-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M+dVywVffdpGH+wEIZyRGwU5quXMeEfGzqWziTdhbgTIxb4SxpGghKIZNHYZXjAR Up8S7bCfahjiFpBwfsac+g== 0000950124-98-005117.txt : 19980922 0000950124-98-005117.hdr.sgml : 19980922 ACCESSION NUMBER: 0000950124-98-005117 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980918 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980921 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEENAH FOUNDRY CO CENTRAL INDEX KEY: 0001040599 STANDARD INDUSTRIAL CLASSIFICATION: GLASS, GLASSWARE, PRESSED OR BLOWN [3220] IRS NUMBER: 390496210 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 333-28751-03 FILM NUMBER: 98712531 BUSINESS ADDRESS: STREET 1: 2121 BROOKS AVE STREET 2: PO BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 BUSINESS PHONE: 4147257000 MAIL ADDRESS: STREET 1: 2121 BROOKS AVE STREET 2: PO BOX 729 CITY: NEENAH STATE: WI ZIP: 54927 8-K 1 FORM 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report: September 21, 1998 NEENAH FOUNDRY COMPANY (Exact name of registrant as it appears in its charter) Wisconsin 39-1580331 (State or other jurisdiction of (IRS Employer ID Number) Incorporation or organization) 333-28751 (Commission File Number) 2121 Brooks Avenue, P.O. Box 729, Neenah, Wisconsin 54957 (Address of principal executive offices) (Zip Code) (920) 725-7000 (Registrant's telephone number, including area code) 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On September 8, 1998, Neenah Foundry Company (the "Company") completed its acquisition of Dalton Corporation, an Indiana corporation, and its subsidiaries Dalton Corporation, Warsaw Manufacturing Facility, an Indiana corporation, Dalton Corporation, Kendallville Manufacturing Facility, an Indiana corporation, Dalton Corporation, Ashland Manufacturing Facility, an Ohio corporation, and Dalton Corporation, Stryker Machining Facility Co., an Ohio Corporation (collectively referred to herein as "Dalton"). Pursuant to the transaction, the Company purchased 100% of the capital stock of Dalton Corporation from the Dalton Corporation Employee Stock Ownership Plan & Trust for aggregate consideration of $102.36 million in cash. The acquisition of Dalton was financed through drawings under the Tranche A term loan facility, an additional Tranche B term loan facility and a Multi-Draw Acquisition Revolver under the Company's Amended and Restated Credit Agreement dated as of April 30, 1997, as amended as of September 12, 1997, as of April 3, 1998 and as of September 8, 1998 by and among the Company, the Chase Manhattan Bank and other Lenders party thereto (the "Credit Agreement"). The Credit Agreement was amended in connection with the acquisition of Dalton to create an additional $70.0 million Tranche B term loan facility and a $50.0 million Multi-Draw Acquisition Revolver in addition to the Company's existing $50.0 million revolving loan facility and term loan facility. Dalton manufactures and sells gray iron castings, primarily to the refrigeration, air conditioning, automotive/truck and heavy equipment industries. Dalton will operate as a wholly owned subsidiary of the Company out of four facilities in Warsaw, Indiana, Kendalville, Indiana, Ashland, Ohio and Stryker, Ohio and will continue to operate under its current management team. As a consequence of this acquisition, the Company acquired certain real property and leasehold interests described below as well as the related plant and equipment assets of Dalton. In addition to the properties listed below, Dalton currently leases nine (9) properties which are used for warehouse space, sales offices, aircraft hangar space and concrete loading areas. The Company currently has no plans to alter the existing usage of these properties. LOCATION USE OWNED OR APPROXIMATE LEASED AREA 1900 East Jefferson Street Manufacturing facilities, Owned 315,589 square Warsaw, IN 46580 warehousing and office feet space 1681 Orange Road Manufacturing facilities, Owned 83,681 square Ashland, OH 44805 warehousing and office feet space 200 West Ohio Street Manufacturing facilities, Owned 238,193 square Kendalville, IN 46755 warehousing and office feet space 310 Ellis Street Manufacturing, machining Owned 31,690 square Stryker, OH 43557 and office space feet 3 ITEM 5. OTHER EVENTS On September 8, 1998, the Company acquired 100% of the capital stock of Advanced Cast Products, Inc. a Delaware corporation ("ACP"), pursuant to a capital contribution from its indirect parent, ACP Holding Company. In connection with the transaction, the Company repaid certain outstanding indebtedness of ACP through advances under Tranche A of the Company's Amended and Restated Credit Agreement dated as of April 30, 1997, as amended as of September 12, 1997 and April 3, 1998. ACP is a ductile iron foundry specializing in iron castings for the railroad, automotive/truck and heavy equipment markets. ACP operates out of 3 principal facilities in Meadville, Pennsylvania, Ironton, Ohio and Easton, Massachusetts and will be operated as a wholly owned subsidiary of the Company under the direction of the Company's management. Based on the provisions of Regulation S-X Rule 3-05(b)(2) and the definition of "significant subsidiary" contained in Rule 1-02(w), ACP is not deemed to be a significant subsidiary. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of Business Acquired. Audited financial statements for Dalton are not available at this time, and will be filed in an amendment to this 8-K within 60 days of the date hereof. 2 4 (b) Pro Forma Financial Information The pro forma financial information for the Company and Dalton is not available at this time, and will be filed in an amendment to the 8-K within 60 days of the date hereof. (c) Exhibits 2.1 Stock Purchase Agreement for the acquisition of Dalton dated as of August 7, 1998 by and among Neenah Foundry Company, Dalton Corporation and the Dalton Corporation Employee Stock Ownership Plan and Trust. 10.1 Credit Agreement dated as of April 30, 1997 as Amended and Restated as of September 12, 1997, as of April 3, 1998 and as of September 8, 1998 by and among Neenah Foundry Company, NFC Castings, Inc., the Chase Manhattan Bank as Administrative Agent, Chase Securities Inc. as Arranger and the other Lenders from time to time party thereto. SIGNATURES 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. NEENAH FOUNDRY COMPANY September 21, 1998 By: /s/ Gary W. LaChey ----------------------------------------- Name: Gary W. LaChey Title: Vice President-Finance, Secretary and Treasurer 3 EX-2.1 2 EXHIBIT 2.1 1 EXECUTION COPY ================================================================================ STOCK PURCHASE AGREEMENT By and Among DALTON CORPORATION and DALTON CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST as Seller and NEENAH FOUNDRY COMPANY, as Buyer August 7, 1998 ================================================================================ 2 EXECUTION COPY TABLE OF CONTENTS
PAGE 1. DEFINITIONS; INTERPRETATION..............................................................................1 1.1 Definitions.....................................................................................1 1.2 Interpretation..................................................................................4 2. SALE AND TRANSFER OF SHARES; CLOSING.....................................................................5 2.1 Shares..........................................................................................5 2.2 Consideration for Shares........................................................................5 2.3 Purchase Price Adjustment.......................................................................5 2.4 Closing.........................................................................................7 2.5 Closing Obligations.............................................................................7 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER.................................................8 3.1 Organization And Good Standing..................................................................8 3.2 Authority; No Conflict..........................................................................8 3.3 Capitalization..................................................................................9 3.4 Financial Statements............................................................................9 3.5 Books And Records..............................................................................10 3.6 Title to Assets; Sufficiency...................................................................10 3.7 Title To Properties; Encumbrances..............................................................10 3.8 No Undisclosed Liabilities.....................................................................11 3.9 Tax Matters....................................................................................11 3.10 No Material Adverse Change.....................................................................13 3.11 Contracts......................................................................................14 3.12 Employee Benefits..............................................................................15 3.13 Compliance With Legal Requirements.............................................................18 3.14 Litigation.....................................................................................18 3.15 Absence Of Certain Changes And Events..........................................................18 3.16 Insurance......................................................................................19 3.17 Labor and Employment Matters...................................................................20 3.18 Environmental, Health And Safety Matters.......................................................21 3.19 Intellectual Property..........................................................................22 3.20 Transaction With Affiliates....................................................................23 3.21 Funded Debt....................................................................................23 3.22 Due Inquiry....................................................................................23 3.23 Disclosure.....................................................................................23 3.24 Representations And Warranties Concerning The ESOP.............................................23 3.25 Brokers Or Finders.............................................................................24
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EXECUTION COPY 4. REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................24 4.1 Organization And Good Standing.................................................................24 4.2 Authority; No Conflict.........................................................................24 4.3 Brokers Or Finders.............................................................................24 5. COVENANTS OF THE COMPANY, AND SELLER WITH RESPECT TO THE ESOP...........................................25 5.1 Access And Investigation.......................................................................25 5.2 Operation Of The Businesses Of The Acquired Companies..........................................25 5.3 Negative Covenant..............................................................................25 5.4 Notification...................................................................................25 5.5 Fairness Opinion...............................................................................26 5.6 Termination Of ESOP............................................................................26 5.7 Best Efforts...................................................................................26 5.8 Exclusivity....................................................................................26 5.9 S Corporation Status...........................................................................27 5.10 Disclosure Schedule............................................................................28 5.11 Tax Returns....................................................................................28 6. COVENANTS OF BUYER......................................................................................28 6.1 Approvals Of Governmental Bodies...............................................................28 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.....................................................28 7.1 Accuracy Of Representations....................................................................28 7.2 Performance....................................................................................29 7.3 Consents.......................................................................................29 7.4 Documents to be Delivered by Company...........................................................29 7.5 HSR Act Waiting Period.........................................................................30 7.6 No Injunction..................................................................................30 7.7 Real Property..................................................................................30 7.8 Participant Vote...............................................................................31 7.9 No Material Adverse Effect.....................................................................31 7.10 Absence of Litigation..........................................................................31 7.11 Management Arrangements........................................................................32 7.12 Financing......................................................................................32 7.13 Due Diligence..................................................................................32 7.14 All Proceedings To be Satisfactory.............................................................32 7.15 Sale of Ashland Facility.......................................................................32 8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE....................................................32 8.1 Accuracy Of Representations....................................................................32 8.2 Performance....................................................................................32 8.3 Consents.......................................................................................32 8.4 Additional Documents...........................................................................33 8.5 Participant Vote...............................................................................33 8.6 No Injunction..................................................................................33
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EXECUTION COPY 8.7 Minimum Purchase Price.........................................................................33 9. TERMINATION.............................................................................................33 9.1 Termination Events.............................................................................33 9.2 Effect Of Termination..........................................................................34 10. NO INDEMNIFICATION......................................................................................34 11. POST-CLOSING COVENANTS..................................................................................35 11.1 Determination Letter...........................................................................35 11.2 Distribution Of Trust Assets...................................................................35 11.3 Valuation Report...............................................................................35 11.4 Existing Agreements............................................................................35 12. GENERAL PROVISIONS......................................................................................35 12.1 Expenses.......................................................................................35 12.2 Public Announcements...........................................................................35 12.3 Confidentiality................................................................................36 12.4 Notices........................................................................................36 12.5 Further Assurances.............................................................................37 12.6 Entire Agreement; Amendments and Notices.......................................................37 12.7 Assignments, Successors, And No Third-Party Rights.............................................38 12.8 Severability...................................................................................38 12.9 Section Headings, Construction.................................................................38 12.10 Time Of Essence................................................................................38 12.11 Choice of Law..................................................................................38 12.12 Specific Performance...........................................................................38 12.13 Waiver of Jury Trial...........................................................................39 12.14 Counterparts...................................................................................39
Exhibits - -------- Exhibit 1.1 Sample Working Capital Statement Exhibit 7.4(b) Form of Opinion of Dutton & Overman Exhibit 7.4(c) Form of Opinion of Ludwig Goldberg & Krenzel Exhibit 7.4(l) Form of Resignation and Release Exhibit 8.4(c) Form of Opinion of Kirkland & Ellis iii 5 EXECUTION COPY STOCK PURCHASE AGREEMENT This Stock Purchase Agreement ("Agreement"), dated as of August 7, 1998, is made by Neenah Foundry Company, a Wisconsin corporation ("Buyer"), the Dalton Corporation Employee Stock Ownership Plan and Trust ("ESOP" or "Seller") and Dalton Corporation, an Indiana corporation ("Company"). Buyer, Seller and the Company are referred to collectively herein as the "Parties". RECITALS Seller owns 2,371,342.8776 shares of common stock of the Company, constituting all of the issued and outstanding capital stock of the Company. Seller desires to sell, and Buyer desires to purchase, all of such issued and outstanding shares ("Shares"), for the consideration and on the terms set forth in this Agreement. THEREFORE, in consideration of the mutual promises, covenants, representations and warranties contained herein, the Parties agree as follows: 1. DEFINITIONS; INTERPRETATION. 1.1 Definitions. For purposes of this Agreement, the following terms have the meanings specified or referred to in this Section 1: "Acquired Companies"--collectively, the Company and its wholly-owned Subsidiaries: Dalton Corporation, Warsaw Manufacturing Facility; Dalton Corporation, Kendallville Manufacturing Facility, Dalton Corporation, Ashland Manufacturing Facility and Dalton Corporation, Stryker Machining Facility. "Affiliated Group" means any affiliated group within the meaning of Code Section 1504(a) or any similar group defined under a similar provision of state, local or foreign law. "Annex I"--exceptions to Buyer's representations and warranties, delivered to Seller and the Company concurrently with the execution and delivery of this Agreement. "Applicable Contract"--any Contract (a) under which any Acquired Company has or may acquire any rights, (b) under which any Acquired Company has or may become subject to any obligation or liability, or (c) by which any Acquired Company or any of the assets owned or used by it is or may become bound. "Ashland Facility"--Dalton Corporation, Ashland Manufacturing Facility, located at 1681 Orange Street, Ashland, Ohio 44805. "Balance Sheet"--as defined in Section 3.4. 6 EXECUTION COPY "Buyer"--as defined in the first paragraph of this Agreement. "Code"--the Internal Revenue Code of 1986, as amended, or any successor law, and regulations issued thereunder. "Closing"--as defined in Section 2.3. "Closing Date"--the date and time as of which the Closing actually takes place. "Company"--as defined in the first paragraph of this Agreement. "Contemplated Transactions"--all of the transactions contemplated by this Agreement,including: (a) The sale of the Shares by Seller to Buyer; (b) Buyer's delivery of the Purchase Price to Seller; and (c) The performance by Buyer and Seller of their respective covenants and obligations under this Agreement. "Contract"--as defined in Section 3.11. "Determination Date"--as defined in Section 2.3(a). "Disclosure Schedule"--the disclosure letter delivered to Buyer by Seller and the Company concurrently with the execution and delivery of this Agreement. "Environmental, Health, and Safety Liabilities"--any cost (including response costs and corrective action costs), damages, expense, liability, obligation, fees, or other responsibility arising from or under Environmental Law or Occupational Safety and Health Law. "Environmental Law"--all applicable laws of federal, state or local governments, and agencies thereof, all judicial and administrative orders and determinations, all contractual obligations and all common law concerning public health and safety, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as now or hereafter in effect. "ERISA"--the Employee Retirement Income Security Act of 1974, as amended, or any successor law, and regulations and rules issued pursuant to that Act or any successor law. 2 7 EXECUTION COPY "ESOP Fiduciary"--Consulting Fiduciaries, Inc., an Illinois corporation. "Financial Statements" has the meaning set forth in Section 3.4. "Funded Debt"--without duplication, all obligations of any Acquired Company under indebtedness for borrowed money (including, without limitation, principal, interest, overdrafts, penalties, premiums, fees, expenses, indemnities and breakage costs), all obligations of any Acquired Company under capital leases, notes payable, guaranties and drafts accepted representing extensions of credit. "GAAP"--United States generally accepted accounting principles, applied on a basis consistent with the basis on which the Balance Sheet and the other financial statements referred to in Section 3.4 were prepared. "HSR Act"--the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any successor law, and regulations and rules issued pursuant to that Act or any successor law. "IRS"--the United States Internal Revenue Service or any successor agency. "LIFO Reserves"--means any contra asset amounts recorded to report inventory on a LIFO basis in the Balance Sheet, Most Recent Balance Sheet or Proposed Closing Balance Sheet. "Most Recent Balance Sheet"--as defined in Section 3.4. "Most Recent Financial Statements"--as defined in Section 3.4. "Occupational Safety and Health Law"--all applicable laws of federal, state or local governments, and agencies thereof, designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards. "Ordinary Course of Business"--ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency). "Organizational Documents"--(a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) any charter or similar document adopted or filed in connection with the creation, formation, or organization of any person or other entity; and (e) any amendment to any of the foregoing. "Security Interest"--any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) mechanic's, materialmen's, and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the taxpayer is contesting in good faith through appropriate proceedings and for which adequate reserves have been established on the Balance Sheet, (c) purchase money liens and liens securing rental payments under capital lease arrangements, and 3 8 EXECUTION COPY (d) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money. "Seller"--as defined in the first paragraph of this Agreement. "Shares"--as defined in the Recitals of this Agreement. "Subsidiary"--means any Person whose securities having ordinary voting power to elect a majority of its board of directors or managing or general partners (or other persons having similar functions) or other ownership interests (including partnership and membership interests) ordinarily constituting a majority interest in the capital, profits or cash flow of such Person, are at the time, directly or indirectly, owned or controlled by such other Person, or by one or more other Subsidiaries of such other Person, or by such other Person and one or more of its other Subsidiaries; when used in this Agreement, "Subsidiary" means a Subsidiary of the Company. "Tax" means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. "Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "Target Working Capital" shall mean $19,998,676.00 "Working Capital" means, as of the date of determination, an amount equal to the consolidated current assets of the Company , less the consolidated current liabilities of the Company, in each case determined in accordance with GAAP, applied in a manner consistent with the preparation of the Financial Statements and the accounting conventions set forth in Section 2.3(e); provided, that (i) all amounts in respect of income Taxes or Taxes imposed pursuant to Section 1374 of the Code (Tax Imposed on Certain Built-In Gains) shall be excluded from the determination of current assets and current liabilities, (ii) all amounts in respect of Funded Debt shall be excluded from the determination of current assets and current liabilities, (iii) all amounts in respect of LIFO Reserves shall be excluded from the determination of current assets, and (iv) all amounts in respect of contributions made or to be made to the ESOP prior to Closing shall be excluded from the determination of current liabilities in each case, in accordance with Exhibit 1.1. 1.2 Interpretation. Unless otherwise indicated to the contrary herein by the context or use thereof: (i) the words, "herein," "hereto," "hereof" and words of similar import refer to this Agreement as a whole and not to any particular Section or paragraph hereof; (ii) the word "including" means "including, but not limited to"; (iii) masculine gender shall also include the 4 9 EXECUTION COPY feminine and neutral genders, and vice versa; and (iv) words importing the singular shall also include the plural, and vice versa. 2. SALE AND TRANSFER OF SHARES; CLOSING. 2.1 Shares. Subject to the terms and conditions of this Agreement, at the Closing, Seller will sell, convey, transfer and deliver the Shares to Buyer, and, in reliance upon the representations, warranties and covenants contained herein, Buyer will purchase the Shares from Seller. 2.2 Consideration for Shares. Upon the terms and subject to the conditions contained herein, as consideration for the purchase of the Shares, Buyer shall pay to Sellers, in the aggregate, an amount equal to the difference of (x) $102,000,000.00 less (y) without duplication, the sum of (i) the greater of the total amount of Funded Debt outstanding as of the close of business on the Determination Date and the total amount of Funded Debt outstanding as of the Closing, provided, that there shall be excluded from the determination of Funded Debt as of the Closing any amount which represents an increase in Funded Debt between the Determination Date and the Closing due to the payment of any liability to the extent that the payment of such liability results in a corresponding dollar-for-dollar decrease to a liability reflected on the Working Capital Statement, plus, (ii) all fees and expenses of the Seller and the Acquired Companies incurred in connection with the transactions contemplated by this Agreement in accordance with Section 12.1 to the extent not paid prior to the date hereof and reflected in the Most Recent Financial Statements, plus (iii) all fees and expenses incurred by any Acquired Company in connection with the sale or attempted sale of the Ashland Facility to the extent not paid prior to the date hereof and reflected in the Most Recent Financial Statements, plus (iv) all brokers fees and other expenses of any of the Acquired Companies or Seller in connection with the Contemplated Transactions, to the extent not paid prior to the date hereof and reflected in the Most Recent Financial Statements, plus (v) the amount of any disallowed deduction or increased Tax liabilities of any Acquired Company pursuant to Code Section 280G (the "Base Purchase Price") subject to adjustment as provided in Section 2.3 hereof (as so adjusted, the "Purchase Price"), payable in the manner specified in Section 2.5 below. Buyer and the Company shall cooperate with one another to determine the Purchase Price on and as of the Closing Date in accordance with the foregoing. 