------------------------------------
3. The condition precedent set forth in section 7.8.0.1 of the Plan
will be satisfied by entry of the judgment order confirming the Plan.
4. Class 17 (Asbestos Personal Injury Claims and Lead Personal Injury
Claims) has voted, by at least 75 percent (75%) of those voting, in favor of the
Plan.
5. The Bankruptcy Court has entered an order approving the
Environmental Settlement Agreement, which is reasonably acceptable to the Plan
Proponents. The Plan Proponents have waived the condition that such order have
become a Final Order on or before the Confirmation Date.
6. The Plan Proponents have advised the Court that this order is, in
form and substance, acceptable to the Plan Proponents.
7. Each of the conditions precedent to confirmation of the Plan that
are set forth in section 7.8 of the Plan have been waived by the Plan Proponents
or satisfied.
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XII.
THE TRANSFERS OF PROPERTIES UNDER THE PLAN
ARE GOVERNED BY THE EXEMPTIONS PROVIDED
IN SECTION 1146(c) OF THE BANKRUPTCY CODE
-----------------------------------------
A. SALES OF DIVISIONS, PLANTS, OR OTHER SIGNIFICANT OPERATING
ASSETS AFTER THE EFFECTIVE DATE
1. As part of the Plan Consideration, the Debtors will be
distributing to the PI Trust and holders of Allowed Environmental Claims and
Allowed Unsecured Claims Divestiture Notes in the aggregate principal amount of
$50 million.
2. Pursuant to the Divestiture Notes, if divisions, plants, or other
significant operating assets of the Debtors are sold (the "Divestitures"), the
net proceeds received from such sale will be placed in a separate account.
Whenever funds in such account equal or exceed $10 million, an equivalent amount
of Divestiture Notes is required to be called for redemption at one hundred
percent (100%) of their principal amount plus accrued interest to the redemption
date.
3. The Divestitures are necessary to effectuate the Plan.
4. Consistent with the requirements of section 1146(c) of the
Bankruptcy Code, the Divestitures are not subject to taxation under any state
or local law imposing a stamp, transfer, or similar tax.
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B. REORGANIZED CREDIT FACILITY
1. It is a condition to the occurrence of the Effective Date that
the Reorganized Debtors shall have entered into and shall have credit
availability under a credit facility to provide the Reorganized Debtors with
working capital (including letters of credit) in an amount sufficient to meet
the needs of the Reorganized Debtors, as determined by the Reorganized Debtors.
2. The lenders providing such credit facility may require, as a
condition to issuance of such credit facility, security interests in certain
assets of the Reorganized Debtors (the "Security Interests"). If required by
such lenders, the Security Interests are necessary to effectuate the Plan and to
achieve a viable reorganized company.
3. Consistent with the requirements of section 1146(c) of the
Bankruptcy Code, any Security Interests will not be subject to taxation under
any state or local law imposing a stamp, transfer, or similar tax.
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The foregoing constitutes our findings of fact and conclusions of
law.
Dated: Cincinnati, Ohio
November 18, 1996
/s/ S. Arthur Spiegel
--------------------------------
THE HONORABLE S. ARTHUR SPIEGEL
United States District Judge
Cincinnati, Ohio
November 18, 1996
/s/ Burton Perlman
---------------------------------
THE HONORABLE BURTON PERLMAN
United States Bankruptcy Judge
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