2.3 Purchase Price Adjustment. (a) Proposed Closing Balance Sheet. The Company shall prepare and deliver to Buyer a balance sheet (the "Proposed Closing Balance Sheet"), on or before a date not more than ten (10) and not less than one (1) business day prior to the Closing Date together with a statement of the Company's determination of the Working Capital of the Company as at the close of business on August 29, 1998, or in the event the Closing shall not have occurred on or prior to September 4, 1998, as of the close of business on the Closing Date (the date of such determination of Working Capital, the "Determination Date"), which shall be reasonably acceptable to Buyer in form and substance (the "Working Capital Statement"). The Proposed Closing Balance Sheet shall be prepared from the books and records of the Company in 5 10 EXECUTION COPY accordance with the accounting principles set forth in subsection (d) below taking into account the payments to be made by the Company at the Closing (including any payments of expenses or Taxes in accordance with Section 12.1). (b) Working Capital Adjustment. If the Final Closing Working Capital (i) is less than the Target Working Capital, then the Purchase Price payable at Closing shall be reduced dollar-for-dollar by the excess of the Target Working Capital over the Final Closing Working Capital or (ii) is greater than the Target Working Capital, then the Purchase Price payable at Closing shall be increased dollar-for-dollar by the excess of the Final Closing Working Capital over the Target Working Capital (the "Closing Date Adjustment"). (c) Preparation of Closing Balance Sheet; Dispute Resolution. (i) During the preparation of the Proposed Closing Balance Sheet and the Working Capital Statement and all activities in connection therewith, Buyer will be entitled to designate a representative ("Buyer's Accountant") to observe and comment on the preparation of the Proposed Closing Balance Sheet and the Working Capital Statement and procedures relating thereto. On or prior to the Closing Date Buyer may notify the Company of its objections, if any (an "Objection Notice"), to the Proposed Closing Balance Sheet and/or the determination of the Working Capital from the Working Capital Statement. If the Buyer does not tender to the Company an Objection Notice on or prior to the Closing Date, then the Proposed Closing Balance Sheet and the determination of Working Capital from the Working Capital Statement will be conclusive and binding upon the parties and the Working Capital of the Company as of the Determination Date determined from the Working Capital Statement will be deemed to be the Final Closing Working Capital for purposes of Section 2.3(b) above. (ii) Dispute and Amicable Resolution. If the Buyer timely gives an Objection Notice as described in subsection (i) above, then the Company, the Seller and the Buyer will attempt amicably to resolve their disputes as reflected in the Objection Notice, and any amount agreed to in writing by the Company, the Seller and the Buyer as the Working Capital of the Company as of the Determination Date, will be deemed to be the Final Closing Working Capital for purposes of Section 2.3(b) above. (iii) Resolution by Independent Accounting Firm. If the Company, the Seller and the Buyer do not resolve all disputes as reflected in the Objection Notice on or prior to the Closing Date, then the Company, the Seller and the Buyer will retain a firm of certified public accountants that is mutually acceptable to the Company, the Seller and the Buyer (if the Company, the Seller and the Buyer are unable to agree on a mutually acceptable accounting firm prior to the 15th day following delivery of the Objection Notice, then such firm will be chosen randomly by lot from among the accounting firms formerly constituting the "big six", other than the Company's accountant and the Buyer's Accountant) (the "Independent Accounting Firm") to determine the Working Capital of the Company as of the Determination Date, as soon as practicable, and, in any event, within 30 days after the submission of any dispute thereto, all in accordance with the standards and definitions set forth herein and in subsection (d) below. The Working Capital, determined by the Independent Accounting Firm (1) must be within the range 6 11 EXECUTION COPY of values established for such amount as determined by reference to the value assigned to such amount by the Buyer's Accountant and the Company in the Objection Notice and the Proposed Closing Balance Sheet, respectively, and, assuming compliance with the preceding clause, (2) will be conclusive and binding upon the Parties for purposes of Section 2.3(b) above. The fees and expenses of the Independent Accounting Firm will be split equally between the Buyer and the Company, and the portion thereof attributable to the Company shall be considered an expense of the Company for purposes of Section 2.2 above. (iv) "Final Closing Working Capital" means the Working Capital as of the close of business on the Determination Date as finally determined pursuant to clauses (i), (ii) and (iii) above. (d) Accounting Conventions. Each accounting term used herein shall have the meaning that is applied thereto in accordance with GAAP and each account included in the Closing Date Balance Sheet shall be calculated in accordance with GAAP and shall be consistent with the books and records of the Company; provided, that all known arithmetic errors shall be taken into account in the calculation of each account set forth above, regardless of their materiality. With respect to the calculation of the levels of the accounts set forth above, no change in accounting principles shall be made from those utilized in preparing the Financial Statements, including, with respect to the nature or classification of accounts, closing proceedings, levels of reserves or levels of accruals other than as a result of objective changes in the underlying business. For purposes of the preceding sentence, "changes in accounting principles" includes all changes in accounting principles, policies, practices, procedures or methodologies with respect to financial statements, their classification or their display, as well as all changes in practices, methods, conventions or assumptions utilized in making accounting estimates. 2.4 Closing. The purchase and sale (the "Closing") provided for in this Agreement will take place at the offices of Buyer's counsel at 153 E. 53rd St., New York, New York, at 10:00 a.m. (local time) on the later of (a) September 4, 1998 or (b) three (3) business days after the satisfaction or waiver of all conditions to Closing contained in Sections 7 and 8 below. Subject to termination in accordance with provisions of Section 9 hereof, failure to consummate the purchase and sale provided for in this Agreement on the date and time and at the place determined pursuant to this Section 2.4 will not result in the termination of this Agreement and will not relieve any party of any obligation under this Agreement. 2.5 Closing Obligations. At the Closing, (a) Seller will deliver to Buyer (i) certificates representing the Shares, duly endorsed (or accompanied by duly executed stock powers) for transfer to Buyer free and clear of all liens, charges, security interests, encumbrances and restrictions on transfer whatsoever, and (ii) the documents referred to in Section 7.4; and (b) Buyer will deliver to Seller (i) by wire transfer to an account designated by Seller by notice to Buyer not less than five (5) business days prior to Closing, immediately available funds in the aggregate in the amount of the Purchase Price and (ii) the documents referred to in Section 8.4. 7 12 EXECUTION COPY 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER. The Company and Seller with respect to the ESOP represent and warrant to Buyer that the statements contained in this Section 3 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 3), except as set forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Section 3. 3.1 Organization And Good Standing. Section 3.1 of the Disclosure Schedule contains a complete and accurate list for each Acquired Company of its name, its jurisdiction of incorporation, other jurisdictions in which it is authorized to do business, its capitalization (including the identity of each stockholder and the number of shares held by each) and its officers and directors. Each Acquired Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, with full corporate power and authority to conduct its business as it is now being conducted and to own or use the properties and assets that it purports to own or use. Each Acquired Company is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification, except where the failure to so qualify would not have a material adverse effect on its business, operations or financial condition or the ownership of any of its assets. Seller has delivered to Buyer true and complete copies of the Organizational Documents of each Acquired Company, as currently in effect. 3.2 Authority; No Conflict. (a) Each of the Company and Seller has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of each of the Company and Seller, enforceable in accordance with its terms. (b) Except as set forth in Section 3.2(b) of the Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation or performance of the transactions contemplated by this Agreement will, directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with, or result in a violation of any provision of the Organizational Documents of the Acquired Companies; (ii) contravene, conflict with, or result in a violation of any order, writ, decree or injunction of any court or governmental agency having jurisdiction over the Seller or any of the Acquired Companies or any of their respective properties; (iii) contravene, conflict with, or result in a violation or breach of any provision of, or give any person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Applicable Contract; or (iv) result in the imposition or creation of any lien, security interest or encumbrance upon or with respect to any of the assets owned or used by any Acquired Company. 8 13 EXECUTION COPY (c) Except as set forth in Section 3.2(c) of the Disclosure Schedule, neither Seller nor any Acquired Company is or will be required to give any notice to, make any declaration, filing or registration with or obtain any waiver, authorization, approval or consent from any person or other entity in connection with the execution and delivery of this Agreement, the consummation or performance of the Contemplated Transactions or the continuation of any Acquired Company's rights under any Applicable Contract. 3.3 Capitalization. The authorized equity securities of the Company consist of 8,750,000 shares of common stock without par value, of which 2,371,342.8776 shares are issued and outstanding and constitute the Shares. Seller is and will be on the Closing Date the record owner and holder of the Shares, free and clear of all encumbrances. The Company is the owner of record and beneficially of all the outstanding equity securities of each other Acquired Company, free and clear of all encumbrances. All of the outstanding equity securities of each Acquired Company have been duly authorized and validly issued and are fully paid and nonassessable. All of the issued and outstanding Shares have been duly authorized, are validly issued, fully paid, and nonassessable, and are held beneficially and of record by Seller free and clear of all Taxes, liens, claims, charges, pledges, encumbrances, options, warrants, purchase rights, contracts, commitments, equities, claims, demands and restrictions whatsoever. No shares of the capital stock of any Acquired Company are reserved for issuance. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other commitments that could require any Acquired Company to issue, sell, or otherwise cause to become outstanding any of its or any other Acquired Company's capital stock, nor any stock appreciation rights, phantom stock, or similar rights or instruments. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of any capital stock of any Subsidiary of the Company. All of the shares of capital stock of each Subsidiary have been duly authorized and are validly issued, fully paid, and nonassessable. The Company owns all of the issued and outstanding shares of capital stock in each of its Subsidiaries free and clear of any restrictions on transfer, Taxes, liens, claims, charges, pledges, encumbrances, options, warrants, purchase rights, contracts, commitments, equities, and demands and restrictions whatsoever. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require any of the Company or its Subsidiaries to sell, transfer, or otherwise dispose of any capital stock of any of its Subsidiaries or that could require any Subsidiary of the Company to issue, sell, or otherwise cause to become outstanding any of its own capital stock, nor any stock appreciation rights, phantom stock, or similar rights or instruments. 3.4 Financial Statements. The Company has delivered to Buyer (a) audited, consolidated balance sheets of the Acquired Companies as at January 3, 1998 (the "Balance Sheet"), December 28, 1996 and December 30, 1995 and the related audited, consolidated statements of income, stockholders' equity and cash flow for the fiscal year then ended (collectively, the "Financial Statements"), together with the report thereon of Price Waterhouse LLP with respect to the 1995 and 1996 fiscal years and of Price Waterhouse Coopers LLP, with respect to the 1997 fiscal year, in each case as the Company's independent certified public accountants, and (b) an unaudited, consolidated and consolidating balance sheet of the Acquired Companies as at June 30, 1998 (the "Most Recent Balance Sheet") and the related unaudited, 9 14 EXECUTION COPY consolidated statements of income, shareholders' equity and cash flow for the 6 months then ended (the "Most Recent Financial Statements"). The Financial Statements (including the notes thereto) have been prepared from the books and records of the Company, are correct and complete, have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby and present fairly the transactions, assets and liabilities of the Acquired Companies as of such dates and the financial condition of the Acquired Companies as of such dates and the results of operations of the Acquired Companies for such periods; provided, however, that the Most Recent Financial Statements are subject to normal year-end adjustments (which will not be material individually or in the aggregate) and lack footnotes and other presentation items. 3.5 Books And Records. The books of account, minute books, stock record books, and other records of the Acquired Companies, all of which have been made available to Buyer, are complete and correct and have been maintained in accordance with sound business practices. The stock records of the Acquired Companies fairly and accurately reflect in all respects the record ownership of all of the outstanding Shares of capital stock of the Acquired Companies. 3.6 Title to Assets; Sufficiency. Except as set forth in Section 3.6 of the Disclosure Schedule, the Acquired Companies have good and marketable title to, or a valid leasehold interest in, the properties and assets used by them or otherwise necessary to conduct their business, located on their premises, or shown on the Most Recent Balance Sheet or acquired after the date thereof, free and clear of all Security Interests, except for properties and assets disposed of in the Ordinary Course of Business since the date of the Most Recent Balance Sheet. The assets currently owned by the Acquired Companies, or leased by any Acquired Company pursuant to any valid and enforceable lease agreement entered into in the Ordinary Course of Business or otherwise disclosed to Buyer constitute all of the assets necessary to conduct the business of the Company and its Subsidiaries in accordance with past practices as of the most recent fiscal month end and as of the date hereof. 3.7 Title To Properties; Encumbrances. (a) Section 3.7(a) of the Disclosure Schedule sets forth the address and legal description of each parcel of real property owned by an Acquired Company (the "Owned Real Property"). The applicable Acquired Company has good and marketable title in and to all of the Owned Real Property subject to no liens, encroachments, encumbrances or other defects in title (collectively, "Liens"), except as described on such Section of the Disclosure Schedule. (b) Section 3.7(b) of the Disclosure Schedule sets forth a list of all leases, subleases and other occupancy agreements, including all amendments, extensions and other modifications (the "Leases") for real property (the "Leased Real Property"; the Owned Real Property and the Leased Real Property, collectively, the "Real Property") to which any Acquired Company is a "tenant", "subtenant"or other lessee party. The applicable Acquired Company has a good and valid leasehold interest in and to all of the Leased Real Property, subject to no Liens except as described in such Section of the Disclosure Schedule. Each Lease is in full force and effect and is enforceable in accordance with its terms. There exists no default or condition 10 15 EXECUTION COPY which, with the giving of notice, the passage of time or both, could become a default under any Lease. (c) The Real Property constitutes all of the real property owned, leased, occupied or otherwise utilized in connection with the business of the Acquired Companies. Other than the Acquired Companies, there are no parties in possession or parties having any current or future right to occupy any of the Real Property. The Real Property is in good condition and repair and is sufficient and appropriate for the conduct of the business of the Acquired Companies. The Real Property and all plants, buildings and improvements located thereon conform to all applicable building, zoning and other laws, ordinances, rules and regulations. All permits, licenses and other approvals necessary to the current occupancy and use of the Real Property have been obtained, are in full force and effect and have not been violated. There exists no violation of any covenant, condition, restriction, easement, agreement or order affecting any portion of the Real Property. All improvements located on the Real Property have direct access to a public road adjoining such Real Property. No such improvements or accessways encroach on land not included in the Real Property and no such improvement is dependent for its access, operation or utility on any land, building or other improvement not included in the Real Property. There is no pending or, to the knowledge of any Acquired Company, any threatened condemnation proceeding affecting any portion of the Real Property. There are no outstanding options or rights of first refusal with respect to the purchase or use of any of the Owned Real Property, any portion thereof or interest therein. None of the Acquired Companies are obligated to purchase or lease any real property. (d) The Company has delivered or made available to Buyer copies of the deeds and other instruments by which the Acquired Companies acquired all Real Property, leaseholds or other interests owned by the Acquired Companies, and copies of all title insurance policies, opinions, abstracts, and surveys in the possession of the Acquired Companies and relating to such property or interests. 3.8 No Undisclosed Liabilities. Except as set forth in Section 3.8 of the Disclosure Schedule, the Acquired Companies have no liabilities or obligations of any nature (whether absolute, accrued, contingent, or otherwise) except for liabilities or obligations reflected or reserved against in the most recent Balance Sheet and current liabilities incurred in the ordinary course of business since the date thereof, none of which is a liability resulting from, arising out of, relating to, in the nature of or caused by any breach of contract, breach of warranty, tort, infringement, claim or lawsuit. 3.9 Tax Matters. Except as set forth in the applicable subsection of Section 3.9 of the Disclosure Schedule: (a) Each of the Company and its Subsidiaries has filed all Tax Returns that it was required to file. All such Tax Returns were correct and complete in all respects. All Taxes owed by any of the Company and its Subsidiaries (whether or not shown on any Tax Return) have been paid. Except as set forth in Section 3.9(a)(i) of the Disclosure Schedule, none of the Company and its Subsidiaries currently is the beneficiary of any extension of time within which 11 16 EXECUTION COPY to file any Tax Return. Except as set forth in Section 3.9(a)(ii) of the Disclosure Schedule, no claim has ever been made by an authority in a jurisdiction where any of the Company and its Subsidiaries does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no security interests or liens on any of the assets of any of the Company and its Subsidiaries that arose in connection with any failure (or alleged failure) to pay any Tax. (b) Each of the Company and its Subsidiaries has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party. (c) No director or officer (or employee responsible for Tax matters) of any of the Company and its Subsidiaries expects any authority to assess any additional Taxes for any period for which Tax Returns have been filed. There is no dispute or claim concerning any Tax Liability of any of the Company and its Subsidiaries either (A) claimed or raised by any authority in writing or (B) as to which any of the directors and officers (and employees responsible for Tax matters) of the Company and its Subsidiaries has Knowledge based upon personal contact with any agent of such authority. Section 3.9(c) of the Disclosure Schedule lists all federal, state, local, and foreign income Tax Returns filed with respect to any of the Company and its Subsidiaries for taxable periods ended on or after December 31, 1991, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. The Company has delivered to the Buyer correct and complete copies of all federal income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by any of the Company and its Subsidiaries since December 31, 1991. (d) None of the Company and its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. (e) None of the Company and its Subsidiaries has filed a consent under Code Section 341(f) concerning collapsible corporations. None of the Company and its Subsidiaries has made any payments, is obligated to make any payments, or is a party to any agreement that under certain circumstances could obligate it to make any payments that will not be deductible under Code Section 280G. None of the Company and its Subsidiaries has been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii). Each of the Company and its Subsidiaries has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662. None of the Company and its Subsidiaries is a party to any Tax allocation or sharing agreement. None of the Company and its Subsidiaries (A) has been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company) or (B) has any Liability for the Taxes of any Person (other than any of the Company and its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. 12 17 EXECUTION COPY (f) Section 3.9(f) of the Disclosure Schedule sets forth the following information with respect to each of the Company and its Subsidiaries (or, in the case of clause (B) below, with respect to each of the Subsidiaries) as of the most recent practicable date: (A) the basis of the Company or such Subsidiary in its assets; (B) the basis of the stockholder(s) of each Subsidiary in its stock (or the amount of any Excess Loss Account (as such term is defined in the Code)); (C) the amount of any net operating loss, net capital loss, unused investment or other credit, unused foreign tax, or excess charitable contribution allocable to the Company or any Subsidiary; (D) the amount of any deferred gain or loss allocable to the Company or any Subsidiary arising out of any Deferred Intercompany Transaction (as such term is defined in the Code); and (E) sufficient detail regarding each asset of the Company or any Subsidiary sold, transferred, conveyed, assigned or otherwise disposed of since the date of the Balance Sheet to permit Buyer to determine the amount of any Tax (including any Tax imposed pursuant to Section 1374 of the Code (Tax Imposed on Certain Built-In Gains)) incurred or to be incurred through the Closing Date by any Acquired Company for each taxable period ending on or after the Closing Date. (g) The unpaid Taxes of the Company and its Subsidiaries (A) did not, as of the date of the Most Recent Balance Sheet, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (B) do not exceed that reserve as adjusted for the passage of time through the day of the Closing Date in accordance with the past custom and practice of the Company and its Subsidiaries in filing their Tax Returns. (h) The Company has been a validly electing S corporation within the meaning of Code Sections 1361 and 1362 at all times since January 4, 1998 and the Company will be an S corporation up to and including the Closing Date. (i) Section 3.9(i) of the Disclosure Schedule identifies each Acquired Company that is a "qualified subchapter S subsidiary" within the meaning of Code Section 1361(b)(3)(B). Each Subsidiary so identified has been a qualified subchapter S subsidiary at all times since the date shown on such schedule up to and including the Closing Date. (j) Neither the Company nor any qualified subchapter S subsidiary of the Company has, in the past 10 years, (A) acquired assets from another Person in a transaction in which the Company's Tax basis for the acquired assets was determined, in whole or in part, by reference to the Tax basis of the acquired assets (or any other property) in the hands of the transferor or (B) acquired the stock of any corporation which is a qualified subchapter S subsidiary. 3.10 No Material Adverse Change. Since the date of the Balance Sheet there has not been any material adverse change in the business, operations, properties, prospects, assets, or condition (financial or otherwise) of any Acquired Company. 13 18 EXECUTION COPY 3.11 Contracts. Section 3.11 of the Disclosure Schedule lists the following contracts and other agreements to which any Acquired Company is a party (each a "Contract" and collectively, the "Contracts"): (a) any agreement (or group of related agreements) for the consignment or lease of machinery, equipment or other personal property to or from any Person providing for lease payments in excess of $50,000 per annum; (b) any agreement (or group of related agreements) for the purchase or sale of raw materials, products, machinery, equipment or other personal property, or for the furnishing or receipt of services, the performance of which will extend over a period of more than one year or involve consideration in excess of $50,000; (c) any capitalized lease, pledge, conditional sale or title retention agreement involving the payment of more than $50,000 in the aggregate; (d) any agreement concerning a partnership or joint venture; (e) any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, or under which it has imposed a Security Interest on any of its assets, tangible or intangible; (f) any agreement concerning confidentiality or noncompetition or otherwise prohibiting the Company or any of its Subsidiaries from freely engaging in any business; (g) any material agreement with the Seller or any of its Affiliates; (h) any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other material plan or arrangement for the benefit of its current or former directors, officers, or employees; (i) any license, royalty or other agreement relating to any Acquired Company's Intellectual Property; (j) any agreement containing commitments of suretyship, guarantee or indemnification (except for guarantees, warranties and indemnities provided by the Company or any Subsidiary in the ordinary course of business and those having a contract value, individually or in the aggregate of $25,000 or less); (k) any agreement involving a governmental body; (l) any collective bargaining agreement; 14 19 EXECUTION COPY (m) any agreement for the employment of any individual on a full-time, part-time, consulting, or other basis providing annual compensation in excess of $50,000 or providing material severance benefits; (n) any agreement under which the consequences of a default or termination could have a material adverse effect on the business, assets, conditions, properties or prospects of any Acquired Company; (o) any other agreement (or group of related agreements) the performance of which involves consideration in excess of $50,000; or (p) any commitment to do any of the foregoing described in clauses (a) through (o). The Company has delivered to the Buyer a correct and complete copy of each written agreement listed in Section 3.11 of the Disclosure Schedule and a written summary setting forth the material terms and conditions of each oral agreement referred to in Section 3.11 of the Disclosure Schedule. With respect to each such agreement: (A) the agreement is legal, valid, binding, enforceable, and in full force and effect in all material respects and will continue to be so following the Closing; (B) no party is in material breach or default, and no event has occurred which with notice or lapse of time would constitute a material breach or default, or permit termination, modification, or acceleration, under the agreement; and (C) no party has repudiated any material provision of the agreement. Except as specifically identified in Section 3.11 of the Disclosure Schedule, no Acquired Company is a party to any contract, agreement or understanding which contains a "change in control", "potential change in control" or similar provision which could be triggered by the transactions contemplated by this Agreement. 3.12 Employee Benefits. (a) As used in this Section 3.12, the following terms have the meanings set forth below. "Employee Benefit Plan"--any Pension Plan, Welfare Plan, or Multi-Employer Plan which any of the Acquired Companies maintains or contributes to, or with respect to which any of the Acquired Companies has any liability or potential liability. "Multi-Employer Plan"--has the meaning given in ERISA Section 3(37)(A). "Other Benefit Obligation"--means all obligations, arrangements, or customary practices, whether or not legally enforceable, to provide benefits, other than salary, as compensation for services rendered, to present or former directors, employees, or agents, other than obligations, arrangements, and practices that are Plans with respect to which any of the Acquired Companies has any liability or potential liability. Other Benefit Obligations include consulting agreements under which the compensation paid does not depend upon the amount of service rendered, 15 20 EXECUTION COPY sabbatical policies, severance payment policies, and fringe benefits within the meaning of Section 132 of the Code. "PBGC"--means the Pension Benefit Guaranty Corporation, or any successor thereto. "Pension Plan"--has the meaning given in ERISA Section 3(2)(A). "Plan"--has the meaning given in ERISA Section 3(3). "Welfare Plan"--has the meaning given in ERISA Section 3(1). (b) Section 3.12(b) of the Disclosure Schedule contains a complete and accurate list of each Employee Benefit Plan and each other Benefit obligation. (c) The Company has delivered to Buyer, as applicable: (i) All documents that set forth the terms of each Employee Benefit Plan and each other Benefit obligation and of any related trust, including plan documents and summary plan descriptions; (ii) All personnel, payroll, and employment manuals and policies; (iii) All collective bargaining agreements pursuant to which contributions have been made or obligations incurred by the Acquired Companies; (iv) A written description of any Other Benefit Obligation that is not otherwise in writing; (v) All insurance policies purchased by or to provide benefits under any Employee Benefit Plan or Other Benefit Obligation; (vi) All contracts with third party administrators, actuaries, investment managers, consultants, and other independent contractors that relate to any Employee Benefit Plan or Other Benefit Obligation; (vii) The Forms 5500 filed with respect to each Employee Benefit Plan in each of the most recent three plan years, including all schedules thereto; (viii) The most recent determination letter received with respect to each Employee Benefit Plan from the IRS; and (ix) The actuarial reports prepared with respect to each Employee Benefit Plan in each of the most recent three plan years. 16 21 EXECUTION COPY (d) Except as set forth in Section 3.12(d) of the Disclosure Schedule: (i) The Acquired Companies have performed all of their respective obligations under all Employee Benefit Plans and Other Benefit Obligations; (ii) The Acquired Companies, with respect to all Employee Benefit Plans and Other Benefit Obligations are in full compliance with ERISA, the Code, and other applicable laws and with any applicable collective bargaining agreement, no prohibited transaction has occurred, no Acquired Company has any liability to the IRS or the PBGC, and all filings required by ERISA and the Code as to each Employee Benefit Plan have been timely filed; and (iii) Other than ordinary claims for benefits submitted by participants or beneficiaries, no claim against or legal proceeding involving any Employee Benefit Plan or Other Benefit Obligation is pending or, to the Company's knowledge, is threatened. (e) Each Employee Benefit Plan that is intended to be qualified within the meaning of Code Section 401(a) has received a determination from the IRS that such Employee Benefit Plan is so qualified and nothing has occurred since the date of such determination that could adversely affect the qualification of such Employee Benefit Plan. (f) Each Employee Benefit Plan and any related trust, insurance contract or fund has been maintained, funded and administered in compliance with its respective terms and the terms of any applicable collective bargaining agreements and in compliance with all applicable laws and regulations, including, but not limited to, ERISA and the Code; there has been no application for or waiver of the minimum funding standards imposed by Code Section 412 with respect to any Employee Benefit Plan, and there are no circumstances that would materially change the funded status of any Employee Benefit Plan; no asset that is to be acquired by Buyer, directly or indirectly, pursuant to this Agreement is subject to any lien under ERISA or the Code; and none of the Acquired Companies has incurred any liability under Title IV of ERISA (other than for contributions not yet due) or to the PBGC (other than for payment of premiums not yet due). (g) None of the Acquired Companies has incurred any liability on account of a "partial withdrawal" or a "complete withdrawal" (within the meaning of Section 4205 and 4203, respectively, of ERISA) from any Multi-Employer Plan, no such liability has been asserted, and there are no events or circumstances which could result in any such partial or complete withdrawal; and none of the Acquired Companies is bound by any contract or agreement or has any obligation or liability described in Section 4204 of ERISA. (h) Each of the Acquired Companies has complied with the health care continuation requirements of Part 6 of Subtitle B of Title I of ERISA; and none of the Acquired Companies has any obligation under any Employee Benefit Plan or otherwise to provide health or life insurance benefits to former employees of the Acquired Companies or to any other person, except as specifically required by Part 6 of Subtitle B of Title I of ERISA. 17 22 EXECUTION COPY (i) The Company has no liability with respect to any "employee benefit plan" (as defined in Section 3(3) of ERISA) solely by reason of being treated as a single employer under Code Section 414 with any trade, business or entity other than the Acquired Companies. 3.13 Compliance With Legal Requirements. Except as set forth in Section 3.13 of the Disclosure Schedule, each Acquired Company has complied with and is in compliance with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings and charges thereunder) of federal, state or local governments, and all agencies thereof, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, grievance or notice has been filed or commenced against any of them alleging any failure to comply. 3.14 Litigation. Except as set forth in Section 3.14 of the Disclosure Schedule, none of the Acquired Companies nor their respective officers, directors, employees or agents, in their capacities as such, are engaged in, a party to, or threatened with any legal action or other proceeding or investigation before any court, arbitrator or governmental agency, or are subject to any pending or threatened adverse claim, the existence or outcome of which could result in a monetary or non-monetary judgment, order or award that could have a material adverse effect upon the business, operations or financial condition of any Acquired Company. 3.15 Absence Of Certain Changes And Events. Except as set forth in Section 3.15 of the Disclosure Schedule, since the date of the Most Recent Balance Sheet, the Acquired Companies have conducted their businesses only in the Ordinary Course of Business and, without limiting the generality of the foregoing, there has not been any: (a) change in any Acquired Company's authorized or issued capital stock, grant of any stock option or right to purchase shares of capital stock of any Acquired Company, issuance of any security convertible into such capital stock, or declaration or payment of any dividend or other distribution or payment in respect of shares of capital stock or redemption, purchase of or other acquisition of shares of any Acquired Company's capital stock; (b) amendment to the Organizational Documents of any Acquired Company (except as provided in Section 5.3). (c) damage to or destruction or loss of any asset (tangible or intangible) or property of any Acquired Company, whether or not covered by insurance, materially and adversely affecting the properties, assets, business or financial condition of any Acquired Company; (d) cancellation or compromise of any debt to, claim by or right of the Acquired Companies except in the Ordinary Course of Business and as noted on the books and records of the Acquired Companies; (e) amendment or termination of any material contract or commitment to which an Acquired Company is a party, other than in the Ordinary Course of Business; 18 23 EXECUTION COPY (f) extraordinary transaction outside the Ordinary Course of Business; (g) sale, lease, transfer, or assignment of or lien or Security Interest imposed upon, or any license or sublicense of, any material assets, tangible or intangible, of any Acquired Company outside the Ordinary Course of Business; (h) material agreement, contract, lease, or license entered into by any Acquired Company outside the Ordinary Course of Business; (i) acceleration, termination, material modification to, or cancellation of any material agreement, contract, lease, or license to which any Acquired Company is a party or by which any of them is bound; (j) capital expenditures in an amount in excess of $100,000.00 individually or in the aggregate or any capital investment in, or any loan to, any other Person; (k) loan to, or any other transaction entered into with, any Acquired Company's directors, officers, and employees, other than employment arrangements entered into in the Ordinary Course of Business and disclosed in writing to Buyer; (l) increase in the base compensation of or any other material change in the employment terms of any Acquired Company's directors, officers and employees; (m) employment contract or collective bargaining agreement, written or oral, entered into by any Acquired Company or any modification of the terms of any existing such contract or agreement; (n) adoption, amendment, modification, or termination of any bonus, profit-sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any Acquired Company's directors, officers, and employees (and no such action has been taken with respect to any other Employee Benefit Plan); (o) change in the accounting principles, practices, procedures or methods of any Acquired Company or in its cash management practices; or (p) commitment by any Acquired Company to do any of the foregoing. 3.16 Insurance. (a) The Company has delivered to Buyer true and complete copies of all policies of insurance (including policies providing property, casualty, liability and workers' compensation coverage and bond and surety arrangements) currently in force to which any Acquired Company is a party or under which any Acquired Company, or any director or officer of any Acquired Company, is covered. 19 24 EXECUTION COPY (b) Section 3.16(b) of the Disclosure Schedule sets forth with respect to each policy (i) the name, address and telephone number of the agent, (ii) the name of the insured, the name of the policy holder and the name of each covered insured, (iii) the policy number and period of coverage, and (iv) a description of any retroactive premium adjustment or other experience-based liability on the part of any Acquired Company, and (iv) any contract or arrangement, other than a policy of insurance, for the transfer or sharing of any risk by any Acquired Company. (c) Except as set forth in Section 3.16(c) of the Disclosure Schedule, all policies to which any Acquired Company is a party or that provide coverage to either Seller, any Acquired Company, or any director or officer of an Acquired Company: (i) Are valid, outstanding, and enforceable, (ii) are issued by an insurer that is financially sound and reputable, (iii) taken together, provide adequate insurance coverage for the assets and the operations of the Acquired Companies for all risks to which the Acquired Companies are normally exposed, (iv) neither the Company, its Subsidiaries nor any other party to the policy is in material breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred which, with notice or the lapse of time, would constitute such a material breach or default, or permit termination, modification, or acceleration, under the policy; and (v) no party to the policy has repudiated any material provision thereof. Section 3.16(c) of the Disclosure Schedule describes any material self-insurance arrangements affecting any of the Company and its Subsidiaries. (d) All known claims, if any, made against the Company or any of the Subsidiaries that are covered by insurance have been disclosed to and accepted by the appropriate insurance companies and are being defended by such appropriate insurance companies and are described in Section 3.16(d) of the Disclosure Schedule and, except as disclosed in Section 3.16(d) of the Disclosure Schedule, no claims have been denied coverage during the last three years. 3.17 Labor and Employment Matters. (a) Except as set forth in Section 3.17 of the Disclosure Schedule, no Acquired Company is party to or bound by any collective bargaining agreement or relationship with any labor organization. Except as disclosed in Section 3.17 of the Disclosure Schedule with respect to the Acquired Companies: (i) no executive, key employee or group of employees has any plans to terminate employment; (ii) no labor organization or group of employees has filed any representation petition or made any written or oral demand for recognition; (iii) no union organizing or decertification efforts are underway or threatened and no other question concerning representation exists; (iv) within the past five years no labor strike, work stoppage or slowdown, or other material labor dispute has occurred, and none is underway or threatened; (v) there is no employment-related charge, complaint, grievance, investigation, inquiry or obligation of any kind, pending or threatened in any forum, relating to an alleged violation or breach by any such Acquired Company (or its or their officers or directors) of any law, regulation or contract; and (vi) no Acquired Company or agent thereof has committed any act or omission giving rise to 20 25 EXECUTION COPY liability for any violation identified in subsection (v) above, or as a result of any adverse workman's compensation experience. (b) Any notice required under any law or collective bargaining agreement has been given, and all bargaining obligations with any employee representative have been satisfied. No Acquired Company has implemented any plant closing or mass layoff of employees as those terms are defined in the Worker Adjustment Retraining and Notification ("WARN") Act of 1988, as amended, or any similar state or local law or regulation, and no layoffs that could implicate such laws or regulations will be implemented before Closing without advance notification to Buyer. 3.18 Environmental, Health And Safety Matters. Except as set forth in Section 3.18 of the Disclosure Schedule: (a) Each Acquired Company has complied and is in full compliance with, and is not in violation of or liable under, any Environmental Law. There is no threatened notice, claim, citation or directive from any federal, state or local government, or any agency thereof, or private citizen acting in the public interest, of any actual or potential violation or failure to comply with any Environmental Law, or of any actual or threatened obligation to undertake or bear the cost of any Environmental, Health, and Safety Liabilities with respect to any property or assets (whether real, personal, or mixed) in which any Acquired Company has or had an interest. (b) There is no pending or threatened notice, claim, citation or directive that relates to hazardous activity or hazardous materials, or any alleged, actual or potential obligation to undertake or bear the cost of any Environmental, Health, and Safety Liabilities with respect to any of the properties or assets (whether real, personal, or mixed) in which any Acquired Company has or had an interest, with respect to which hazardous materials have been generated, handled, treated, stored or disposed of. (c) The Company has delivered to Buyer true and complete copies and results of all reports, studies, analyses, tests, or monitoring possessed by any Acquired Company pertaining to hazardous materials or hazardous activities in, on, or under the Real Property or concerning compliance by any Acquired Company with Environmental Laws, except for such materials that are generated routinely in the ordinary course of compliance with the terms of permits or monitoring requirements imposed by Environmental Laws. (d) Other than as disclosed in Section 3.18(d) of the Disclosure Schedule, all properties and equipment used in the business of any Acquired Company and their respective predecessors and Affiliates have been free of asbestos, PCB's, methylene chloride, trichloroethylene, 1,2-transdichloroethylene, dioxins, dibenzofurans, and Extremely Hazardous Substances. (e) No Acquired Company has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, or released any substance, including without limitation any hazardous substance, or owned or operated any property or facility and no such 21 26 EXECUTION COPY property or facility is contaminated by any such substance, in a manner that has given or would give rise to material liabilities, including any liability for response costs, corrective action costs, personal injury, property damage, natural resources damages or attorney fees, or any investigative, corrective or remedial obligations, pursuant to any Environmental Law (including CERCLA and RCRA). (f) None of the following exists at any Owned Real Property or Leased Real Property: (1) underground storage tanks; (2) asbestos-containing material in any form or condition; (3) materials or equipment containing polychlorinated biphenyls; or (4) landfills, surface impoundments or disposal areas, except (x) in the case of clauses (1), (3) or (4), for such items that are in compliance in all material respects with all applicable Environmental Laws and (y) in the case of clause (2), for such items for which no remedial actions are necessary to prevent any present or future material liability. (g) Neither this Agreement nor the consummation of the transactions contemplated hereby will result in any obligations for site investigation or cleanup, or notification to or consent of government agencies or third parties, pursuant to any so-called "transaction-triggered" or "responsible transfer" Environmental Laws. 3.19 Intellectual Property. (a) The Acquired Companies own or have the right to use pursuant to a valid and enforceable license, agreement or permission all Intellectual Property necessary for the operation of their businesses as presently conducted. (b) No Acquired Company has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of third parties, and no Acquired Company has ever received any charge, complaint, claim, demand or notice alleging any such interference, infringement, misappropriation or violation or contesting the validity or enforceability of any Intellectual Property owned or used by the Acquired Companies. (c) Section 3.19(c) of the Disclosure Schedule identifies each item of patented, registered and applied for Intellectual Property, and material unregistered trademarks, service marks, trade names, copyrights, in each case owned by any of the Acquired Companies, and any Intellectual Property that any third party owns and that the Acquired Companies use pursuant to license, sublicense, agreement or permission. The Company has delivered to Buyer correct and complete copies of all such licenses, agreements and permissions as currently in effect with respect to each item of Intellectual Property so identified. (d) None of the Acquired Companies have any notice of or are aware of any facts which indicate a likelihood of any infringement or misappropriation by any third party with respect to the Intellectual Property of the Acquired Companies. (e) All Intellectual Property owned or used by the Acquired Companies immediately prior to the Closing will be owned or available for use by the Acquired Companies on identical terms and conditions immediately subsequent to the Closing. 22 27 EXECUTION COPY (f) "Intellectual Property" shall mean all patents, patent applications and patent disclosures; all inventions (whether or not patentable and whether or not reduced to practice); all trademarks, service marks, trade dress, trade names and corporate names and all the goodwill associated therewith; all mask works; all registered and unregistered statutory and common law copyrights; all registrations, applications and renewals for any of the foregoing; all trade secrets, confidential information, ideas, formulae, compositions, know-how, manufacturing and production processes and techniques, research information; drawings, specifications, designs, plans, improvements, proposals, technical and computer data, documentation and software, financial, business and marketing plans, customer and supplier lists and related information, marketing materials and all other intellectual property rights. 3.20 Transaction With Affiliates. Except as set forth on in Section 3.20 of the Disclosure Schedule, none of the Company's nor any of its Subsidiaries' shareholders, directors, officers or employees nor any of their respective relatives or Affiliates is involved in any business arrangement or relationship with the Company or any of its Subsidiaries (whether written or oral), and none of the Company's or any of its Subsidiaries' shareholders, directors, officers or employees nor any of their respective relatives or Affiliates owns any property or right, tangible or intangible, which is used by the Company or any of its Subsidiaries or necessary to the business of any Acquired Company. 3.21 Funded Debt. Except as set forth in Section 3.21 of the Disclosure Schedule neither the Company nor any of its Subsidiaries has outstanding any Funded Debt nor is a guarantor or is otherwise responsible for any liability or obligation (including indebtedness) of any other Person. 3.22 Due Inquiry. Each of the directors and officers of each Acquired Company has reviewed each of the representations and warranties contained in this Section 3 and the Company has made due inquiry of each person who is in a corporate management, plant management or superintendent level position who might reasonably be expected, within the scope of his or her management or supervisory responsibility, to have information regarding or knowledge of any fact, event or other circumstance which may constitute a breach of any representation or warranty of the Company contained herein. 3.23 Disclosure. Taken as a whole, the representations and warranties contained in this Section 3 do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Section 3 not misleading. 3.24 Representations And Warranties Concerning The ESOP. (a) The sale of the Shares will not violate or conflict with the governing documents of the ESOP and will not constitute a "prohibited transaction" as defined in Code Section 4975(c) and Sections 406 and 407 of ERISA and the regulations thereunder. (b) Except as set forth in Section 3.24(b)(i) or (ii) of the Disclosure Schedule, as applicable, during the 3-year period ending on the Closing Date, (i) there have been no sales 23 28 EXECUTION COPY of securities to the ESOP and (ii) there have been no sales of securities to the ESOP as to which the Company has provided or agreed to provide the written statement required by Code Section 1042(b)(3) or which could otherwise cause any Acquired Company to be subject to any Tax pursuant to Code Section 4978. (c) There are no outstanding loans with respect to the ESOP, and no unallocated shares are held in the ESOP suspense account. 3.25 Brokers Or Finders. Except as set forth in Section 3.25 of the Disclosure Schedule, no Acquired Company has incurred any obligation or liability for any fee or commission to any broker, finder or agent in connection with this Agreement or with respect to the Contemplated Transactions or the sale of the Ashland Facility or which could otherwise result in the obligation of Buyer to pay any such fee or commission. 4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to Seller as follows: 4.1 Organization And Good Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Wisconsin. 4.2 Authority; No Conflict. (a) This Agreement constitutes the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. (b) Except as set forth in Annex I, neither the execution and delivery of this Agreement by Buyer nor the consummation or performance of the Contemplated Transactions on the terms and conditions prescribed herein will give any person or entity the right to prevent, delay, or otherwise interfere with any of the Contemplated Transactions pursuant to: (i) any provision of Buyer's Organizational Documents, (ii) any order, writ, decree or injunction of any court or governmental agency having jurisdiction over it or any of its properties, or (iii) any contract, commitment or other obligation to which Buyer is a party or by which Buyer may be bound. (c) Except as set forth in Annex I or with respect to requirements under the HSR Act, Buyer is not and will not be required to obtain any consent from any governmental or regulatory authority or other person or entity in connection with the execution and delivery of this Agreement or the consummation or performance of the Contemplated Transactions on the terms and conditions prescribed herein. 4.3 Brokers Or Finders. Buyer has incurred no obligation or liability for any fee or commission to any broker, finder or agent, and will not incur any such obligation or liability, in connection with this Agreement which would result in the obligation of Seller to pay any such fee or commission with respect to the Contemplated Transactions. 24 29 EXECUTION COPY 5. COVENANTS OF THE COMPANY, AND SELLER WITH RESPECT TO THE ESOP. 5.1 Access And Investigation. Between the date of this Agreement and the Closing Date, the Company and Seller will, and will cause each Acquired Company and its representatives and employees to, (a) afford Buyer and its representatives and prospective lenders and their representatives (collectively, "Buyer's Advisors") full and free access to each Acquired Company's personnel, properties (including subsurface testing), contracts, books and records, Tax Returns and other documents and data, (b) furnish Buyer and Buyer's Advisors with copies of all such contracts, books and records, and other existing documents and data as Buyer may reasonably request, and (c) furnish Buyer and Buyer's Advisors with such additional financial, operating, and other data and information as Buyer may reasonably request and cause its officers, employees, consultants, agents, accountants and attorneys to cooperate fully with such representatives in connection with such review and examination and to make full disclosure to Buyer and its lenders of all material facts affecting the financial condition and business operations of the Company and its Subsidiaries. 5.2 Operation Of The Businesses Of The Acquired Companies. Between the date of this Agreement and the Closing Date, the Company and Seller will, and will cause each Acquired Company to: (a) conduct the business of such Acquired Company only in the Ordinary Course of Business; (b) use their best efforts to preserve intact its current business, assets and organization and maintain the relations and good will with suppliers, customers, landlords, licensors, creditors, employees, agents, and others having business relationships with such Acquired Company; (c) confer with Buyer concerning operational matters of a material nature; and (d) otherwise report periodically to Buyer, as Buyer may reasonably request, concerning the status of the business, operations, and finances of such Acquired Company. 5.3 Negative Covenant. Except as otherwise expressly permitted by this Agreement, between the date of this Agreement and the Closing Date, the Company and Seller will not, and will cause each Acquired Company not to, without the prior consent of Buyer, take any affirmative action, or fail to take any reasonable action within their or its control, as a result of which any of the changes or events listed in Section 3.15 will or is likely to occur, except: prior to the Closing the by-laws of the Company will be duly amended, effective with and contingent upon the Closing, to delete section 2.01 thereof, which currently limits the ownership of substantially all of the Company's outstanding shares to the salaried employees and the trustee of the ESOP. From and after the Determination Date, none of the Acquired Companies shall pay, cause to be paid or permit to be paid any amount that would have the effect of reducing the amount of any outstanding Funded Debt other than in accordance with the terms thereof, to the extent necessary to avoid the occurrence or continuation of any default or event of default thereunder, or on the Closing Date in accordance with Section 2.2. 5.4 Notification. Between the date of this Agreement and the Closing Date, the Company and Seller will promptly notify Buyer in writing if Seller or any Acquired Company or any of its employees becomes aware of any fact or condition that causes or constitutes a breach of any of their representations and warranties as of the date of this Agreement, or if Seller or any Acquired Company or any of its employees becomes aware of the occurrence after the 25 30 EXECUTION COPY date of this Agreement of any fact or condition that would (except as expressly contemplated by this Agreement) cause or constitute a breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition. Should any such fact or condition require any change in the Disclosure Schedule if the Disclosure Schedule were dated the date of the occurrence or discovery of any such fact or condition, the Company and Seller will promptly deliver to Buyer a supplement to the Disclosure Schedule specifying such change; provided, that any such disclosure shall not be effective to cure any such breach for purposes of Section 7.1 without the written consent of Buyer. 5.5 Fairness Opinion. Prior to the Closing Date, Seller shall retain Duff & Phelps or such other qualified, independent financial advisor (as is reasonably acceptable to Buyer) to make an appraisal of the fair market value of the ESOP and to render an opinion at Closing to the effect that the Purchase Price is not less than the fair market value of the Shares, and the Contemplated Transactions are fair to the ESOP from a financial point of view. 5.6 Termination Of ESOP. Prior to the Closing, the Company's Board of Directors will adopt resolutions to terminate the ESOP, effective with and contingent upon the Closing. 5.7 Best Efforts. Between the date of this Agreement and the Closing Date, the Company and Seller will use their best efforts to cause the conditions in Sections 7 and 8 to be satisfied. Seller and the Company will, as soon as reasonably practicable, commence to take all commercially reasonable actions required to obtain all consents, approvals, waivers and agreements of, and to give all notices and make all other registrations or filings with, any third parties, including governmental authorities, including any such filing required under the HSR Act, necessary to authorize, approve or permit the full and complete sale, conveyance, assignment, transfer and delivery of the Shares and the continuance in full force and effect of the permits, contracts and other agreements set forth on the Disclosure Schedule, and shall cooperate with Buyer with respect thereto; provided, that it shall be the obligation of the Company and Seller to procure all authorizations, consents and approvals set forth in Section 3.2(c) of the Disclosure Schedule. 5.8 Exclusivity. (a) Until the earlier occurs of the Closing or the termination of this Agreement, none of the Seller, any Acquired Company, nor any of their respective directors, officers, employees, agents, representatives, shareholders or Affiliates (collectively, the "Company Group") shall initiate, solicit, entertain, negotiate, accept or discuss, directly or indirectly, or encourage inquiries or proposals (each, an "Acquisition Proposal") with respect to, or furnish any information relating to or participate in any negotiations or discussions concerning, or enter into any agreement with respect to, any acquisition or purchase of all or a substantial portion of the business, assets, properties, capital stock or capital stock equivalents of the Company or any of its Subsidiaries (a "Potential Sale"), whether by merger, combination, sale of stock, sale of assets, recapitalization, or otherwise (an "Acquisition"), or enter into any agreement, arrangement or undertaking requiring it to abandon, terminate or fail to consummate the transaction contemplated by this Agreement. The Seller and the Company shall, and shall cause each other member of the Company Group to, immediately cease and cause to be terminated any existing activities, including discussions or negotiations with any parties, other than Buyer, conducted prior to the 26 31 EXECUTION COPY date hereof with respect to any Acquisition Proposal. The Company shall (i) immediately inform Buyer of any inquiries any member of the Company Group receives after the date hereof concerning an Acquisition Proposal or Potential Sale and provide Buyer with copies of all correspondence or other documents received in connection therewith and (ii) inform the Persons sending such inquiries, requests or proposals that the Company is bound by an exclusivity arrangement (without any reference to Buyer, its Affiliates, or its potential financing sources). The Seller and the Company represent that each is not a party to or bound by any agreement with respect to an Acquisition Proposal other than under this Agreement. Each of the Seller and the Company shall cause its officers, directors, agents and advisors to comply with the provisions of this Section 5.8. Notwithstanding the foregoing, Seller and Company shall not be prohibited by this Section 5.8 from participating in negotiations to sell the Ashland Facility; provided that the Company shall keep the Buyer duly apprised of all such negotiations or transactions and provide Buyer with any such information or details regarding such transaction as Buyer shall reasonably request. (b) Termination Rights. If the ESOP Fiduciary shall determine or the Board of Directors of the Company shall determine by a majority vote, in each case, in good faith, after consultation with its financial and legal advisors, with respect to any unsolicited written proposal from a third party for an Acquisition Proposal received after the date hereof that failure to enter into such Acquisition Proposal would constitute a breach of the fiduciary duties of the ESOP Fiduciary or the Board of Directors of the Company, as the case may be, under applicable law and that such Acquisition Proposal is more favorable to the Seller and the Company than the transactions contemplated by this Agreement and is in the best interest of the Seller and the Company and the Company has received the advice of its outside legal counsel setting forth the relevant factors the Board of Directors must consider under applicable law, and in the written opinion of such counsel, the failure to consider such an Acquisition Proposal would constitute a breach of the Company's Board of Directors' fiduciary duties under applicable law, then the Company may terminate this Agreement and enter into a letter of intent, agreement-in-principle, acquisition agreement or other similar agreement (each, as an "Acquisition Agreement") with respect to such Acquisition Proposal; provided that, (A) prior to any such termination, the Company has provided Buyer written notice that it intends to terminate this Agreement pursuant to this Section 5.8(b) and Section 9, identifying the Acquisition Proposal then determined to be more favorable and the parties thereto and delivering an accurate description of all material terms (including any changes or adjustment to such terms as a result of negotiations or otherwise) of the Acquisition Agreement to be entered into for such Acquisition Proposal, (B) prior to such termination the Company shall offer to Buyer the right to amend this Agreement to provide terms substantially equivalent to or better than such Acquisition Proposal, and (C) the Company shall pay or cause to be paid to Buyer the amount set forth in Section 9.2(b). 5.9 S Corporation Status. Neither the Company nor Seller will revoke the Company's election to be taxed as an S corporation within the meaning of code Sections 1361 and 1362. Neither the Company nor Seller will take or allow any action that would result in the termination of the Company's status as a validly electing S corporation within the meaning of Code Sections 1361 and 1362. 27 32 EXECUTION COPY 5.10 Disclosure Schedule. Seller and the Company shall deliver the Disclosure Schedule in form and substance reasonably acceptable to Buyer as promptly as practicable after the date hereof (but in any event within 10 days of the date hereof); provided, that upon acceptance thereof by the Buyer, such Disclosure Schedule shall be deemed to be effective as of the date hereof. 5.11 Tax Returns. The Company shall prepare Tax Returns for all complete taxable periods (including United States federal, state and local income tax returns for the 1997 tax year) which have not been and will not be filed prior to the Closing Date and shall deliver such Tax Returns to the Buyer not less than ten (10) days prior to the Closing together with all supporting worksheets, documents and other information. The Company shall permit the Buyer and its representatives and advisors to have full access, at any reasonable time and from time to time until the Closing to all pre-Closing Tax Returns and all books and records, wherever located, relevant to such Tax Returns and the Company shall cause its accountants or other persons necessary to, responsible for or connected to the preparation of such Tax Returns to be made available to Buyer and its representatives and advisors and to cooperate with the Buyer in the preparation of such Tax Returns. Each Tax Return (including any schedule and statement thereto) shall be true, correct and accurate in all respects and in the condition necessary for the Company to file such Tax Returns following the Closing as and when due. 6. COVENANTS OF BUYER. 6.1 Approvals Of Governmental Bodies. As promptly as practicable after the date of this Agreement, Buyer will use commercially reasonable efforts to make all filings required to be made by it to consummate the Contemplated Transactions (including all filings under the HSR Act). Between the date of this Agreement and the Closing Date, Buyer will cooperate (without incurring any cost or expense) with the Company and Seller with respect to all filings that they are required to make in connection with the Contemplated Transactions, and shall cooperate with the Company and Seller in obtaining all consents identified in Section 3.2 of the Disclosure Schedule. 7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's obligation to purchase the Shares and to take the other actions required to be taken by Buyer at the Closing is subject to the satisfaction, at or prior to Closing, of each of the following conditions (any of which may be waived by Buyer in its sole discretion, in whole or in part): 7.1 Accuracy Of Representations. All representations and warranties of the Company and Seller contained in this Agreement must have been accurate in all material respects as of the date of this Agreement and must be accurate in all material respects as of the Closing Date as if made on the Closing Date. 28 33 EXECUTION COPY 7.2 Performance. All of the covenants and obligations that Seller is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been duly performed and complied with in all material respects. 7.3 Consents. Each of the Consents, if any, identified in Section 3.2 of the Disclosure Schedule shall have been obtained and must be in full force and effect. 7.4 Documents to be Delivered by Company. At the Closing, Company and Seller shall have delivered to Buyer the following documents, in each case duly executed or otherwise in proper form: (a) A copy of the opinion, dated as of the Closing Date, of the independent financial advisor to the ESOP to the effect that as of the Closing Date the Purchase Price is not less than the fair market value of the Shares, and the Contemplated Transactions are fair to the ESOP from a financial point of view. (b) An opinion of Dutton & Overman, P.C., counsel to the Company, substantially in the form of Exhibit 7.4(b). (c) An opinion of Ludwig Goldberg & Krenzel, counsel to the ESOP, in the form of Exhibit 7.4(c). (d) Fully executed Mortgage Releases, UCC-3 Termination Statements, and other releases necessary to release all liens on and security interests in assets of the Acquired Companies. (e) Stock Certificate(s). Shares certificates representing all of the outstanding shares of the Shares, duly endorsed in blank or otherwise acceptable for transfer, with all restrictive legends (if any) either removed or properly canceled. (f) Stock Option, etc. Evidence of the exercise, conversion or cancellation of all options, warrants, convertible securities and other rights or securities disclosed in Section 3.3 of the Disclosure Schedule, in form and substance satisfactory to Buyer. (g) Compliance Certificate. A certificate signed on behalf of the Company by the chief executive officer of the Company that each of the representations and warranties made by the Company in this Agreement is true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made or given on and as of the Closing Date, and that the Company has performed and complied in all material respects with all of its obligations under this Agreement which are to be performed or complies with on or prior to the Closing Date. (h) Certified Resolutions. Certified copies of the resolutions of the Board of Directors and the stockholders of the Company, authorizing and approving this Agreement and the consummation of the transactions contemplated hereby. 29 34 EXECUTION COPY (i) Articles; Bylaws; Good Standings. (i) A copy of the articles of incorporation of the Company and each Subsidiary certified as of a recent date by the Secretary of State of the state of incorporation of each such company, (ii) a copy of the bylaws of the Company and each Subsidiary certified by the secretary of the Company and each Subsidiary, respectively and (iii) certificates of good standing for the Company and its Subsidiary from the Secretary of State of the state of incorporation of each such company and from each other jurisdiction in which such company is required to qualify to do business, in each case dated not more than ten (10) days prior to the Closing Date. (j) Consents and Approvals. Material consents, if any, of third parties necessary for the Company, or the Sellers to execute, deliver and perform this Agreement. (k) Incumbency Certificate. Incumbency certificates relating to each person executing (as corporate officer or otherwise on behalf of another person) any document executed and delivered to Buyer pursuant to the terms hereof. (l) Resignations. Written resignations and releases of the directors and officers of the Company and its Subsidiary substantially in the form of Exhibit 7.4(l). (m) Other Documents. All other documents, instruments or writings required to be delivered to Buyer at or prior to the Closing pursuant to this Agreement and such other certificates of authority and documents as Buyer may reasonably request. 7.5 HSR Act Waiting Period. All applicable waiting periods related to the HSR Act shall have expired. 7.6 No Injunction. No injunction or other restraining order prohibiting the sale of the Shares by Seller to Buyer shall be in effect. 7.7 Real Property. (a) A title insurance company selected by Buyer (the "Title Company") shall be willing to insure at standard rates the applicable Acquired Company's marketable title in and to the Owned Real Property in fee simple, the applicable Acquired Company's leasehold estate in any financeable Leased Real Property (a "Financeable Leasehold") and Buyer's lender's mortgage lien on the Owned Real Property and each Financable Leasehold, in each case free and clear of all Liens, defects, claims, leases, rights of possession or other encumbrances (other than the matters disclosed in Sections 3.7(a) and 3.7(b) of the Disclosure Schedule) including such endorsements and affirmative coverages as Buyer and Buyer's lender (the "Lender") shall reasonably require (including without limitation non-imputation endorsements). The Company shall provide all such affidavits and indemnities as the Title Company reasonably shall require in order to afford such coverages. (b) Buyer shall have obtained a survey of each Owned Real Property and each Leased Real Property to which an Acquired Company holds a Financable Leasehold conforming to the Minimum Standard Detail Requirements jointly established and approved in 1992 by ALTA and ACSM certified to the Buyer, the applicable Acquired Company, the Lender and the 30 35 EXECUTION COPY Title Company and showing no Liens, defects, encroachments or encumbrances other than the matters disclosed in Sections 3.7(a) and 3.7(b) of the Disclosure Schedule. (c) All Real Property shall be in substantially the same condition and repair as that on the date of this Agreement, reasonable wear and tear excepted. (d) Buyer shall have received (i) from each landlord under a Lease an estoppel, (ii) from each landlord under a Lease described in Section 3.2(c) of the Disclosure Schedule a consent to the transactions contemplated by this Agreement and (iii) from each mortgagee and ground lessor of any Leased Real Property a nondisturbance agreement, in each case in form and substance reasonably satisfactory to Buyer and Lender. Lender shall have received from each landlord under a Lease designated by Lender an agreement regarding the subordination to Lender of such landlord's lien against personal property on the applicable demised premises and such other matters as Lender reasonably may require. (e) The Company shall have timely paid any and all real property transfer, transfer gains, stamp and other similar taxes, if any, assessed in connection with the transactions contemplated by this Agreement and shall have delivered evidence satisfactory to Buyer and the Title Company of the payment of such taxes. (f) Buyer shall have received from each Acquired Company that owns any of the Owned Real Property an affidavit (i) stating that such entity is not a "foreign person", as defined in Section 1445(f)(3) of the Internal Revenue Code, (ii) setting forth such entity's taxpayer identification number, (iii) stating that such entity intends to file a U.S. income tax return with respect to the sale of such Owned Real Property, and (iv) granting Buyer permission to furnish a copy of such affidavit to the Internal Revenue Service. 7.8 Participant Vote. If this Agreement and the Contemplated Transactions shall have been submitted to a vote of the ESOP participants for approval or disapproval, on the basis of one vote for each of the Shares allocated to participants' ESOP accounts, this Agreement and the Contemplated Transactions shall have been approved by the participant's whose ESOP accounts represent not less than a majority of the Shares. 7.9 No Material Adverse Effect. During the period from the date hereof to the Closing Date, no event shall have occurred or be continuing (including any litigation) which has had or could reasonably be expected to have a material adverse effect on the business, assets, properties, condition (financial or otherwise) or prospects of any Acquired Company. 7.10 Absence of Litigation. No action, suit, investigation or proceeding shall have been commenced or threatened by a governmental agency or third party against Buyer, the Company, its Subsidiaries, or any of the affiliates, officers or directors of any of them, with respect to the transactions contemplated hereby, challenging the rights of the parties hereto to consummate such transactions or which reasonably could be expected to have a material adverse effect. 31 36 EXECUTION COPY 7.11 Management Arrangements. Such members of the Company's management as Buyer shall determine, shall have entered into formal arrangements with Buyer, on terms and conditions satisfactory to Buyer in its sole discretion. 7.12 Financing. Buyer shall have received cash proceeds of financing in an amount necessary to consummate the purchase of the Shares and to pay all fees and expenses in connection therewith and to provide for ongoing working capital needs of Buyer and the Company, and having such terms and conditions as are satisfactory to Buyer in its sole discretion. 7.13 Due Diligence. Buyer shall have completed its due diligence review of the Company and the Subsidiaries, and Buyer shall, in good faith, be satisfied with the results of such due diligence review. 7.14 All Proceedings To be Satisfactory. All corporate and other proceedings to be taken by the Sellers in connection with the transactions contemplated hereby, and all documents incident thereto shall be reasonably satisfactory in form and substance to the Buyer and its counsel, and the Buyer and said counsel shall have received all such counterpart originals or certified or other copies of such documents as it or they may reasonably request. 7.15 Sale of Ashland Facility. If the Company shall have entered into an agreement for or consummated the sale of the Ashland Facility, such transaction must be on terms and conditions satisfactory to Buyer in all respects. 8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. Seller's obligation to sell the Shares and to take the other actions required to be taken by Seller at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Seller, in whole or in part): 8.1 Accuracy Of Representations. All representations and warranties of Buyer contained in this Agreement must have been accurate in all material respects as of the date of this Agreement and must be accurate in all material respects as of the Closing Date as if made on the Closing Date. 8.2 Performance. All of the covenants and obligations that Buyer is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been duly performed and complied with in all material respects. 8.3 Consents. Each of the Consents identified in Section 4.2 of Annex I shall have been obtained and must be in full force and effect. 32 37 EXECUTION COPY 8.4 Additional Documents. Each of the following documents shall have been delivered to Seller: (a) The opinion, dated as of the Closing Date, of the independent financial advisor to the ESOP to the effect that as of the Closing Date the Purchase Price is not less than the fair market value of the Shares, and the Contemplated Transactions are fair to the ESOP from a financial point of view. (b) Written evidence of approval of the Contemplated Transactions on behalf of the ESOP by the ESOP Fiduciary. (c) An opinion of Kirkland & Ellis, counsel to Buyer, substantially in the form of Exhibit 8.4(c). (d) Such other documents as may be required by this Agreement to be delivered to Seller at or prior to Closing. 8.5 Participant Vote. If this Agreement and the Contemplated Transactions shall have been submitted to a vote of the ESOP participants for approval or disapproval, on the basis of one vote for each of the Shares allocated to participants' ESOP accounts, this Agreement and the Contemplated Transactions shall have been approved by the participant's whose ESOP accounts represent not less than a majority of the Shares. 8.6 No Injunction. No injunction or other restraining order prohibiting the sale of the Shares by Seller to Buyer shall be in effect. 8.7 Minimum Purchase Price. The quotient of aggregate Purchase Price payable to the Seller pursuant to Section 2.2 divided by 2,371,342.8776 shall be equal to or greater than $26.50. 9. TERMINATION. 9.1 Termination Events. This Agreement may, by notice given prior to or at the Closing, be terminated: (a) (i) By Buyer if any of the conditions in Section 7 has not been satisfied as of the Closing Date and Buyer has not waived such condition on or before the Closing Date; or (ii) by Seller, if any of the conditions in Section 8 has not been satisfied as of the Closing Date and Seller has not waived such condition on or before the Closing Date. (b) By mutual consent of Buyer and Seller; or (c) By either Buyer or Seller if the Closing has not occurred on or before September 4, 1998, or such later date as the parties may agree upon. 33 38 EXECUTION COPY (d) By Seller in accordance with Section 5.8(b). (e) By Buyer in the event that the Company and Seller shall not have delivered to Buyer the Disclosure Schedule in form and substance reasonably satisfactory to Buyer within 10 days after the date hereof, provided that Buyer shall have until the 5th business day following receipt of the Disclosure Schedule to review the same and exercise its rights under this Section 9.1(e). 9.2 Effect Of Termination. (a) If this Agreement is terminated pursuant to Section 9.1, all further obligations of the parties under this Agreement will terminate and no party shall have any liability to the other party, except for obligations of the parties hereto in Sections 12.1, 12.2 and 12.3, which shall survive the termination of this Agreement, and except that nothing herein will relieve any party from liability for any breach of any agreement or covenant contained herein prior to such termination or liability for any breach of any representation or warranty by such party which breach is known to such party as of the date of this Agreement. For purposes o the foregoing sentence, a breach shall be deemed to be known to a party if such party had actual knowledge of any fact or other matter the existence of which is contradictory to or constitutes the basis of a breach or any representation or warranty, or, with respect to the Company's obligation under Section 3.22, is discovered upon completion of the due inquiry there specified. (b) If this Agreement is terminated pursuant to Section 9.1(d) and, within 12 months after the date of this Agreement, an Acquisition is completed, then the Company shall pay to Buyer a fee of $5,000,000.00 to, among other things, compensate Buyer for its time and effort and for out-of-pocket expenses (whether incurred prior to or after the date of this Agreement) incurred by the Buyer and its Affiliates in connection with the transactions contemplated by this Agreement, which amount shall be payable by wire transfer of immediately available funds immediately prior to the consummation of such Acquisition. 10. NO INDEMNIFICATION. Following the Closing, neither Seller nor any Acquired Company, nor Buyer, nor their respective officers, directors, employees or agents, shall have any liability for breach of any representation, warranty, covenant, commitment or other obligation contained in or arising out of this Agreement, other than any such obligation pursuant to Section 11 or Section 12 hereof. Nothing contained in this Agreement shall be interpreted to eliminate, diminish, or affect the rights of current and former directors, officers, employees and agents of the Company to any rights of indemnification to which they are entitled under the Company's Code of By-laws or the Indiana Business Corporation Law. The obligations of the parties hereto provided in Sections 12.1, 12.2 and 12.3 shall survive the termination of this Agreement. 34 39 EXECUTION COPY 11. POST-CLOSING COVENANTS. 11.1 Determination Letter. As soon as practicable after the Closing, an application shall be filed by the Company with the appropriate District Director of Internal Revenue, requesting a determination that the ESOP is qualified under Code Section 401(a) upon its termination. Any ESOP amendments or such other related documents or information as shall be necessary or appropriate to obtain such determination, or as the IRS shall request, shall be submitted in connection with such application. 11.2 Distribution Of Trust Assets. As soon as practicable after the issuance by the IRS of a favorable determination letter as provided in Section 11.1 above, all ESOP trust assets shall be distributed to the ESOP participants in accordance with the terms of the ESOP. 11.3 Valuation Report. Immediately following the Closing, the ESOP Fiduciary shall deliver or cause to be delivered to Buyer a copy of the valuation report prepared by Duff & Phelps, as financial advisor to the ESOP, which supports the fairness opinion referred to in Sections 5.5 and 7.4(a). 11.4 Existing Agreements. Buyer shall cause the Company to perform and the Company shall continue the performance of all its obligations under the employment agreements, supplemental benefits agreements and split dollar agreements between the Company and certain current and former executives as identified in Sections 3.11(h) and 3.12(b) of the Disclosure Schedule, in accordance with their respective terms. 12. GENERAL PROVISIONS. 12.1 Expenses. All costs and expenses incurred by each of Buyer and the Company in connection with the negotiation, preparation, execution and performance of this Agreement and the consummation of the Contemplated Transactions will be paid by Buyer and the Company, respectively. All such costs and expenses incurred by Seller shall be paid by the Company. The Company shall pay on behalf of Seller any and all real property transfer, transfer, gains, stamp and other similar Taxes, if any, assessed in connection with the transactions contemplated by this Agreement and shall have delivered evidence satisfactory to Buyer and the company providing title insurance thereto, of the payment of such Taxes. The Purchase Price specified in Section 2.2 shall be net of all such costs and expenses of Seller and the Company, including the estimated costs of the actions to be taken pursuant to Sections 11.1 and 11.2 above. 12.2 Public Announcements. The timing and content of all announcements regarding any aspect of this Agreement or the transactions contemplated hereby to the financial community, government agencies, employees or the general public shall be mutually agreed upon in advance by the Parties hereto; provided, that each party hereto may make any such announcement which it in good faith believes, based on advice of counsel, is necessary or advisable in connection with any requirement of law or regulation, it being understood and agreed that each party shall promptly provide the other parties hereto with copies of any such announcement; and provided further that Buyer or its affiliates may make any announcement or disclosure to current or future 35 40 EXECUTION COPY financing sources or subsequent purchasers or assignees of substantially all of the capital stock or assets of Buyer, or any Subsidiary or Affiliate thereof without consent of or disclosure to the Company or the Seller. 12.3 Confidentiality. Until the Closing Date the parties and the Acquired Companies will maintain in confidence, and will cause their officers, directors, employees, agents and advisors to maintain in confidence any written, oral, or other information obtained in confidence from another party or an Acquired Company in connection with this Agreement or the Contemplated Transactions or which such party has reason to believe is confidential or commercially sensitive. If the Contemplated Transactions are not consummated, each party will return or destroy as much of such written information as the other party may reasonably request. 12.4 Notices. All notices, consents, waivers, and other communications under this Agreement must be in writing and shall be delivered personally, by telecopier, by certified mail, return receipt requested, or by a nationally recognized overnight delivery service (costs prepaid), and shall be deemed given or made upon receipt thereof. All such notices are to be given or made to the parties at the following addresses (or to such other address as any party may designate by a notice given in accordance with the provisions of this Section): If to Buyer: Neenah Foundry Company 2121 Brooks Avenue Neenah, Wisconsin 54957 Attention: James K. Hildebrand Telecopy No.: (920) 729-3603 With copies (which shall not constitute notice to Buyer: Citicorp Venture Capital, Ltd. 399 Park Avenue, 14th Floor, Zone 4 New York, NY 10043 Attention: John D. Weber Telecopy No.: (212) 888-2940 and Kirkland & Ellis 153 East 53rd Street New York, NY 10022 Attention: Kirk A. Radke, Esq. Telecopy No.: (212) 446-4900 36 41 EXECUTION COPY If to the Company or Seller: Dalton Corporation Corporate Office P.O. Box 230 Warsaw, IN 46581-0230 Attention: K.L. Davidson Telecopy No.: (219) 268-2731 With copies (which shall not constitute notice to Company or Seller) to: Dutton & Overman, P.C. 710 Century Building 36 South Pennsylvania Street Indianapolis, IN 46204 Attention: Carl D. Overman Telecopy No.: (317) 633-1494 and Ludwig Goldberg Krenzel 50 California Street 36th Floor San Francisco, CA 94111 Attention: Ronald L. Ludwig Telecopy No.: (415) 433-6496 12.5 Further Assurances. The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement. 12.6 Entire Agreement; Amendments and Notices. This Agreement supersedes all prior agreements between the parties with respect to its subject matter and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed on behalf of all the parties to this Agreement. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. 37 42 EXECUTION COPY 12.7 Assignments, Successors, And No Third-Party Rights. Neither party may assign any of its rights under this Agreement without the prior written consent of the other Parties, except that Buyer may, without any such consent or any notice to Company or Seller, assign, directly or indirectly, any or all of its rights and obligations under this Agreement to any of its Affiliates, to any Person which provides financing to the Buyer or any of its Subsidiaries or to any subsequent purchaser of the Buyer or any of its Subsidiaries or Affiliates (whether by merger, consolidation, sale of stock, sale of assets or otherwise). Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the Parties. Nothing expressed or referred to in this Agreement will be construed to give any person other than the Parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties to this Agreement and their successors and assigns. 12.8 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 12.9 Section Headings, Construction. The headings of Sections in this Agreement are provided for convenience of reference only and are not intended to and will not affect its construction or interpretation. All references to "Section" or "Sections" refer to the corresponding Section or Sections of this Agreement. 12.10 Time Of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence. Whenever the last day for the exercise of any privilege or the discharge of any duty hereunder shall fall upon any day which is not a business day, the party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding business day. 12.11 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE CHOICE OF LAW OR CONFLICTS OF LAW PRINCIPLES THEREOF. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY FORUM NON CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. 12.12 Specific Performance. Each of the Buyer, the Company and Seller acknowledges and agrees that the other party would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each party agrees that the other party shall be entitled to an injunction 38 43 EXECUTION COPY or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter, in addition to any other remedy to which they may be entitled, at law or in equity. 12.13 Waiver of Jury Trial. Each of the parties hereto waives to the fullest extent permitted by law any right it may have to trial by jury in respect of any claim, demand, action or cause of action based on, or arising out of, under or in connection with this Agreement, or any course of conduct, course of dealing, verbal or written statement or action of any party hereto, in each case whether now existing or hereafter arising, and whether in contract, tort, equity or otherwise. The parties to this Agreement each hereby agrees that any such claim, demand, action or cause of action shall be decided by court trial without a jury and that the parties to this Agreement may file an original counterpart of a copy of this Agreement with any court as evidence of the consent of the parties hereto to the waiver of their right to trial by jury. 12.14 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. * * * * 39 44 EXECUTION COPY IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first written above. DALTON CORPORATION By: --------------------------------- Name: Title DALTON CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST By: --------------------------------- Name: Title NEENAH FOUNDRY COMPANY By: --------------------------------- Name: Title EX-10.1 3 EXHIBIT 10.1 1 CONFORMED COPY NEENAH FOUNDRY COMPANY NFC CASTINGS, INC. $245,000,000 Credit Agreement Dated as of April 30, 1997, as Amended and Restated as of September 12, 1997, as of April 3, 1998, and as of September 8, 1998 CHASE SECURITIES INC. AS ARRANGER THE CHASE MANHATTAN BANK AS ADMINISTRATIVE AGENT [CHASE LOGO] 2 TABLE OF CONTENTS
Page ---- ARTICLE I Definitions SECTION 1.01. Definitions............................................................... 1 SECTION 1.02. Terms Generally........................................................... 20 ARTICLE II The Credits SECTION 2.01. Outstanding Term Loans; Commitments....................................... 21 SECTION 2.02. Loans..................................................................... 21 SECTION 2.03. Borrowing Procedure....................................................... 22 SECTION 2.04. Evidence of Debt; Repayment of Loans...................................... 23 SECTION 2.05. Fees...................................................................... 23 SECTION 2.06. Interest on Loans......................................................... 24 SECTION 2.07. Default Interest.......................................................... 24 SECTION 2.08. Alternate Rate of Interest................................................ 24 SECTION 2.09. Termination and Reduction of Commitments.................................. 25 SECTION 2.10. Conversion and Continuation of Borrowings................................. 25 SECTION 2.11. Repayment of Term Borrowings and Acquisition Borrowings................... 26 SECTION 2.12. Optional Prepayment....................................................... 28 SECTION 2.13. Mandatory Prepayments..................................................... 28 SECTION 2.14. Reserve Requirements; Change in Circumstances............................. 30 SECTION 2.15. Change in Legality........................................................ 31 SECTION 2.16. Indemnity................................................................. 32 SECTION 2.17. Pro Rata Treatment........................................................ 32 SECTION 2.18. Sharing of Setoffs........................................................ 32 SECTION 2.19. Payments.................................................................. 33 SECTION 2.20. Taxes..................................................................... 33 SECTION 2.21. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate........................................................ 34 SECTION 2.22. Letters of Credit......................................................... 35 ARTICLE III Representations and Warranties SECTION 3.01. Organization; Powers...................................................... 38
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Page ---- SECTION 3.02. Authorization............................................................. 38 SECTION 3.03. Enforceability............................................................ 38 SECTION 3.04. Governmental Approvals.................................................... 38 SECTION 3.05. Financial Statements...................................................... 39 SECTION 3.06. No Material Adverse Change................................................ 39 SECTION 3.07. Title to Properties; Possession Under Leases.............................. 39 SECTION 3.08. Subsidiaries.............................................................. 40 SECTION 3.09. Litigation; Compliance with Laws.......................................... 40 SECTION 3.10. Agreements................................................................ 40 SECTION 3.11. Federal Reserve Regulations............................................... 40 SECTION 3.12. Investment Company Act; Public Utility Holding Company Act................ 40 SECTION 3.13. Use of Proceeds........................................................... 40 SECTION 3.14. Tax Returns............................................................... 41 SECTION 3.15. No Material Misstatements................................................. 41 SECTION 3.16. ERISA..................................................................... 41 SECTION 3.17. Environmental Matters..................................................... 41 SECTION 3.18. Insurance................................................................. 42 SECTION 3.19. Security Documents........................................................ 42 SECTION 3.20. Location of Real Property and Leased Premises............................. 42 SECTION 3.21. Labor Matters............................................................. 43 SECTION 3.22. Solvency.................................................................. 43 SECTION 3.23. Year 2000 Compliance...................................................... 43 ARTICLE IV Conditions of Lending SECTION 4.01. All Credit Events......................................................... 43 SECTION 4.02. First Credit Event........................................................ 44 ARTICLE V Affirmative Covenants SECTION 5.01. Existence; Businesses and Properties...................................... 47 SECTION 5.02. Insurance................................................................. 47 SECTION 5.03. Obligations and Taxes..................................................... 48 SECTION 5.04 Financial Statements, Reports, etc........................................ 48 SECTION 5.05. Litigation and Other Notices.............................................. 49 SECTION 5.06. Maintaining Records; Access to Properties and Inspections................. 50 SECTION 5.07. Use of Proceeds........................................................... 50 SECTION 5.08. Compliance with Environmental Laws........................................ 50 SECTION 5.09. Preparation of Environmental Reports...................................... 50 SECTION 5.10. [Intentionally Omitted]................................................... 50 SECTION 5.11. Further Assurances........................................................ 50
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Page ---- ARTICLE VI Negative Covenants SECTION 6.01. Indebtedness.............................................................. 51 SECTION 6.02. Liens..................................................................... 52 SECTION 6.03. Sale and Lease-Back Transactions.......................................... 53 SECTION 6.04. Investments, Loans and Advances........................................... 53 SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions................. 54 SECTION 6.06. Dividends and Distributions; Restrictions on Ability of Subsidiaries to Pay Dividends........................................... 55 SECTION 6.07. Transactions with Affiliates.............................................. 56 SECTION 6.08. Business of Borrower and Subsidiaries..................................... 56 SECTION 6.09. Other Indebtedness and Agreements......................................... 56 SECTION 6.10. Capital Expenditures...................................................... 56 SECTION 6.11. Consolidated Leverage Ratio............................................... 57 SECTION 6.12. Consolidated Net Worth.................................................... 57 SECTION 6.13. Consolidated Interest Coverage Ratio...................................... 57 SECTION 6.14. Fiscal Year............................................................... 57 ARTICLE VII Events of Default ARTICLE VIII The Administrative Agent and the Collateral Agent ARTICLE IX Miscellaneous SECTION 9.01. Notices................................................................... 61 SECTION 9.02. Survival of Agreement..................................................... 61 SECTION 9.03. Binding Effect............................................................ 62 SECTION 9.04. Successors and Assigns.................................................... 62 SECTION 9.05. Expenses; Indemnity....................................................... 64 SECTION 9.06. Right of Setoff........................................................... 65 SECTION 9.07. Applicable Law............................................................ 65 SECTION 9.08. Waivers; Amendment........................................................ 65 SECTION 9.09. Interest Rate Limitation.................................................. 66 SECTION 9.10. Entire Agreement.......................................................... 67 SECTION 9.11. WAIVER OF JURY TRIAL...................................................... 67 SECTION 9.12. Severability.............................................................. 67 SECTION 9.13. Counterparts.............................................................. 67 SECTION 9.14. Headings.................................................................. 67
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Page ---- SECTION 9.15. Jurisdiction; Consent to Service of Process................................. 67 SECTION 9.16. Confidentiality............................................................. 68 SECTION 9.17. Termination................................................................. 68 SCHEDULES: SCHEDULE 1.01(A) -- SUBSIDIARY GUARANTORS SCHEDULE 2.01 -- LENDERS AND COMMITMENTS SCHEDULE 3.07(D) -- CONTRACTUAL RIGHTS REGARDING MORTGAGED PROPERTY SCHEDULE 3.08 -- SUBSIDIARIES SCHEDULE 3.09(A) -- LITIGATION SCHEDULE 3.09(C) -- CERTIFICATES OF OCCUPANCY SCHEDULE 3.10 -- AGREEMENTS AND INSTRUMENTS SCHEDULE 3.17 -- ENVIRONMENTAL MATTERS SCHEDULE 3.18 -- INSURANCE SCHEDULE 3.19(D) -- FILING OFFICES-- MORTGAGES SCHEDULE 3.20(A) -- MORTGAGED PROPERTIES SCHEDULE 3.20(B) -- LEASED PROPERTIES SCHEDULE 4.02(A) -- LOCAL COUNSEL SCHEDULE 6.01 -- EXISTING INDEBTEDNESS SCHEDULE 6.02 -- EXISTING LIENS SCHEDULE 6.07 -- TRANSACTIONS WITH AFFILIATES EXHIBITS: EXHIBIT A -- FORM OF ADMINISTRATIVE QUESTIONNAIRE EXHIBIT B -- FORM OF ASSIGNMENT AND ACCEPTANCE EXHIBIT C -- FORM OF BORROWING REQUEST EXHIBIT D -- FORM OF INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT EXHIBIT E-1 -- FORM OF MORTGAGES EXHIBIT E-2 -- FORM OF AMENDMENTS TO MORTGAGES EXHIBIT F -- FORM OF PARENT GUARANTEE AGREEMENT EXHIBIT G -- FORM OF PLEDGE AGREEMENT EXHIBIT H -- FORM OF SECURITY AGREEMENT EXHIBIT I -- FORM OF SUBSIDIARY GUARANTEE AGREEMENT EXHIBIT J-1 -- FORM OF OPINION OF KIRKLAND & ELLIS EXHIBIT J-2 -- FORM OF OPINION OF LOCAL COUNSEL EXHIBIT K -- FORM OF SELLER NOTE
6 CONFORMED COPY CREDIT AGREEMENT dated as of April 30, 1997, as amended and restated as of September 12, 1997, as of April 3, 1998 (the "Existing Credit Agreement"), and as of September 8, 1998, among NEENAH FOUNDRY COMPANY (formerly known as Neenah Corporation), a Wisconsin corporation (the "Borrower"), NFC CASTINGS, INC., a Delaware corporation ("Holdings"), the Lenders (as defined in Article I), and THE CHASE MANHATTAN BANK, a New York banking corporation, as issuing bank (in such capacity, the "Issuing Bank"), as administrative agent (in such capacity, the "Administrative Agent") and as collateral agent (in such capacity, the "Collateral Agent") for the Lenders. Pursuant to the Existing Credit Agreement, the Lenders have made Tranche A Term Loans (such term and each other capitalized term used but not defined herein having the meaning given it in Article I), Tranche B Term Loans and Revolving Loans to the Borrower and the Issuing Bank has issued Letters of Credit for the account of the Borrower. A portion of the proceeds of the Tranche A Term Loans have been used to consummate the ACP Contribution and a portion of such proceeds will be used to pay the Purchase Price. Holdings and the Borrower have requested the Lenders to extend additional credit to the Borrower in the form of (a) Additional Tranche B Term Loans on the Restatement Closing Date in an aggregate principal amount not in excess of $70,000,000, (b) Acquisition Loans at any time and from time to time during the Acquisition Loan Availability Period, in an aggregate principal amount at any time outstanding not in excess of $50,000,000, and (c) Revolving Loans at any time and from time to time prior to the Revolving Credit Maturity Date, in an aggregate principal amount at any time outstanding not in excess of $50,000,000. Holdings and the Borrower have requested the Issuing Bank to issue letters of credit, in an aggregate face amount at any time outstanding not in excess of $15,000,000, to support payment obligations incurred in the ordinary course of business by the Borrower and its Subsidiaries. The proceeds of the Additional Tranche B Term Loans and the Acquisition Loans to be made on the Restatement Closing Date will be used solely to pay the Purchase Price and related fees and expenses. The proceeds of the Revolving Loans are to be used solely for general corporate purposes in the ordinary course of the Borrower's business, including Permitted Acquisitions. Holdings and the Borrower have also requested that the Existing Credit Agreement be amended and restated in the form hereof (this "Agreement"). The Lenders are willing to extend such credit to the Borrower, the Issuing Bank is willing to issue letters of credit for the account of the Borrower and its Subsidiaries and the Required Lenders 7 2 are willing to amend and restate the Existing Credit Agreement, in each case on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows: ARTICLE I Definitions SECTION 1.01. Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below: "ABR Acquisition Borrowing" shall mean a Borrowing comprised of ABR Acquisition Loans. "ABR Acquisition Loan" shall mean any Acquisition Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II. "ABR Borrowing" shall mean a Borrowing comprised of ABR Loans. "ABR Loan" shall mean any ABR Term Loan, ABR Revolving Loan or ABR Acquisition Loan. "ABR Revolving Loan" shall mean any Revolving Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II. "ABR Term Borrowing" shall mean a Borrowing comprised of ABR Term Loans. "ABR Term Loan" shall mean any Term Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II. "Account" shall mean any right to payment for goods sold or for services rendered, whether or not it has been earned by performance. "ACP" shall mean Advanced Cast Products, Inc., a Delaware corporation. "ACP Contribution" shall mean the contribution by ACP Holdings on September 8, 1998, of all the issued and outstanding capital stock of ACP to the Borrower, the repayment at such time of substantially all the Indebtedness of ACP (other than the Subordinated Promissory Notes) and the assumption by Holdings of all obligations with respect to the Subordinated Promissory Notes. "ACP Holdings" shall mean ACP Holding Company, a Delaware corporation. "ACP Merger" shall have the meaning assigned to such term in the definition of the term "Change in Control". "ACP Products" shall mean ACP Products, L.L.C., a Delaware limited liability company. 8 3 "Acquisition" shall mean the acquisition by the Borrower of all the issued and outstanding capital stock of Dalton pursuant to the Stock Purchase Agreement. "Acquisition Borrowing" shall mean a Borrowing comprised of Acquisition Loans. "Acquisition Loan Availability Period" shall mean the period commencing on and including the Restatement Closing Date and ending on and including the second anniversary of the Restatement Closing Date. "Acquisition Loan Commitment" shall mean, with respect to each Additional Lender, the commitment of such Additional Lender to make Acquisition Loans hereunder as set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Additional Lender assumed its Acquisition Loan Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.09, (b) reduced or increased from time to time pursuant to assignments by or to such Additional Lender pursuant to Section 9.04 and (c) reinstated from time to time pursuant to Section 2.01. "Acquisition Loan Lenders" shall mean the Lenders having Acquisition Loan Commitments or outstanding Acquisition Loans. "Acquisition Loan Maturity Date" shall mean June 30, 2004. "Acquisition Loan Repayment Date" shall have the meaning assigned to such term in Section 2.11(a)(iv). "Acquisition Loans" shall mean the loans made by the Lenders to the Borrower pursuant to clause (b) of Section 2.01. Each Acquisition Loan shall be either a Eurodollar Acquisition Loan or an ABR Acquisition Loan. "Additional Lenders" shall mean the Additional Tranche B Lenders and the Acquisition Loan Lenders. "Additional Loans" shall mean the Additional Tranche B Term Loans and the Acquisition Loans. "Additional Tranche B Commitment" shall mean, with respect to each Additional Lender, the commitment of such Additional Lender to make Additional Tranche B Term Loans to the Borrower as set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Additional Lender assumed its Additional Tranche B Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.09 or (b) reduced or increased from time to time pursuant to assignments by or to such Additional Lender pursuant to Section 9.04. "Additional Tranche B Lenders" shall mean the Lenders having Additional Tranche B Commitments or outstanding Additional Tranche B Term Loans. "Additional Tranche B Term Loan Repayment Date" shall have the meaning set forth in Section 2.11(a)(iii). 9 4 "Additional Tranche B Maturity Date" shall mean September 30, 2005. "Additional Tranche B Term Loans" shall mean the term loans made by the Lenders to the Borrower pursuant to clause (a) of Section 2.01. Each Additional Tranche B Term Loan shall be either a Eurodollar Term Loan or an ABR Term Loan. "Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate in effect for such Interest Period and (b) Statutory Reserves. "Administrative Agent Fees" shall have the meaning assigned to such term in Section 2.05(b). "Administrative Questionnaire" shall mean an Administrative Questionnaire in the form of Exhibit A. "Affiliate" shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "Aggregate Revolving Credit Exposure" shall mean the aggregate amount of the Lenders' Revolving Credit Exposures. "Alternate Base Rate" shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate or both for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) or (c), or both, of the preceding sentence, as appropriate, until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively. The term "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective on the date such change is publicly announced as being effective. The term "Base CD Rate" shall mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment Rate. "Applicable Percentage" shall mean, for any day, with respect to any Loan, or with respect to the Commitment Fees, as the case may be, the applicable percentage set forth below under the caption "Eurodollar Spread--Tranche A Term Loans, Revolving Loans and Acquisition Loans", "Eurodollar Spread--Tranche B Term Loans and Additional Tranche B Term Loans", "ABR Spread--Tranche A Term Loans, Revolving Loans and Acquisition Loans", "ABR Spread--Tranche B Term Loans and Additional Tranche B Term Loans" or "Fee Percentage", as the case may be, based upon the Consolidated Leverage Ratio as of the relevant date of determination: 10 5
=========================================================================================================== Eurodollar ABR Spread- Eurodollar ABR Spread- Spread- Tranche B Spread- Tranche A Term Tranche B Term Loans Tranche A Term Loans, Term Loans and and Loans, Revolving Revolving Loans Additional Additional Consolidated Leverage Loans and and Acquisition Tranche B Term Tranche B Fee Ratio Acquisition Loans Loans Loans Term Loans Percentage - ----------------------------------------------------------------------------------------------------------- Category 1 2.50% 1.50% 2.75% 1.75% .50% - ---------- Equal to or greater than 4.50 to 1.00 - ----------------------------------------------------------------------------------------------------------- Category 2 2.25% 1.25% 2.50% 1.50% .50% - ---------- Equal to or greater than 4.00 to 1.00, but less than 4.50 to 1.00 - ----------------------------------------------------------------------------------------------------------- Category 3 2.00% 1.00% 2.25% 1.25% .50% - ---------- Equal to or greater than 3.50 to 1.00, but less than 4.00 to 1.00 - ----------------------------------------------------------------------------------------------------------- Category 4 1.75% .75% 2.00% 1.00% .375% - ---------- Equal to or greater than 3.00 to 1.00, but less than 3.50 to 1.00 - ----------------------------------------------------------------------------------------------------------- Category 5 1.50% .50% 2.00% 1.00% .375% - ---------- Less than 3.00 to 1.00 ===========================================================================================================
Each change in the Applicable Percentage resulting from a change in the Consolidated Leverage Ratio shall be effective with respect to all Loans, Commitments and Letters of Credit outstanding on and after the date of delivery to the Administrative Agent of the financial statements and certificates required by Section 5.04(a) or (b) indicating such change until the date immediately preceding the next date of delivery of such financial statements and certificates indicating another such change. Notwithstanding the foregoing, (a) at any time during which the Borrower has failed to deliver the financial statements and certificates required by Section 5.04(a) or (b), or (b) at any time after the occurrence and during the continuance of an Event of Default, the Consolidated Leverage Ratio shall be deemed to be in Category 1 for purposes of determining the Applicable 11 6 Percentage. Notwithstanding the foregoing, until December 4, 1998, the Leverage Ratio shall be deemed to be in Category 1 for purposes of determining the Applicable Percentage. "Approved Fund" shall mean, with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "Ashland" shall mean Dalton Corporation, Ashland Manufacturing Facility, an indirect Subsidiary of the Borrower, after giving effect to the Acquisition. "Ashland Earn-Out Obligation" shall mean the obligations of Dalton pursuant to Section 3 of the Asset Purchase and Sale Agreement dated as of June 27, 1995, between Ashland Castings Corporation and DF Acquisition Co. "Assessment Rate" shall mean for any date the annual rate (rounded upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the Administrative Agent as the then current net annual assessment rate that will be employed in determining amounts payable by the Administrative Agent to the Federal Deposit Insurance Corporation (or any successor thereto) for insurance by such Corporation (or such successor) of time deposits made in dollars at the Administrative Agent's domestic offices. "Asset Sale" shall mean the sale, transfer or other disposition (by way of merger or otherwise) by the Borrower or any of the Subsidiaries to any Person other than the Borrower or any Subsidiary Guarantor of (a) any capital stock of any of the Subsidiaries (other than directors' qualifying shares) or (b) any other assets of the Borrower or any of the Subsidiaries (other than (i) inventory, excess, damaged, obsolete or worn out assets, scrap, Permitted Investments and licenses of patterns developed for customers of the Borrower or any Subsidiary, in each case disposed of in the ordinary course of business, (ii) assets transferred for an aggregate purchase price not exceeding $3,000,000 in any fiscal year of the Borrower in connection with the replacement or upgrade of a tangible asset of the Borrower or any Subsidiary Guarantor within 180 days of such transfer, (iii) dispositions resulting in Casualty Proceeds or Condemnation Proceeds or (iv) dispositions resulting in other insurance settlements or condemnation awards not exceeding $100,000 in any fiscal year of the business), provided that any asset sale or series of related asset sales described in clause (b) above having a value not in excess of $100,000 shall be deemed not to be an "Asset Sale" for purposes of this Agreement. "Assignment and Acceptance" shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent, in the form of Exhibit B or such other form as shall be approved by the Administrative Agent. "Board" shall mean the Board of Governors of the Federal Reserve System of the United States of America. "Borrower Tax Amount" shall mean, with respect to any fiscal quarter, the amount paid by Holdings, the Borrower and the Subsidiaries to ACP Holdings in respect of taxes, which amount shall not be greater than the amount of taxes that would be required to be paid in cash by any of Holdings, the Borrower and the Subsidiaries if Holdings, the Borrower and the Subsidiaries were not consolidated with ACP Holdings and its other subsidiaries for tax purposes. 12 7 "Borrowing" shall mean a group of Loans of a single Type made by the Lenders on a single date and as to which a single Interest Period is in effect. "Borrowing Request" shall mean a request by the Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C. "Business Day" shall mean any day other than a Saturday, Sunday or day on which banks in New York City are authorized or required by law to close; provided, however, that when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market. "Capital Lease Obligations" of any Person shall mean the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. "Capital Stock" of any Person shall mean any and all shares, interests (including membership and economic interests in a limited liability company), rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity prior to such conversion. "Casualty" shall have the meaning set forth in each of the Mortgages. "Casualty Proceeds" shall have the meaning set forth in each of the Mortgages. A "Change in Control" shall be deemed to have occurred if (a) prior to the first fully distributed public offering of Voting Stock of Holdings (or, in the event (i) Holdings shall merge with and into ACP Holdings or the Borrower in a transaction permitted by Section 6.05 (a "Holdings Merger"), ACP Holdings, or (ii) following a Holdings Merger, ACP Holdings shall merge with and into ACP Products or the Borrower in a transaction permitted by Section 6.05 (an "ACP Holdings Merger"), ACP Products), the Permitted Holders shall cease to own directly or indirectly (including by way of direct or indirect ownership of economic interests in ACP Products), beneficially or of record, shares representing at least 51% on a fully diluted, as if converted, basis of the aggregate ordinary voting power represented by the issued and outstanding Voting Stock of Holdings (or, in the event of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products), (b) after the first fully distributed public offering of Voting Stock of Holdings (or, in the event of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products), the Permitted Holders shall cease to own directly or indirectly (including by way of direct or indirect ownership of economic interests in ACP Products), beneficially or of record, shares representing at least 25% on a fully diluted, as if converted, basis of the aggregate ordinary voting power represented by the issued and outstanding Voting Stock of Holdings (or, in the event of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products), (c) after the first fully distributed public offering of Voting Stock of Holdings (or, in the event of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products), any Person or group (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on the date hereof) other than the Permitted Holders shall own directly or indirectly, beneficially or of record, a percentage of the 13 8 issued and outstanding Voting Stock of Holdings (or, in the event of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products) on a fully diluted, as if converted, basis having ordinary voting power in excess of the percentage then owned, directly or indirectly (including by way of direct or indirect ownership of economic interests in ACP Products), beneficially and of record, on a fully diluted, as if converted, basis, by the Permitted Holders; (d) a majority of the seats (except in the case of any vacancy for 30 days or less resulting from the death or resignation of any director of Holdings (or, in the event of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products)) on the board of directors of Holdings (or, in the event of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products) shall at any time be occupied by persons who were neither (i) nominated by the board of directors of Holdings, ACP Holdings or ACP Products, as the case may be, nor (ii) appointed by directors so nominated; (e) any change in control (or similar event, however denominated) with respect to Holdings (or, in the event of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products) or the Borrower shall occur under and as defined in any indenture or agreement in respect of Indebtedness to which any such Person or any Subsidiary is a party; or (f) Holdings (or in the event of (i) a Holdings Merger, ACP Holdings, or (ii) an ACP Holdings Merger, ACP Products) shall cease to own, beneficially and of record, 100% of the issued and outstanding Capital Stock of the Borrower. "Citicorp" shall mean Citicorp, a Delaware corporation. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Collateral" shall mean all the "Collateral" as defined in any Security Document and shall also include the Mortgaged Properties. "Commitment" shall mean, with respect to any Lender, such Lender's Revolving Credit Commitment, Additional Tranche B Commitment and Acquisition Loan Commitment. "Commitment Fee" shall have the meaning assigned to such term in Section 2.05(a). "Condemnation" shall have the meaning set forth in each of the Mortgages. "Condemnation Proceeds" shall have the meaning set forth in each of the Mortgages. "Confidential Information Memorandum" shall mean the Confidential Information Memorandum of the Borrower dated August 1998. "Consolidated Capital Expenditures" shall mean, for any period, the sum of (a) the aggregate of all expenditures (whether paid in cash or other consideration or accrued as a liability) by the Borrower or any of the Subsidiaries during such period that, in accordance with GAAP, are or should be included in "additions to property, plant and equipment" or similar items reflected in the consolidated statement of cash flows of the Borrower and the Subsidiaries for such period (including the amount of assets leased in connection with any Capital Lease Obligation), and (b) to the extent not included pursuant to clause (a) above, the aggregate of all expenditures (whether paid in cash or other consideration or accrued as a liability) by the Borrower or any Subsidiary to acquire, by purchase or otherwise, the business, property or fixed assets of, or stock or other evidence of beneficial ownership of, any Person (other than expenditures for Permitted Acquisitions); provided, however, that, for purposes of Section 6.10 only, to the extent the Borrower or a Subsidiary uses, 14 9 within 180 days of the receipt thereof, (i) the proceeds of the disposition of assets described in clause (b)(i), (ii) or (iv) of the definition of the term "Asset Sale" or (ii) Casualty Proceeds or Condemnation Proceeds to purchase, construct, repair, lease or replace any property, plant or equipment, the amount of the related Consolidated Capital Expenditure shall be reduced by the amount of such proceeds. "Consolidated Current Assets" shall mean, as of any date of determination, the total assets that would properly be classified as current assets (other than cash and cash equivalents) of the Borrower and the Subsidiaries as of such date, determined on a consolidated basis in accordance with GAAP. "Consolidated Current Liabilities" shall mean, as of any date of determination, the total liabilities (other than, without duplication, (a) the current portion of long-term Indebtedness and (b) outstanding Revolving Loans) that would properly be classified as current liabilities of the Borrower and the Subsidiaries as of such date, determined on a consolidated basis in accordance with GAAP. "Consolidated EBITDA" shall mean, for any period, Consolidated Net Income for such period, plus, to the extent deducted in computing such Consolidated Net Income, (a) the sum of (i) all Federal, state, local and foreign taxes, (ii) Consolidated Net Interest Expense and (iii) depreciation, depletion, amortization of intangibles and other non-cash charges or non-cash losses (including non-cash transaction expenses and the amortization of debt discounts), minus, to the extent added in computing such Consolidated Net Income, (b) any non-cash income or non-cash gains, all as determined on a consolidated basis with respect to the Borrower and the Subsidiaries in accordance with GAAP. "Consolidated Interest Coverage Ratio" shall mean, for any period, the ratio for such period of (a) Consolidated EBITDA to (b) Consolidated Net Interest Expense determined in each case for the period of four consecutive fiscal quarters ending on the last day of such period. "Consolidated Leverage Ratio" shall mean, as of any date of determination, the ratio of (a) Net Debt on such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters ending on such date (including the Consolidated EBITDA for such four fiscal quarters of any Subsidiary acquired during such four fiscal quarters constituting a Permitted Acquisition pursuant to Section 6.04(g)). "Consolidated Net Income" shall mean, for any period, net income or loss of the Borrower and the Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income of any Person in which any other Person (other than the Borrower or any of the Subsidiaries or any director holding qualifying shares in accordance with applicable law) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to the Borrower or any wholly owned Subsidiary by such Person during such period, (b) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of the Subsidiaries or the date that Person's assets are acquired by the Borrower or any of the Subsidiaries (except, in the case of any Subsidiary acquired during such period constituting a Permitted Acquisition pursuant to Section 6.04(g), which shall not be excluded for purposes of determining Consolidated EBITDA for purposes of the Consolidated Leverage Ratio and the Senior Debt Leverage Ratio only), (c) the 15 10 income of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by the Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (d) any after tax gains or losses attributable to sales of assets out of the ordinary course of business and (e) (to the extent not included in clauses (a) through (d) above) any non-cash extraordinary gains or non-cash extraordinary losses. "Consolidated Net Interest Expense" shall mean, for any period, the gross interest expense of the Borrower and the Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including the portion of any payments or accruals with respect to Capital Lease Obligations that are allocable to interest expense in accordance with GAAP, but excluding (a) the amortization of debt discounts and (b) the amortization of all fees (including fees with respect to Interest Rate Protection Agreements) payable in connection with the incurrence of Indebtedness to the extent included in interest expense in accordance with GAAP (including fees and expenses in connection with the Transactions and the Original Credit Event) less the total interest income of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP. For purposes of the foregoing, gross interest expense shall be determined after giving effect to any net payments made or received by the Borrower or any Subsidiary with respect to Interest Rate Protection Agreements. "Consolidated Net Worth" shall mean, as of any date of determination, the consolidated stockholder's equity of the Borrower and the Subsidiaries at such date, as determined on a consolidated basis in accordance with GAAP; provided, however, that common stock or preferred stock (a) with respect to which no payments that would violate Section 6.06 are required to be made and (b) that is redeemable not earlier than April 30, 2009 shall be included regardless of its classification under GAAP. "Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms "Controlling" and "Controlled" shall have meanings correlative thereto. "Credit Event" shall have the meaning assigned to such term in Section 4.01. "CVC" shall mean Citicorp Venture Capital, Ltd., a New York corporation. "Dalton" shall mean Dalton Corporation, an Indiana corporation. "Default" shall mean any event or condition which upon notice, lapse of time or both would constitute an Event of Default. "Design Technologies" shall mean Design Technologies International, an American Polish company. "dollars" or "$" shall mean lawful money of the United States of America. "Domestic Subsidiaries" shall mean all Subsidiaries incorporated or organized under the laws of the United States of America, any State thereof or the District of Columbia. 16 11 "Earn-Out Obligation" shall mean any unsecured contingent liability of the Borrower or any Subsidiary owed to any seller in connection with any Permitted Acquisition permitted pursuant to Section 6.04(g) by the Borrower or any Subsidiary that (a) constitutes a portion of the purchase price for such Permitted Acquisition but is not an amount certain on the date of incurrence thereof and is not subject to any right of acceleration by such seller or (b) is only payable upon the achievement of performance standards by the property acquired in such Permitted Acquisition and in an amount based upon such achievement. "Environment" shall mean ambient air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, the workplace or as otherwise defined in any Environmental Law. "Environmental Claim" shall mean any written accusation, allegation, notice of violation, claim, demand, order, directive, cost recovery action or other cause of action by, or on behalf of, any Governmental Authority or any Person for damages, injunctive or equitable relief, personal injury (including sickness, disease or death), Remedial Action costs, tangible or intangible property damage, natural resource damages, nuisance, pollution, any adverse effect on the Environment caused by any Hazardous Material, or for fines, penalties or restrictions, resulting from or based upon (a) the existence, or the continuation of the existence, of a Release (including sudden or non- sudden, accidental or non-accidental Releases), (b) exposure to any Hazardous Material, (c) the presence, use, handling, transportation, storage, treatment or disposal of any Hazardous Material or (d) the violation or alleged violation of any Environmental Law or Environmental Permit. "Environmental Law" shall mean any and all applicable present and future treaties, laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the Environment, preservation or reclamation of natural resources, the management, Release or threatened Release of any Hazardous Material or to health and safety matters, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Sections 9601 et seq. (collectively "CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. Sections 6901 et seq., the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Sections 1251 et seq., the Clean Air Act of 1970, as amended 42 U.S.C. Sections 7401 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C. Sections 2601 et seq., the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Sections 651 et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001 et seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. Sections 300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Sections 5101 et seq., and any similar or implementing state or local law, and all amendments or regulations promulgated under any of the foregoing. "Environmental Permit" shall mean any permit, approval, authorization, certificate, license, variance, filing or permission required by or from any Governmental Authority pursuant to any Environmental Law. "Equity Issuance" shall mean the sale or issuance by ACP Products, ACP Holdings or Holdings of any Capital Stock to any Person other than the Borrower or any of its Subsidiaries. 17 12 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time. "ERISA Affiliate" shall mean any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. "ERISA Event" shall mean (a) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. "Eurodollar Acquisition Borrowing" shall mean a Borrowing comprised of Eurodollar Acquisition Loans. "Eurodollar Acquisition Loan" shall mean any Acquisition Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II. "Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar Loans. "Eurodollar Loan" shall mean any Eurodollar Revolving Loan, Eurodollar Term Loan or Eurodollar Acquisition Loan. "Eurodollar Revolving Loan" shall mean any Revolving Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II. "Eurodollar Term Borrowing" shall mean a Borrowing comprised of Eurodollar Term Loans. "Eurodollar Term Loan" shall mean any Term Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II. "Event of Default" shall have the meaning assigned to such term in Article VII. 18 13 "Excess Cash Flow" shall mean, for any fiscal year of the Borrower, the excess of (a) the sum, without duplication, of (i) Consolidated EBITDA for such fiscal year, (ii) extraordinary cash income of the Borrower and its consolidated Subsidiaries, if any, during such fiscal year and not included in Consolidated EBITDA and (iii) reductions to non-cash working capital of the Borrower and its consolidated Subsidiaries for such fiscal year (i.e., the decrease, if any, in Consolidated Current Assets minus Consolidated Current Liabilities from the beginning to the end of such fiscal year); provided that such working capital as of the first day of such fiscal year shall be determined on a pro forma basis adjusted to give effect (as if such event had occurred on the first day of such fiscal year) to each Permitted Acquisition made pursuant to Section 6.04(g) during such fiscal year over (b) the sum, without duplication, of (i) the amount of any cash income taxes payable by the Borrower and its consolidated Subsidiaries with respect to such fiscal year, (ii) cash interest paid by the Borrower and its consolidated Subsidiaries during such fiscal year, (iii) Consolidated Capital Expenditures made in cash in accordance with Section 6.10 during such fiscal year, (iv) scheduled principal repayments of Indebtedness made by the Borrower and its consolidated Subsidiaries during such fiscal year, (v) optional and mandatory prepayments of the principal of Loans during such fiscal year, but only to the extent that such prepayments by their terms cannot be reborrowed or redrawn and do not occur in connection with a refinancing of all or any portion of the Loans, (vi) extraordinary cash expenses paid by the Borrower and its consolidated Subsidiaries, if any, during such fiscal year and not included in Consolidated EBITDA and (vii) additions to non-cash working capital for such fiscal year (i.e., the increase, if any, in Consolidated Current Assets minus Consolidated Current Liabilities from the beginning to the end of such fiscal year); provided that such working capital as of the first day of such fiscal year shall be determined on a pro forma basis adjusted to give effect (as if such event had occurred on the first day of such fiscal year) to each Permitted Acquisition made pursuant to Section 6.04(g) during such fiscal year provided, further, that, to the extent otherwise included therein, the Net Cash Proceeds of Asset Sales and dispositions resulting in Casualty Proceeds or Condemnation Proceeds shall be excluded from the calculation of Excess Cash Flow. "Excluded Taxes" shall mean, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.21(a)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender's failure to comply with Section 2.20(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.20(a). "Federal Funds Effective Rate" shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average 19 14 of the quotations for the day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "Fee Letter" shall mean the Fee Letter dated August 3, 1998, between the Borrower and The Chase Manhattan Bank. "Fees" shall mean the Commitment Fees, the Administrative Agent's Fees, the L/C Participation Fees and the Issuing Bank Fees. "Financial Officer" of any corporation shall mean the chief financial officer, principal accounting officer, Treasurer or Controller of such corporation. "Foreign Lender" shall mean any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction. "Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic Subsidiary. "FSC" shall mean Neenah Foundry Foreign Sales Corporation, a Barbados corporation, and a wholly owned Subsidiary of the Borrower. "GAAP" shall mean generally accepted accounting principles applied on a consistent basis. "Governmental Authority" shall mean any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body. "Guarantee" of or by any Person shall mean any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. "Guarantee Agreements" shall mean the Parent Guarantee Agreement and the Subsidiary Guarantee Agreement. "Guarantors" shall mean Holdings and the Subsidiary Guarantors. "Hazardous Materials" shall mean all explosive or radioactive substances or wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or gaseous wastes, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs") or PCB-containing materials or equipment, radon gas, infectious or medical 20 15 wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. "Holdings Merger" shall have the meaning assigned to such term in the definition of the term "Change in Control". "Indebtedness" of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business), (d) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding trade accounts payable, accrued obligations incurred in the ordinary course of business and any unaccrued Earn-Out Obligation), (f) all Indebtedness of others of the type described in clauses (a) through (e) and (g) through (j) of this definition secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations of such Person in respect of interest rate protection agreements, foreign currency exchange agreements or other interest or exchange rate hedging arrangements and (j) all obligations of such Person as an account party in respect of letters of credit and bankers' acceptances. The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner. "Indemnified Taxes" shall mean Taxes other than Excluded Taxes. "Indemnity, Subrogation and Contribution Agreement" shall mean the Indemnity, Subrogation and Contribution Agreement, substantially in the form of Exhibit D, among the Borrower, the Subsidiary Guarantors and the Collateral Agent. "Interest Payment Date" shall mean, with respect to any Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, each day that would have been an Interest Payment Date had successive Interest Periods of three months' duration been applicable to such Borrowing, and, in addition, the date of any prepayment of such Borrowing or conversion of such Borrowing to a Borrowing of a different Type. "Interest Period" shall mean (a) as to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the Borrower may elect and (b) as to any ABR Borrowing, the period commencing on the date of such Borrowing and ending on the earliest of (i) the next succeeding March 31, June 30, September 30 or December 31, (ii) the Revolving Credit Maturity Date, the Tranche A Maturity Date, the Tranche B Maturity Date, the Additional Tranche B Maturity Date or the Acquisition Loan Maturity Date, as applicable, and (iii) the date such Borrowing is converted to a Borrowing of a different Type in accordance with Section 2.10 or repaid or prepaid in accordance with Section 2.11, 2.12 or 2.13; provided, however, that if any Interest 21 16 Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period. "Interest Rate Protection Agreement" shall mean any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or similar agreement or arrangement designed to protect the Borrower or any Subsidiary against fluctuations in interest rates, and not entered into for speculation. "Issuing Bank Fees" shall have the meaning assigned to such term in Section 2.05(c). "L/C Commitment" shall mean the commitment of the Issuing Bank to issue Letters of Credit pursuant to Section 2.22. "L/C Disbursement" shall mean a payment or disbursement made by the Issuing Bank pursuant to a Letter of Credit. "L/C Exposure" shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate principal amount of all L/C Disbursements that have not yet been reimbursed at such time. The L/C Exposure of any Revolving Credit Lender at any time shall mean its Pro Rata Percentage of the aggregate L/C Exposure at such time. "L/C Participation Fee" shall have the meaning assigned to such term in Section 2.05(c). "Lenders" shall mean (a) the financial institutions listed on Schedule 2.01 (other than any such financial institution that has ceased to be a party hereto pursuant to an Assignment and Acceptance) and (b) any financial institution that has become a party hereto pursuant to an Assignment and Acceptance. "Letter of Credit" shall mean any letter of credit issued pursuant to Section 2.22. "LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Dow Jones Service (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of the Telerate Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not so available at such time for any reason, the "LIBO Rate" with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits approximately equal in principal amount to the Administrative Agent's portion of such Eurodollar Borrowing and for a maturity comparable to such Interest Period are offered to the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period. 22 17 "Lien" shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. "Loan Documents" shall mean this Agreement, the Letters of Credit, the Guarantee Agreements, the Security Documents and the Indemnity, Subrogation and Contribution Agreement. "Loan Parties" shall mean the Borrower and the Guarantors. "Loans" shall mean the Revolving Loans, the Term Loans and the Acquisition Loans. "Management Investors" shall mean the officers, directors and employees of ACP Holdings, ACP Products, Holdings, the Borrower or any Subsidiary of the Borrower who own Voting Stock of ACP Holdings, ACP Products, Holdings or the Borrower on or after the Restatement Closing Date. "Margin Stock" shall have the meaning assigned to such term in Regulation U. "Material Adverse Effect" shall mean (a) a materially adverse effect on the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and the Subsidiaries, taken as a whole, (b) material impairment of the ability of the Borrower or any other Loan Party to perform any of its obligations under any Loan Document to which it is or will be a party or (c) material impairment of the rights of or benefits available to the Lenders under any Loan Document. "Merger Agreement" shall mean the Agreement and Plan of Reorganization dated as of November 20, 1996, by and among Holdings, the Borrower and Neenah Corporation, as the same may be amended, restated, modified or supplemented from time to time prior to the date hereof or in accordance with Section 6.09(a). "Mortgaged Properties" shall mean the owned real properties of the Loan Parties specified on Schedule 3.20(a). "Mortgages" shall mean the mortgages, deeds of trust, leasehold mortgages, assignments of leases and rents, modifications and other security documents and any amendments thereto delivered pursuant to clause (i) of Section 4.02(j) or pursuant to Section 5.11, each substantially in the form of Exhibit E-1 and, if applicable, as amended by an amendment substantially in the form of Exhibit E- 2. "Multiemployer Plan" shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the cash proceeds (including cash proceeds subsequently received (as and when received) in respect of non-cash consideration initially received and including all insurance settlements and condemnation awards in any fiscal year of the Borrower in excess of $100,000), net of (i) selling expenses (including reasonable broker's fees or commissions, legal fees, transfer and similar taxes and the Borrower's good faith estimate of income taxes paid or payable in connection with the receipt of such cash 23 18 proceeds), (ii) amounts provided as a reserve, in accordance with GAAP, against any liabilities under any indemnification obligations associated with such Asset Sale (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds) and (iii) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money which is secured by the asset sold in such Asset Sale and which is repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such asset) and (b) with respect to any issuance or disposition of Indebtedness, the cash proceeds thereof, net of all taxes and customary fees, commissions, costs and other expenses incurred in connection therewith. "Net Debt" shall mean, at any date and without duplication, (a) the aggregate amount of all Indebtedness of the Borrower and the Subsidiaries on a consolidated basis at such date (other than any Indebtedness described in clause (i) or (j) of the definition of the term "Indebtedness") minus (b) the aggregate amount of all Permitted Investments as shown on the Borrower's consolidated balance sheet on such date. "Obligations" shall mean all obligations defined as "Obligations" in the Guarantee Agreements and the Security Documents. "Original Closing Date" shall mean April 30, 1997. "Original Credit Event" shall mean (a) the initial extensions of credit on each of the Original Closing Date and April 3, 1998 and the other transactions under the Existing Credit Agreement and (b) the issuance of the Senior Subordinated Notes. "Other Taxes" shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement. "Parent Guarantee Agreement" shall mean the Parent Guarantee Agreement, substantially in the form of Exhibit F, made by Holdings in favor of the Collateral Agent for the benefit of the Secured Parties. "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA. "Perfection Certificate" shall mean the Perfection Certificate substantially in the form of Annex 2 to the Security Agreement. "Permitted Acquisitions" shall mean acquisitions of not less than 100% of the outstanding capital stock of any corporation, a division of any corporation or any similar business unit (or of substantially all the assets and business of any of the foregoing) engaged in a Related Business, so long as in the case of each such acquisition of capital stock, such acquisition was not preceded by an unsolicited tender offer for such capital stock by Holdings or any of its Affiliates. "Permitted Holders" shall mean (i) CVC and its Affiliates and Permitted Transferees and (ii) the Management Investors and their Permitted Transferees. 24 19 "Permitted Investments" shall mean: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof; (b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from Standard & Poor's Ratings Service or from Moody's Investors Service, Inc.; (c) investments in certificates of deposit, banker's acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $250,000,000; (d) other investment instruments approved in writing by the Required Lenders and offered by financial institutions which have a combined capital and surplus and undivided profits of not less than $250,000,000; and (e) shares of funds registered under the Investment Company Act of 1940, as amended, that have assets of at least $100,000,000 and invest only in obligations described in clauses (a) through (d) above, to the extent that such shares are rated by Moody's Investors Service, Inc. or Standard & Poor's Ratings Service in one of the two highest rating categories assigned by such agency for shares of such nature. "Permitted Transferee" shall mean (a) with respect to CVC (i) Citicorp, any direct or indirect wholly owned subsidiary of Citicorp, and any officer, director or employee of CVC, Citicorp or any wholly owned subsidiary of Citicorp, (ii) any spouse or lineal descendant (including by adoption and stepchildren) of the officers, directors and employees referred to in clause (a)(i) above or (iii) any trust, corporation or partnership 100% in interest of the beneficiaries, stockholders or partners of which consists of one or more of the persons described in clause (a)(i) or (ii) above and (b) with respect to any officer or employee of ACP Products, ACP Holdings, Holdings, the Borrower or a Subsidiary, (i) any spouse or lineal descendant (including by adoption and stepchildren) of such officer or employee and (ii) any trust, corporation or partnership 100% in interest of the beneficiaries, stockholders or partners of which consists of such officer or employee, any of the persons described in clause (b)(i) above or any combination thereof. "Person" shall mean any natural person, corporation, business trust, joint venture, association, company, partnership or government, or any agency or political subdivision thereof. "Plan" shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. 25 20 "Pledge Agreement" shall mean the Pledge Agreement, substantially in the form of Exhibit G, among the Borrower, Holdings, the Subsidiaries party thereto and the Collateral Agent for the benefit of the Secured Parties. "Preferred Stock" as applied to the Capital Stock of any Person, shall mean Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person. "Properties" shall have the meaning assigned to such term in Section 3.17. "Pro Rata Percentage" of any Revolving Credit Lender at any time shall mean the percentage of the Total Revolving Credit Commitment represented by such Lender's Revolving Credit Commitment. "Purchase Price" shall mean approximately $102,000,000, representing the aggregate cash consideration to be paid by the Borrower in connection with the Acquisition, subject to adjustment as provided in the Stock Purchase Agreement. "Qualified Subordinated Debt" shall mean Indebtedness of the Borrower that (a) requires no payments of principal prior to the date that is 12 months after the Tranche B Maturity Date, (b) bears interest at a fixed rate which, in the good faith judgment of the board of directors of the Borrower, is consistent with the market at the time of issuance for similar Indebtedness, (c) does not require the Borrower to satisfy any specified financial covenant that is materially more restrictive for the Borrower than those financial covenants with respect to the Senior Subordinated Notes and (d) is subordinated to the Obligations on terms that are no less favorable in any material respect to the Lenders than those contained in the Senior Subordinated Notes. "Register" shall have the meaning given such term in Section 9.04(d). "Regulation U" shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Regulation X" shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Related Business" shall mean any business of the Borrower and its Subsidiaries as conducted on the Restatement Closing Date and any business related, ancillary or complementary thereto. "Release" shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Material in, into, onto or through the Environment. "Remedial Action" shall mean (a) "remedial action" as such term is defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily undertaken to: (i) cleanup, remove, treat, abate or in any other way address any Hazardous Material in the Environment; (ii) prevent the Release or threat of Release, or minimize the further Release of any Hazardous Material so it does not migrate or endanger or threaten to 26 21 endanger public health, welfare or the Environment; or (iii) perform studies and investigations in connection with, or as a precondition to, (i) or (ii) above. "Required Lenders" shall mean, at any time, Lenders having Loans, L/C Exposure and unused Commitments representing at least a majority of the sum of all Loans outstanding, L/C Exposure and unused Commitments at such time. "Responsible Officer" of any corporation shall mean any executive officer or Financial Officer of such corporation and any other officer or similar official thereof responsible for the administration of the obligations of such corporation in respect of this Agreement. "Restatement Closing Date" shall mean September 8, 1998. "Revolving Credit Borrowing" shall mean a Borrowing comprised of Revolving Loans. "Revolving Credit Commitment" shall mean, with respect to each Lender, the commitment of such Lender to make Revolving Loans hereunder as set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender assumed its Revolving Credit Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. "Revolving Credit Exposure" shall mean, with respect to any Lender at any time, the aggregate principal amount at such time of all outstanding Revolving Loans of such Lender, plus the aggregate amount at such time of such Lender's L/C Exposure. "Revolving Credit Lender" shall mean a Lender with a Revolving Credit Commitment or an outstanding Revolving Loan. "Revolving Credit Maturity Date" shall mean April 30, 2002. "Revolving Loans" shall mean the revolving loans made by the Lenders to the Borrower pursuant to clause (c) of Section 2.01. Each Revolving Loan shall be a Eurodollar Revolving Loan or an ABR Revolving Loan. "Secured Parties" shall have the meaning assigned to such term in the Security Agreement. "Security Agreement" shall mean the Security Agreement, substantially in the form of Exhibit H, between the Borrower, the Subsidiaries party thereto and the Collateral Agent for the benefit of the Secured Parties. "Security Documents" shall mean the Mortgages, the Security Agreement, the Pledge Agreement and each of the security agreements, mortgages and other instruments and documents executed and delivered pursuant to any of the foregoing or pursuant to Section 5.11. "Seller Note" shall mean the promissory note of ACP Holdings in the aggregate principal amount of $3,850,000, issued by ACP Holdings in connection with the acquisition of Deeter Foundry, Inc. by the Borrower and in the form of Exhibit K. 27 22 "Senior Debt" shall mean, at any date and without duplication, (a) the aggregate amount of all Net Debt at such date minus (b) to the extent included therein, the sum of (i) the aggregate amount of all Indebtedness pursuant to the Senior Subordinated Notes at such date and (ii) the aggregate amount of all Indebtedness pursuant to Qualified Subordinated Debt at such date. "Senior Debt Leverage Ratio" shall mean, as of any date of determination with respect to any Permitted Acquisition, the ratio of (a) Senior Debt as of such date (after giving pro forma effect to the amount of Senior Debt to be incurred in connection with such Permitted Acquisition) to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters ending on such date (including the Consolidated EBITDA for such four fiscal quarters of any Subsidiary acquired during such four fiscal quarters constituting a Permitted Acquisition pursuant to Section 6.04(g) and after giving pro forma effect (in accordance with Section 6.04(g)(iii)(B)) to the Consolidated EBITDA of the Person that is the subject of such Permitted Acquisition). "Senior Subordinated Notes" shall mean (a) the 11.125% Series B Senior Subordinated Notes due 2007 of the Borrower, issued on April 30, 1997, in an aggregate principal amount of $150,000,000 and (b) the 11.125% Series D Senior Subordinated Notes due 2007 of the Borrower, issued on July 1, 1997, in an aggregate principal amount of $45,000,000. "Statutory Reserves" shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board and any other banking authority, domestic or foreign, to which the Administrative Agent or any Lender (including any branch, Affiliate, or other fronting office making or holding a Loan) is subject (a) with respect to the Base CD Rate, for new negotiable nonpersonal time deposits in dollars of over $100,000 with maturities approximately equal to three months, and (b) with respect to the Adjusted LIBO Rate, for Eurocurrency Liabilities (as defined in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. "Stock Purchase Agreement" shall mean the Stock Purchase Agreement dated as of August 7, 1998, among Dalton, Dalton Corporation Employee Stock Ownership Plan and Trust and the Borrower. "Subordinated Promissory Notes" shall mean the 12% Senior Subordinated Notes due 2003 in the amount of $4,253,063.17 of Holdings, as successor to ACP, payable to Citicorp Venture Capital Limited dated September 1, 1995, or securities in the same principal amount issued in exchange therefor on the date hereof, or such other indebtedness of Holdings with the same material terms, including subordination, as such Senior Subordinated Notes or preferred stock of Holdings with terms that are not more disadvantageous to the interests of the Lenders than the terms of such Senior Subordinated Notes as determined by the Administrative Agent, in each case issued in lieu thereof. 28 23 "subsidiary" shall mean, with respect to any Person (herein referred to as the "parent"), any corporation, partnership, association or other business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, owned, controlled or held, or (b) that is, at the time any determination is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. "Subsidiary" shall mean any subsidiary of the Borrower. "Subsidiary Guarantee Agreement" shall mean the Subsidiary Guarantee Agreement, substantially in the form of Exhibit I, made by the Subsidiary Guarantors in favor of the Collateral Agent for the benefit of the Secured Parties. "Subsidiary Guarantor" shall mean each Subsidiary listed on Schedule 1.01(a), and each other Subsidiary that is or becomes a party to a Subsidiary Guarantee Agreement. "Taxes" shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority. "Term Borrowing" shall mean a Borrowing comprised of Tranche A Term Loans, Tranche B Term Loans or Additional Tranche B Term Loans. "Term Loan Repayment Dates" shall mean the Tranche A Term Loan Repayment Dates, the Tranche B Term Loan Repayment Dates and the Additional Tranche B Term Loan Repayment Dates. "Term Loans" shall mean the Tranche A Term Loans, the Tranche B Term Loans and the Additional Tranche B Term Loans. "Three-Month Secondary CD Rate" shall mean, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day shall not be a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day), or, if such rate shall not be so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 a.m., New York City time, on such day (or, if such day shall not be a Business Day, on the next preceding Business Day) by the Administrative Agent from three New York City negotiable certificate of deposit dealers of recognized standing selected by it. "Total Revolving Credit Commitment" shall mean, at any time, the aggregate amount of the Revolving Credit Commitments, as in effect at such time. "Tranche A Lender" shall mean a Lender with an outstanding Tranche A Term Loan. 29 24 "Tranche A Maturity Date" shall mean September 30, 2003. "Tranche A Term Borrowing" shall mean a Borrowing comprised of Tranche A Term Loans. "Tranche A Term Loan Repayment Date" shall have the meaning assigned to such term in Section 2.11(a)(i). "Tranche A Term Loans" shall mean the term loans made by the Lenders to the Borrower pursuant to the Existing Credit Agreement and described in Section 2.01. Each Tranche A Term Loan shall be either a Eurodollar Term Loan or an ABR Term Loan. "Tranche B Lender" shall mean a Lender with an outstanding Tranche B Term Loan. "Tranche B Maturity Date" shall mean September 30, 2005. "Tranche B Term Borrowing" shall mean a Borrowing comprised of Tranche B Term Loans. "Tranche B Term Loan Repayment Date" shall have the meaning assigned to such term in Section 2.11(a)(ii). "Tranche B Term Loans" shall mean the term loans made by the Lenders to the Borrower pursuant to the Existing Credit Agreement and described in Section 2.01. Each Tranche B Term Loan shall be either a Eurodollar Term Loan or an ABR Term Loan. "Transactions" shall have the meaning assigned to such term in Section 3.02. "Type", when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, the term "Rate" shall include the Adjusted LIBO Rate and the Alternate Base Rate. "Voting Stock" of a Person shall mean all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors (or Persons performing similar functions). "wholly owned Subsidiary" of any Person shall mean a subsidiary of such Person of which securities (except for directors' qualifying shares) or other ownership interests representing 100% of the equity or 100% of the ordinary voting power or 100% of the general partnership interests are, at the time any determination is being made, owned, controlled or held by such Person or one or more wholly owned subsidiaries of such Person or by such Person and one or more wholly owned subsidiaries of such Person. "Withdrawal Liability" shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without 30 25 limitation". All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, (a) any reference in this Agreement to any Loan Document shall mean such document as amended, restated, supplemented or otherwise modified from time to time and (b) all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided, however, that for purposes of determining compliance with the covenants contained in Article VI, except as otherwise provided herein, all accounting terms herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP as in effect on the date of this Agreement and applied on a basis consistent with the application used in the financial statements referred to in Section 3.05(a) (except to the extent that such financial statements accounted for inventory on a last-in-first-out basis). ARTICLE II The Credits SECTION 2.01. Outstanding Term Loans; Commitments. The Tranche A Lenders and the Tranche B Lenders have made Tranche A Term Loans and Tranche B Term Loans, respectively, to the Borrower pursuant to the Existing Credit Agreement. On the Restatement Closing Date, the aggregate outstanding principal amount of each Lender's Tranche A Term Loans and Tranche B Term Loans are as set forth on Schedule 2.01. Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly, (a) to make an Additional Tranche B Term Loan to the Borrower on the Restatement Closing Date in an aggregate principal amount not to exceed its Additional Tranche B Commitment, (b) to make Acquisition Loans to the Borrower, at any time and from time to time until the earlier of the termination of the Acquisition Loan Availability Period and the termination of the Acquisition Loan Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not to exceed its Acquisition Loan Commitment, and (c) to make Revolving Loans to the Borrower, at any time and from time to time on or after the date hereof, and until the earlier of the Revolving Credit Maturity Date and the termination of the Revolving Credit Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in such Lender's Revolving Credit Exposure exceeding such Lender's Revolving Credit Commitment. Within the limits set forth in clauses (b) and (c) of the preceding sentence and subject to the terms, conditions and limitations set forth herein, the Borrower may borrow, pay or prepay and reborrow Acquisition Loans and Revolving Loans. Amounts paid or prepaid in respect of Term Loans may not be reborrowed. SECTION 2.02. Loans. (a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Commitments; provided, however, that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). Except for Loans deemed made pursuant to Section 2.02(f), the Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $500,000 and not less than $1,000,000 in the case of Eurodollar Loans, (ii) an integral multiple of $100,000 and not less than $500,000 in the case of ABR Loans or (iii) in the case of ABR Loans, equal to the remaining available balance of the applicable Commitments. 31 26 (b) Subject to Sections 2.08 and 2.15, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; provided, however, that the Borrower shall not be entitled to request any Borrowing that, if made, would result in more than seven Eurodollar Borrowings outstanding hereunder at any time. For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings. (c) Except with respect to Loans made pursuant to Section 2.02(f), each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 11:00 a.m., New York City time, and the Administrative Agent shall by 12:00 (noon), New York City time, credit the amounts so received to an account in the name of the Borrower, maintained with the Administrative Agent and designated by the Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders. (d) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with paragraph (c) above and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of the Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing (in lieu of interest which would otherwise become due to such Lender pursuant to Section 2.06) and (ii) in the case of such Lender, a rate determined by the Administrative Agent to represent its cost of overnight or short-term funds (which determination shall be conclusive absent manifest error). If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender's Loan as part of such Borrowing for purposes of this Agreement. (e) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request a Borrowing pursuant to which the Interest Period requested with respect thereto would end after the Revolving Credit Maturity Date. (f) If the Issuing Bank shall not have received from the Borrower the payment required to be made by Section 2.22(e) within the time specified in such Section, the Issuing Bank will promptly notify the Administrative Agent of the L/C Disbursement and the Administrative Agent will promptly notify each Revolving Credit Lender of such L/C Disbursement and its Pro Rata Percentage thereof. Each Revolving Credit Lender shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 2:00 p.m., New York City time, on such date (or, if such Revolving Credit Lender shall have received such notice later than 12:00 (noon), New York City 32 27 time, on any day, not later than 10:00 a.m., New York City time, on the immediately following Business Day), an amount equal to such Lender's Pro Rata Percentage of such L/C Disbursement (it being understood that such amount shall be deemed to constitute an ABR Revolving Loan of such Lender and such payment shall be deemed to have reduced the L/C Exposure), and the Administrative Agent will promptly pay to the Issuing Bank amounts so received by it from the Revolving Credit Lenders. The Administrative Agent will promptly pay to the Issuing Bank any amounts received by it from the Borrower pursuant to Section 2.22(e) prior to the time that any Revolving Credit Lender makes any payment pursuant to this paragraph (f); any such amounts received by the Administrative Agent thereafter will be promptly remitted by the Administrative Agent to the Revolving Credit Lenders that shall have made such payments and to the Issuing Bank, as their interests may appear. If any Revolving Credit Lender shall not have made its Pro Rata Percentage of such L/C Disbursement available to the Administrative Agent as provided above, such Lender and the Borrower severally agree to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with this paragraph to but excluding the date such amount is paid, to the Administrative Agent for the account of the Issuing Bank at (i) in the case of the Borrower, a rate per annum equal to the interest rate applicable to Revolving Loans pursuant to Section 2.06(a) (in lieu of interest which would otherwise become due to such Lender pursuant to Section 2.06), and (ii) in the case of such Lender, for the first such day, the Federal Funds Effective Rate, and for each day thereafter, the Alternate Base Rate. SECTION 2.03. Borrowing Procedure. In order to request a Borrowing (other than a deemed Borrowing pursuant to Section 2.02(f), as to which this Section 2.03 shall not apply), the Borrower shall hand deliver or telecopy to the Administrative Agent a duly completed Borrowing Request (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before a proposed Borrowing, and (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the Business Day of a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall be signed by or on behalf of the Borrower and shall specify the following information: (i) whether the Borrowing then being requested is to be a Term Borrowing, an Acquisition Borrowing or a Revolving Credit Borrowing, and whether such Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which shall be a Business Day), (iii) the number and location of the account to which funds are to be disbursed (which shall be an account that complies with the requirements of Section 2.02(c)); (iv) the amount of such Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect thereto; provided, however, that, notwithstanding any contrary specification in any Borrowing Request, each requested Borrowing shall comply with the requirements set forth in Section 2.02. If no election as to the Type of Borrowing is specified in any such notice, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. The Administrative Agent shall promptly advise the applicable Lenders of any notice given pursuant to this Section 2.03 (and the contents thereof), and of each Lender's portion of the requested Borrowing. SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the principal amount of each Term Loan and Acquisition Loan of such Lender as provided in Section 2.11 and the then unpaid principal amount of each Revolving Loan on the Revolving Credit Maturity Date. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such 33 28 Lender from time to time, including the amounts of principal and interest payable and paid such Lender from time to time under this Agreement. (c) The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower or any Guarantor and each Lender's share thereof. (d) The entries made in the accounts maintained pursuant to paragraphs (b) and (c) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loans in accordance with their terms. (e) Notwithstanding any other provision of this Agreement, in the event any Lender shall request a promissory note payable to such Lender and its registered assigns, the Borrower shall deliver to such Lender such note and the interests represented by such note shall at all times (including after any assignment of all or part of such interests pursuant to Section 9.04) be represented by one or more promissory notes payable to the payee named therein or its registered assigns. SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender, through the Administrative Agent, on the last day of March, June, September and December in each year and on each date on which any Commitment of such Lender shall expire or be terminated as provided herein, a commitment fee (a "Commitment Fee") equal to the Applicable Percentage set forth under the heading "Fee Percentage" in the definition of the term "Applicable Percentage" per annum in effect from time to time on the average daily unused amount of the Commitments of such Lender during the preceding quarter (or other period commencing on the Restatement Closing Date or ending with the Revolving Credit Maturity Date or the date on which the Commitments of such Lender shall expire or be terminated). All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. The Commitment Fee due to each Lender shall commence to accrue on the date of acceptance by the Borrower of the Commitment of such Lender and shall cease to accrue on the date on which the Commitment of such Lender shall expire or be terminated as provided herein. For purposes of this Section 2.05, the unused amount of any Lender's Revolving Credit Commitment on any date shall equal such Lender's Revolving Credit Commitment on such date minus such Lender's outstanding Revolving Loans and L/C Exposure on such date. (b) The Borrower agrees to pay to the Administrative Agent, for its own account, the administrative fees set forth in the Fee Letter at the times and in the amounts specified therein (the "Administrative Agent Fees"). (c) The Borrower agrees to pay (i) to each Revolving Credit Lender, through the Administrative Agent, on the last day of March, June, September and December of each year and on the date on which the Revolving Credit Commitment of such Lender shall be terminated as provided herein, a fee (an "L/C Participation Fee") calculated on such Lender's Pro Rata Percentage of the average daily aggregate L/C Exposure (excluding the portion thereof attributable to unreimbursed L/C Disbursements) during the preceding quarter (or shorter period commencing with the date hereof or ending with the Revolving Credit Maturity Date or the date on which all Letters of Credit have 34 29 been canceled or have expired and the Revolving Credit Commitments of all Lenders shall have been terminated) at a rate equal to the Applicable Percentage from time to time used to determine the interest rate on Revolving Credit Borrowings comprised of Eurodollar Loans pursuant to Section 2.06, and (ii) to the Issuing Bank with respect to each Letter of Credit the standard fronting, issuance and drawing fees specified from time to time by the Issuing Bank (the "Issuing Bank Fees"). All L/C Participation Fees and Issuing Bank Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. (d) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that the Issuing Bank Fees shall be paid directly to the Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances. SECTION 2.06. Interest on Loans. (a) Subject to the provisions of Section 2.07, the Loans comprising each ABR Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when the Alternate Base Rate is determined by reference to the Prime Rate and over a year of 360 days at all other times) at a rate per annum equal to the Alternate Base Rate plus the Applicable Percentage in effect from time to time. (b) Subject to the provisions of Section 2.07, the Loans comprising each Eurodollar Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Percentage in effect from time to time. (c) Interest on each Loan shall be payable on the Interest Payment Dates applicable to such Loan except as otherwise provided in this Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or day within an Interest Period, as the case may be, shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. SECTION 2.07. Default Interest. If the Borrower shall default in the payment of the principal of or interest on any Loan or any other amount becoming due hereunder, by acceleration or otherwise, or under any other Loan Document, the Borrower shall on demand from time to time pay interest, to the extent permitted by law, on such defaulted amount to but excluding the date of actual payment (after as well as before judgment) (a) in the case of overdue principal, at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus 2.00% per annum and (b) in all other cases, at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when determined by reference to the Prime Rate and over a year of 360 days at all other times) equal to the sum of the Alternate Base Rate plus 2.00%. SECTION 2.08. Alternate Rate of Interest. In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing the Administrative Agent shall have determined in good faith that dollar deposits in the principal amounts of the Loans comprising such Borrowing are not generally available in the London interbank market, or that the rates at which such dollar deposits are being offered will not adequately and fairly reflect the cost to any Lender of making or maintaining its Eurodollar Loan during such Interest Period, or that reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall, as soon as practicable thereafter, but, in any event, prior to the commencement of any Interest Period, give written or telecopy notice of such determination to the 35 30 Borrower and the Lenders. In the event of any such determination, until the Administrative Agent shall have advised the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, any request by the Borrower for a Eurodollar Borrowing pursuant to Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each determination by the Administrative Agent hereunder shall be conclusive absent manifest error. SECTION 2.09. Termination and Reduction of Commitments. (a) The Additional Tranche B Commitments shall automatically terminate at 5:00 p.m., New York City time, on the Restatement Closing Date. The Acquisition Loan Commitments shall automatically terminate at 5:00 p.m., New York City time, on the last day of the Acquisition Loan Availability Period. The Revolving Credit Commitments and the L/C Commitment shall automatically terminate on the Revolving Credit Maturity Date. Notwithstanding the foregoing, this Agreement shall cease to be effective, and the Existing Credit Agreement shall remain in effect, at 5:00 p.m., New York City time, on September 15, 1998, if the initial Credit Event under this Agreement shall not have occurred by such time. (b) Upon at least three Business Days' prior irrevocable written or telecopy notice to the Administrative Agent, the Borrower may at any time in whole permanently terminate, or from time to time in part permanently reduce, in each case, without premium or penalty, the Additional Tranche B Commitments, the Acquisition Loan Commitments or the Revolving Credit Commitments; provided, however, that (i) each partial reduction of the Additional Tranche B Commitments, the Acquisition Loan Commitments or the Revolving Credit Commitments shall be in an integral multiple of $500,000 and in a minimum amount of $1,000,000 and (ii) the Total Revolving Credit Commitment shall not be reduced to an amount that is less than the Aggregate Revolving Credit Exposure at the time. (c) Each reduction in the Additional Tranche B Commitments, the Acquisition Loan Commitments or the Revolving Credit Commitments hereunder shall be made ratably among the Lenders in accordance with their respective applicable Commitments. The Borrower shall pay to the Administrative Agent for the account of the applicable Lenders, on the date of each termination or reduction, the unpaid Commitment Fees on the amount of the Commitments so terminated or reduced accrued to but excluding the date of such termination or reduction. SECTION 2.10. Conversion and Continuation of Borrowings. The Borrower shall have the right at any time upon prior irrevocable notice to the Administrative Agent (a) not later than 11:00 a.m., New York City time, on the Business Day of conversion, to convert any Eurodollar Borrowing into an ABR Borrowing, (b) not later than 10:00 a.m., New York City time, three Business Days prior to conversion or continuation, to convert any ABR Borrowing into a Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar Borrowing for an additional Interest Period, and (c) not later than 10:00 a.m., New York City time, three Business Days prior to conversion, to convert the Interest Period with respect to any Eurodollar Borrowing to another permissible Interest Period, subject in each case to the following: (i) each conversion or continuation shall be made pro rata among the Lenders in accordance with the respective principal amounts of the Loans comprising the converted or continued Borrowing; (ii) if less than all the outstanding principal amount of any Borrowing shall be converted or continued, then each resulting Borrowing shall satisfy the limitations specified 36 31 in Sections 2.02(a) and 2.02(b) regarding the principal amount and maximum number of Borrowings of the relevant Type; (iii) each conversion shall be effected by each Lender and the Administrative Agent by recording for the account of such Lender the new Loan of such Lender resulting from such conversion and reducing the Loan (or portion thereof) of such Lender being converted by an equivalent principal amount; accrued and unpaid interest on any Eurodollar Loan (or portion thereof) being converted shall be paid by the Borrower at the time of conversion; (iv) if any Eurodollar Borrowing is converted at a time other than the end of the Interest Period applicable thereto, the Borrower shall pay, upon demand, any amounts due to the Lenders pursuant to Section 2.16; (v) any portion of a Borrowing maturing or required to be repaid in less than one month may not be converted into or continued as a Eurodollar Borrowing; (vi) any portion of a Eurodollar Borrowing that cannot be converted into or continued as a Eurodollar Borrowing by reason of the immediately preceding clause shall be automatically converted at the end of the Interest Period in effect for such Borrowing into an ABR Borrowing; (vii) no Interest Period may be selected for any Eurodollar Term Borrowing or Eurodollar Acquisition Borrowing that would end later than a Term Loan Repayment Date or Acquisition Loan Repayment Date, as the case may be, occurring on or after the first day of such Interest Period if, after giving effect to such selection, the aggregate outstanding amount of the sum of (A) the Eurodollar Term Borrowings comprised of Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans or Acquisition Loans, as applicable, with Interest Periods ending on or prior to such Term Loan Repayment Date or Acquisition Loan Repayment Date, as the case may be, and (B) the ABR Term Borrowings comprised of Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans or Acquisition Loans, as applicable, would not be at least equal to the principal amount of Term Borrowings or Acquisition Borrowings, as the case may be, to be paid on such Term Loan Repayment Date or Acquisition Loan Repayment Date; and (viii) upon notice to the Borrower from the Administrative Agent given at the request of the Required Lenders, after the occurrence and during the continuance of a Default or Event of Default, no outstanding Loan may be converted into, or continued as, a Eurodollar Loan. Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer to this Agreement and specify (i) the identity and amount of the Borrowing that the Borrower requests be converted or continued, (ii) whether such Borrowing is to be converted to or continued as a Eurodollar Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the date of such conversion (which shall be a Business Day) and (iv) if such Borrowing is to be converted to or continued as a Eurodollar Borrowing, the Interest Period with respect thereto. If no Interest Period is specified in any such notice with respect to any conversion to or continuation as a Eurodollar Borrowing, the Borrower shall be deemed to have selected an Interest Period of one month's duration. The Administrative Agent shall advise the Lenders of any notice given pursuant to this Section 2.10 and of each Lender's portion of any converted or continued Borrowing. If the Borrower shall not 37 32 have given notice in accordance with this Section 2.10 to continue any Borrowing into a subsequent Interest Period (and shall not otherwise have given notice in accordance with this Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the Interest Period applicable thereto (unless repaid pursuant to the terms hereof), automatically be continued into a new Interest Period as an ABR Borrowing. SECTION 2.11. Repayment of Term Borrowings and Acquisition Borrowings. (a) (i) The Borrower shall pay to the Administrative Agent, for the account of the Lenders, on the dates set forth below, or, if any such date is not a Business Day, on the next succeeding Business Day (each such date being a "Tranche A Term Loan Repayment Date"), a principal amount of the Tranche A Term Loans equal to the amount set forth below for such date (as adjusted from time to time pursuant to Sections 2.12 and 2.13), together in each case with accrued and unpaid interest on the principal amount thereof to be paid to but excluding the date of such payment:
Date Amount ---- ------ December 31, 1998 $ 750,000 March 31, 1999 $ 750,000 June 30, 1999 $ 750,000 September 30, 1999 $ 750,000 December 31, 1999 $1,000,000 March 31, 2000 $1,000,000 June 30, 2000 $1,000,000 September 30, 2000 $1,000,000 December 31, 2000 $1,000,000 March 31, 2001 $1,000,000 June 30, 2001 $1,000,000 September 30, 2001 $1,000,000 December 31, 2001 $1,000,000 March 31, 2002 $1,000,000 June 30, 2002 $1,000,000 September 30, 2002 $1,000,000 December 31, 2002 $1,250,000 March 31, 2003 $1,250,000 June 30, 2003 $1,250,000 Tranche A Maturity Date $1,250,000
(ii) The Borrower shall pay to the Administrative Agent, for the account of the Lenders, on the dates set forth below, or, if any such date is not a Business Day, on the next succeeding Business Day (each such date being a "Tranche B Term Loan Repayment Date"), a principal amount of the Tranche B Term Loans equal to the amount set forth below for such date (as adjusted from time to time pursuant to Sections 2.12 and 2.13), together in each case with accrued and unpaid interest on the principal amount thereof to be paid to but excluding the date of such payment:
Date Amount ---- ------ December 31, 1998 $ 250,000 March 31, 1999 $ 250,000 June 30, 1999 $ 250,000
38 33 September 30, 1999 $ 250,000 December 31, 1999 $ 250,000 March 31, 2000 $ 250,000 June 30, 2000 $ 250,000 September 30, 2000 $ 250,000 December 31, 2000 $ 250,000 March 31, 2001 $ 250,000 June 30, 2001 $ 250,000 September 30, 2001 $ 250,000 December 31, 2001 $ 250,000 March 31, 2002 $ 250,000 June 30, 2002 $ 250,000 September 30, 2002 $ 250,000 December 31, 2002 $ 250,000 March 31, 2003 $ 250,000 June 30, 2003 $ 250,000 September 30, 2003 $ 250,000 December 31, 2003 $6,250,000 March 31, 2004 $6,250,000 June 30, 2004 $6,250,000 September 30, 2004 $6,250,000 December 31, 2004 $6,250,000 March 31, 2005 $6,250,000 June 30, 2005 $6,250,000 Tranche B Maturity Date $6,250,000
(iii) The Borrower shall pay to the Administrative Agent, for the account of the Lenders, on March 31, June 30, September 30 and December 31 of each year or, if any such date is not a Business Day, on the next succeeding Business Day (each such date being an "Additional Tranche B Term Loan Repayment Date"), commencing December 31, 2003, a principal amount of the Additional Tranche B Term Loans equal to $8,750,000 (as adjusted from time to time pursuant to Sections 2.11(b), 2.12 and 2.13), together in each case with accrued and unpaid interest on the principal amount thereof to be paid to but excluding the date of such payment. (iv) The Borrower shall pay to the Administrative Agent, for the account of the Lenders, on March 31, June 30, September 30 and December 31 of each year or, if any such date is not a Business Day, on the next succeeding Business Day (each such date being an "Acquisition Loan Repayment Date"), commencing September 30, 2000, a principal amount of the Acquisition Loans equal to the dollar amount obtained by multiplying the principal amount (as adjusted from time to time pursuant to Sections 2.11(b), 2.12 and 2.13) of the Acquisition Loans outstanding on the last day of the Acquisition Loan Availability Period by 6.25%, together in each case with accrued and unpaid interest on the principal amount thereof to be paid to but excluding the date of such payment. (b) In the event and on each occasion that any Additional Tranche B Commitment or Acquisition Loan Commitment shall be reduced or shall expire or terminate other than as a result of the making of an Additional Tranche B Term Loan or an Acquisition Loan, respectively, the installments payable on each Additional Tranche B Term Loan Repayment Date or Acquisition Loan Repayment Date, respectively, shall be reduced pro rata by an aggregate amount equal to the amount of such reduction, expiration or termination. 39 34 (c) To the extent not previously paid, all Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans and Acquisition Loans shall be due and payable on the Tranche A Maturity Date, Tranche B Maturity Date, Additional Tranche B Maturity Date and Acquisition Loan Maturity Date, respectively, together with accrued and unpaid interest on the principal amount to be paid to but excluding the date of payment. (d) All repayments pursuant to this Section 2.11 shall be subject to Section 2.16, but shall otherwise be without premium or penalty. SECTION 2.12. Optional Prepayment. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, upon at least three Business Days' prior written or telecopy notice (or telephone notice promptly confirmed by written or telecopy notice) in the case of Eurodollar Loans, or prior written or telecopy notice (or telephone notice promptly confirmed by written or telecopy notice) on or prior to the date of prepayment in the case of ABR Loans, to the Administrative Agent before 11:00 a.m., New York City time; provided, however, that each partial prepayment shall be in an amount that is an integral multiple of $500,000 and not less than $1,000,000. (b) Except for (i) optional prepayments of Revolving Loans and (ii) optional prepayments of Acquisition Loans during the Acquisition Loan Availability Period, optional prepayments shall be allocated pro rata among the then-outstanding Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans and Acquisition Loans and applied pro rata against the remaining scheduled installments of principal due in respect of the Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans and Acquisition Loans under Sections 2.11(a)(i), (ii), (iii) and (iv), respectively. (c) Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the Borrower to prepay such Borrowing by the amount stated therein on the date stated therein. All prepayments under this Section 2.12 shall be subject to Section 2.16 but otherwise without premium or penalty. All prepayments under this Section 2.12 shall be accompanied by accrued but unpaid interest on the principal amount being prepaid to the date of payment. SECTION 2.13. Mandatory Prepayments. (a) In the event of any termination of all the Revolving Credit Commitments, the Borrower shall repay or prepay all its outstanding Revolving Credit Borrowings on the date of such termination. In the event of any partial reduction of the Revolving Credit Commitments, then (i) at or prior to the effective date of such reduction, the Administrative Agent shall notify the Borrower and the Revolving Credit Lenders of the Aggregate Revolving Credit Exposure after giving effect thereto and (ii) if the Aggregate Revolving Credit Exposure would exceed the Total Revolving Credit Commitment after giving effect to such reduction or termination, then the Borrower shall, on the date of such reduction or termination, first repay or prepay Revolving Credit Borrowings in an amount sufficient to eliminate such excess and second, to the extent of any remaining excess (after the prepayment of Revolving Loans), to replace outstanding Letters of Credit and/or deposit an amount in cash in a cash collateral account established with the Collateral Agent for the benefit of the Secured Parties. (b) Not later than the third Business Day following the completion of any Asset Sale, the Borrower shall apply 100% of the Net Cash Proceeds received with respect thereto to prepay 40 35 outstanding Term Loans and Acquisition Loans (and permanently reduce the Acquisition Loan Commitments by the amount of such repayment) in accordance with Section 2.13(f). (c) No later than the earlier of (i) 90 days after the end of each fiscal year of the Borrower, commencing with the fiscal year ending on September 30, 1998, and (ii) the date on which the financial statements with respect to such period are delivered pursuant to Section 5.04(a), the Borrower shall prepay outstanding Term Loans and Acquisition Loans (and permanently reduce the Acquisition Loan Commitments by the amount of such repayment) in accordance with Section 2.13(f) in an aggregate principal amount equal to 50% of Excess Cash Flow for the fiscal year then ended. (d) In the event that any Loan Party or any subsidiary of a Loan Party shall receive Net Cash Proceeds from the issuance or other disposition of Indebtedness for money borrowed of any Loan Party or any subsidiary of a Loan Party (other than Indebtedness for money borrowed permitted by Section 6.01(other than Section 6.01(k)), the Borrower shall, substantially simultaneously with (and in any event not later than the third Business Day next following) the receipt of such Net Cash Proceeds by such Loan Party or such subsidiary, apply an amount equal to 100% of such Net Cash Proceeds to prepay outstanding Term Loans and Acquisition Loans (and permanently reduce the Acquisition Loan Commitments by the amount of such repayment) in accordance with Section 2.13(f). (e) In the event that there shall occur any Casualty or Condemnation and, pursuant to the applicable Mortgage, the Casualty Proceeds or Condemnation Proceeds, as the case may be, are required to be used to prepay the Term Loans and Acquisition Loans, then the Borrower shall apply an amount equal to 100% of such Casualty Proceeds or Condemnation Proceeds, as the case may be, to prepay outstanding Term Loans and Acquisition Loans (and permanently reduce the Acquisition Loan Commitments by the amount of such repayment) in accordance with Section 2.13(f). (f) Mandatory prepayments of outstanding Term Loans and Acquisition Loans under this Agreement shall be allocated pro rata among the then-outstanding Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans and Acquisition Loans and, subject to paragraph (i) below, applied pro rata against the remaining scheduled installments of principal due in respect of Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans and Acquisition Loans under Sections 2.11(a)(i), (ii), (iii) and (iv), respectively; provided, however, that mandatory prepayments during the Acquisition Loan Availability Period made under Section 2.13(d) with the proceeds of Qualified Subordinated Debt shall be allocated first, to the then-outstanding Acquisition Loans and second, pro rata among the then-outstanding Tranche A Term Loans, Tranche B Term Loans and Additional Tranche B Term Loans. (g) The Borrower shall deliver to the Administrative Agent, at the time of each prepayment required under this Section 2.13, (i) a certificate signed by a Financial Officer of the Borrower setting forth in reasonable detail the calculation of the amount of such prepayment and (ii) to the extent practicable, at least three days prior written notice of such prepayment. Each notice of pre-payment shall specify the prepayment date, the Type of each Loan being prepaid and the principal amount of each Loan (or portion thereof) to be prepaid. All prepayments of Borrowings under this Section 2.13 shall be subject to Section 2.16, but shall otherwise be without premium or penalty. (h) Amounts to be applied pursuant to this Section 2.13 to the prepayment of Term Loans, Acquisition Loans and Revolving Loans shall be applied, as applicable, first to reduce outstanding ABR Term Loans, ABR Acquisition Loans and ABR Revolving Loans. Any amounts remaining after 41 36 each such application shall, at the option of the Borrower, be applied to prepay Eurodollar Term Loans, Eurodollar Acquisition Loans or Eurodollar Revolving Loans, as the case may be, immediately and/or shall be deposited in the Prepayment Account (as defined below). The Administrative Agent shall apply any cash deposited in the Prepayment Account (i) allocable to Term Loans to prepay Eurodollar Term Loans, (ii) allocable to Acquisition Loans to prepay Eurodollar Acquisition Loans and (iii) allocable to Revolving Loans to prepay Eurodollar Revolving Loans, in each case on the last day of their respective Interest Periods (or, at the direction of the Borrower, on any earlier date) until all outstanding Term Loans, Acquisition Loans or Revolving Loans, as the case may be, have been prepaid or until all the allocable cash on deposit with respect to such Loans has been exhausted. For purposes of this Agreement, the term "Prepayment Account" shall mean an account established by the Borrower with the Administrative Agent and over which the Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal for application in accordance with this paragraph (h). The Administrative Agent will, at the request of the Borrower, invest amounts on deposit in the Prepayment Account in Permitted Investments that mature prior to the last day of the applicable Interest Periods of the Eurodollar Term Borrowings, Eurodollar Acquisition Borrowings or Eurodollar Revolving Borrowings to be prepaid, as the case may be; provided, however, that (i) the Administrative Agent shall not be required to make any investment that, in its sole judgment, would require or cause the Administrative Agent to be in, or would result in any, violation of any law, statute, rule or regulation and (ii) the Administrative Agent shall have no obligation to invest amounts on deposit in the Prepayment Account if an Event of Default shall have occurred and be continuing. The Borrower shall indemnify the Administrative Agent for any losses relating to the investments so that the amount available to prepay Eurodollar Borrowings on the last day of the applicable Interest Period is not less than the amount that would have been available had no investments been made pursuant thereto. Other than any interest earned on such investments, the Prepayment Account shall not bear interest. Interest or profits, if any, on such investments shall be deposited in the Prepayment Account and reinvested and disbursed as specified above. If the maturity of the Loans has been accelerated pursuant to Article VII, the Administrative Agent may, in its sole discretion, apply all amounts on deposit in the Prepayment Account to satisfy any of the Obligations. The Borrower hereby grants to the Administrative Agent, for its benefit and the benefit of the Issuing Bank and the Lenders, a security interest in the Prepayment Account to secure the Obligations. (i) Any Tranche B Lender or Additional Tranche B Lender may elect, by notice to the Administrative Agent in writing (or by telephone or telecopy promptly confirmed in writing) at least one Business Day prior to any prepayment of Tranche B Term Loans or Additional Tranche B Term Loans required to be made by the Borrower for the account of such Lender pursuant to Section 2.13(b), (c), (d) or (e), to cause all or a portion of such prepayment to be applied instead to prepay Tranche A Term Loans and Acquisition Loans in accordance with paragraph (f) above. SECTION 2.14. Reserve Requirements; Change in Circumstances. (a) Notwithstanding any other provision of this Agreement, if after the date of this Agreement any change in applicable law or regulation or in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof (whether or not having the force of law) shall change the basis of taxation of payments to any Lender or the Issuing Bank of the principal of or interest on any Eurodollar Loan made by such Lender or any Fees or other amounts payable hereunder (other than changes in respect of taxes imposed on the overall net income of such Lender or the Issuing Bank by the jurisdiction in which such Lender or the Issuing Bank has its principal office or lending office or by any political subdivision or taxing authority therein), or shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, 42 37 deposits with or for the account of or credit extended by any Lender or the Issuing Bank (except any such reserve requirement which is reflected in the Adjusted LIBO Rate) or shall impose on such Lender or the Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein, and the result of any of the foregoing shall be to increase the cost to such Lender or the Issuing Bank of making or maintaining any Eurodollar Loan or increase the cost to any Lender of issuing or maintaining any Letter of Credit or purchasing or maintaining a participation therein or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise) by an amount reasonably deemed by such Lender or the Issuing Bank to be material, then the Borrower will pay to such Lender or the Issuing Bank, as the case may be, upon demand such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered. (b) If any Lender or the Issuing Bank shall have determined that the adoption after the date hereof of any law, rule, regulation, agreement or guideline regarding capital adequacy, or any change after the date hereof in any such law, rule, regulation, agreement or guideline (whether such law, rule, regulation, agreement or guideline has been adopted) or in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by any Lender (or any lending office of such Lender) or the Issuing Bank or any Lender's or the Issuing Bank's holding company with any request or directive regarding capital adequacy (whether or not having the force of law) of any Governmental Authority has or would have the effect of reducing the rate of return on such Lender's or the Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made or participations in Letters of Credit purchased by such Lender pursuant hereto or the Letters of Credit issued by the Issuing Bank pursuant hereto to a level below that which such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company could have achieved but for such applicability, adoption, change or compliance (taking into consideration such Lender's or the Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's holding company with respect to capital adequacy) by an amount reasonably deemed by such Lender or the Issuing Bank to be material, then from time to time the Borrower shall pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company for any such reduction suffered. (c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts reasonably determined by such Lender or Issuing Bank to be necessary to compensate such Lender or the Issuing Bank or its holding company, as applicable, as specified in paragraph (a) or (b) above shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank the amount shown as due on any such certificate delivered by it within 10 days after its receipt of the same. (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital shall not constitute a waiver of such Lender's or the Issuing Bank's right to demand such compensation. The protection of this Section shall be available to each Lender and the Issuing Bank regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, agreement, guideline or other change or condition that shall have occurred or been imposed. 43 38 SECTION 2.15. Change in Legality. (a) Notwithstanding any other provision of this Agreement, if, after the date hereof, any change in any law or regulation or in the interpretation thereof by any Governmental Authority charged with the administration or interpretation thereof shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to the Borrower and to the Administrative Agent: (i) such Lender may declare that Eurodollar Loans will not thereafter (for the duration of such unlawfulness) be made by such Lender hereunder (or be continued for additional Interest Periods and ABR Loans will not thereafter (for such duration) be converted into Eurodollar Loans), whereupon any request for a Eurodollar Borrowing (or to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a Eurodollar Borrowing for an additional Interest Period) shall, as to such Lender only, be deemed a request for an ABR Loan (or a request to continue an ABR Loan as such for an additional Interest Period or to convert a Eurodollar Loan into an ABR Loan, as the case may be), unless such declaration shall be subsequently withdrawn; and (ii) such Lender may require that all outstanding Eurodollar Loans made by it be converted to ABR Loans, in which event all such Eurodollar Loans shall be automatically converted to ABR Loans as of the effective date of such notice as provided in paragraph (b) below. In the event any Lender shall exercise its rights under (i) or (ii) above, all payments and prepayments of principal that would otherwise have been applied to repay the Eurodollar Loans that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the ABR Loans made by such Lender in lieu of, or resulting from the conversion of, such Eurodollar Loans. (b) For purposes of this Section 2.15, a notice to the Borrower by any Lender shall be effective as to each Eurodollar Loan made by such Lender, if lawful, on the last day of the Interest Period currently applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt by the Borrower. SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender against any loss or expense that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount on account of the principal of any Eurodollar Loan prior to the end of the Interest Period in effect therefor, (ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period with respect to any Eurodollar Loan, in each case other than on the last day of the Interest Period in effect therefor, or (iii) any Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be made pursuant to a conversion or continuation under Section 2.10) not being made after notice of such Loan shall have been given by the Borrower hereunder (any of the events referred to in this clause (a) being called a "Breakage Event") or (b) any default in the making of any payment or prepayment required to be made hereunder. In the case of any Breakage Event, such loss shall include an amount equal to the excess, as reasonably determined by such Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Interest Period in effect (or that would have been in effect) for such Loan over (ii) the amount of interest likely to be realized by such Lender in redeploying the funds released or not 44 39 utilized by reason of such Breakage Event for such period. A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 2.16 shall be delivered to the Borrower and shall be conclusive absent manifest error. SECTION 2.17. Pro Rata Treatment. Except as required under Sections 2.13(i), 2.14, 2.15 or 2.20, each Borrowing, each payment or prepayment of principal of any Borrowing, each payment of interest on the Loans, each payment of the Commitment Fees, each reduction of the Additional Tranche B Commitments, the Acquisition Loan Commitments or the Revolving Credit Commitments, each reinstatement of the Acquisition Loan Commitments and each conversion of any Borrowing to or continuation of any Borrowing as a Borrowing of any Type shall be allocated pro rata among the Lenders in accordance with their respective applicable Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Loans). Each Lender agrees that in computing such Lender's portion of any Borrowing to be made hereunder, the Administrative Agent may, in its discretion, round each Lender's percentage of such Borrowing to the next higher or lower whole dollar amount. SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall, through the exercise of a right of banker's lien, setoff or counterclaim against the Borrower or any other Loan Party, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of any Loan or Loans or L/C Disbursement as a result of which the unpaid principal portion of its Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans, Acquisition Loans, Revolving Loans or participations in L/C Disbursements shall be proportionately less than the unpaid principal portion of the Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans, Acquisition Loans, Revolving Loans or participations in L/C Disbursements of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans, Acquisition Loans, Revolving Loans or L/C Exposure, as the case may be of such other Lender, so that the aggregate unpaid principal amount of the Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans, Acquisition Loans, Revolving Loans and L/C Exposure and participations in Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans, Acquisition Loans, Revolving Loans and L/C Exposure held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans, Acquisition Loans, Revolving Loans and L/C Exposure then outstanding as the principal amount of its Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans, Acquisition Loans, Revolving Loans and L/C Exposure prior to such exercise of banker's lien, setoff or counterclaim or other event was to the principal amount of all Tranche A Term Loans, Tranche B Term Loans, Additional Tranche B Term Loans, Acquisition Loans, Revolving Loans and L/C Exposure outstanding prior to such exercise of banker's lien, setoff or counterclaim or other event; provided, however, that if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.18 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. The Borrower and Holdings expressly consent to the foregoing arrangements and agree that any Lender holding a participation in a Term Loan, Acquisition Loan, Revolving Loan or L/C Disbursement deemed to have been so purchased may exercise any and all rights of banker's lien, setoff or counterclaim with respect to any and all moneys owing by the 45 40 Borrower and Holdings to such Lender by reason thereof as fully as if such Lender had made a Loan directly to the Borrower in the amount of such participation. SECTION 2.19. Payments. (a) The Borrower shall make each payment (including principal of or interest on any Borrowing or any L/C Disbursement or any Fees or other amounts) hereunder and under any other Loan Document not later than 1:00 p.m., New York City time, on the date when due in immediately available dollars, without setoff, defense or counterclaim. Any payment received by the Administrative Agent after such time shall be deemed to have been received on the next Business Day. Each such payment (other than Issuing Bank Fees, which shall be paid directly to the Issuing Bank) shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York by wire transfer. (b) Whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder or under any other Loan Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable. SECTION 2.20. Taxes. (a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that, if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. 46 41 (e) Each Foreign Lender, and any Issuing Bank that is not a "United States person" within the meaning of Section 7701(a)(30) of the Code (together with the Foreign Lenders, the "Non-U.S. Lenders"), shall deliver to the Borrower (with a copy to the Administrative Agent) two copies of either United States Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a Form W-8, or any subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, a certificate representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Code, is not a 10-percent shareholder of the Borrower (within the meaning of Section 871(h)(3)(B) of the Code) and is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S. Federal withholding tax on payments by the Borrower under this Agreement or any other Loan Document. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement or designates a new lending office. In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence, expiration or invalidity of any form previously delivered by such Non-U.S. Lender. Notwithstanding any other provision of this Section 2.20, a Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 2.20 that such Non-U.S. Lender is not legally able to deliver. SECTION 2.21. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate. (a) In the event (i) any Lender or the Issuing Bank delivers a certificate requesting compensation pursuant to Section 2.14, (ii) any Lender or the Issuing Bank delivers a notice described in Section 2.15 or (iii) the Borrower is required to pay any additional amount to any Lender or the Issuing Bank or any Governmental Authority on account of any Lender or the Issuing Bank pursuant to Section 2.20, the Borrower may, at its sole expense and effort (including with respect to the processing and recordation fee referred to in Section 9.04(b)), upon notice to such Lender or the Issuing Bank and the Administrative Agent, require such Lender or the Issuing Bank to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all of its interests, rights and obligations under this Agreement to an assignee that shall assume such assigned obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Credit Commitment is being assigned, of the Issuing Bank), which consent shall not unreasonably be withheld, and (z) the Borrower or such assignee shall have paid to the affected Lender or the Issuing Bank in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans or L/C Disbursements of such Lender or the Issuing Bank, respectively, plus all Fees and other amounts accrued for the account of such Lender or the Issuing Bank hereunder (including any amounts under Section 2.14 and Section 2.16); provided further that, if prior to any such transfer and assignment the circumstances or event that resulted in such Lender's or the Issuing Bank's claim for compensation under Section 2.14 or notice under Section 2.15 or the amounts paid pursuant to Section 2.20, as the case may be, cease to cause such Lender or the Issuing Bank to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital, or cease to have the consequences specified in Section 2.15, or cease to result in amounts being payable under Section 2.20, as the case may be (including as a result of any action taken by such Lender or the Issuing Bank pursuant to paragraph (b) below), or if such Lender or the Issuing Bank shall waive its right to claim further compensation under Section 2.14 in respect of such circumstances or event or shall withdraw its 47 42 notice under Section 2.15 or shall waive its right to further payments under Section 2.20 in respect of such circumstances or event, as the case may be, then such Lender or the Issuing Bank shall not thereafter be required to make any such transfer and assignment hereunder. (b) If (i) any Lender or the Issuing Bank shall request compensation under Section 2.14, (ii) any Lender or the Issuing Bank delivers a notice described in Section 2.15 or (iii) the Borrower is required to pay any additional amount to any Lender or the Issuing Bank or any Governmental Authority on account of any Lender or the Issuing Bank, pursuant to Section 2.20, then such Lender or the Issuing Bank shall use reasonable efforts (which shall not require such Lender or the Issuing Bank to incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any action inconsistent with its internal policies or legal or regulatory restrictions or suffer any disadvantage or burden deemed by it to be significant) (x) to file any certificate or document reasonably requested in writing by the Borrower or (y) to assign its rights and delegate and transfer its obligations hereunder to another of its offices, branches or affiliates, if such filing or assignment would reduce its claims for compensation under Section 2.14 or enable it to withdraw its notice pursuant to Section 2.15 or would reduce amounts payable pursuant to Section 2.20, as the case may be, in the future. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or the Issuing Bank in connection with any such filing or assignment, delegation and transfer. SECTION 2.22. Letters of Credit. (a) General. The Borrower may request the issuance of a Letter of Credit for its own account or the account of any Subsidiary Guarantor, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time while the Revolving Credit Commitments remain in effect. This Section shall not be construed to impose an obligation upon the Issuing Bank to issue any Letter of Credit that is inconsistent with the terms and conditions of this Agreement. (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. In order to request the issuance of a Letter of Credit (or to amend, renew or extend an existing Letter of Credit), the Borrower shall hand deliver or telecopy to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, the date of issuance, amendment, renewal or extension, the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) below), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare such Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if, and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that, after giving effect to such issuance, amendment, renewal or extension (A) the L/C Exposure shall not exceed $15,000,000 and (B) the Aggregate Revolving Credit Exposure shall not exceed the Total Revolving Credit Commitment. (c) Expiration Date. Each Letter of Credit shall expire at the close of business on the earlier of the date one year after the date of the issuance of such Letter of Credit and the date that is five Business Days prior to the Revolving Credit Maturity Date, unless such Letter of Credit expires by its terms on an earlier date. (d) Participations. By the issuance of a Letter of Credit and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Revolving Credit Lender, and each such Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender's Pro Rata Percentage of the aggregate amount available to be drawn 48 43 under such Letter of Credit, effective upon the issuance of such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Credit Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender's Pro Rata Percentage of each L/C Disbursement made by the Issuing Bank and not reimbursed by the Borrower (or, if applicable, another party pursuant to its obligations under any other Loan Document) forthwith on the date due as provided in Section 2.02(f). Each Revolving Credit Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (e) Reimbursement. If the Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, the Borrower shall pay or cause to be paid to the Administrative Agent an amount equal to such L/C Disbursement not later than 2:00 p.m. on the Business Day the Borrower shall have received notice from the Issuing Bank that payment of such draft will be made, or, if the Borrower shall have received such notice later than 10:00 a.m., New York City time, on any Business Day, not later than 10:00 a.m., New York City time, on the immediately following Business Day. (f) Obligations Absolute. The Borrower's obligations to reimburse L/C Disbursements as provided in paragraph (e) above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under any and all circumstances whatsoever, and irrespective of: (i) any lack of validity or enforceability of any Letter of Credit or any Loan Document, or any term or provision therein; (ii) any amendment or waiver of or any consent to departure from all or any of the provisions of any Letter of Credit or any Loan Document; (iii) the existence of any claim, setoff, defense or other right that the Borrower, any other party guaranteeing, or otherwise obligated with, the Borrower, any Subsidiary or other Affiliate thereof or any other Person may at any time have against the beneficiary under any Letter of Credit, the Issuing Bank, the Administrative Agent or any Lender or any other Person, whether in connection with this Agreement, any other Loan Document or any other related or unrelated agreement or transaction; (iv) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit; and (vi) any other act or omission to act or delay of any kind of the Issuing Bank, the Lenders, the Administrative Agent or any other Person or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Borrower's obligations hereunder. 49 44 Without limiting the generality of the foregoing, it is expressly understood and agreed that the absolute and unconditional obligation of the Borrower hereunder to reimburse L/C Disbursements will not be excused by the gross negligence or wilful misconduct of the Issuing Bank. However, the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank's gross negligence or wilful misconduct in determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof; it is understood that the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary and, in making any payment under any Letter of Credit (i) the Issuing Bank's exclusive reliance on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial respect of the documents presented under such Letter of Credit with the terms thereof shall, in each case, be deemed not to constitute wilful misconduct or gross negligence of the Issuing Bank. (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall as promptly as possible give telephonic notification, confirmed by telecopy, to the Administrative Agent and the Borrower of such demand for payment and whether the Issuing Bank has made or will make an L/C Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Credit Lenders with respect to any such L/C Disbursement. The Administrative Agent shall promptly give each Revolving Credit Lender notice thereof. (h) Interim Interest. If the Issuing Bank shall make any L/C Disbursement in respect of a Letter of Credit, then, unless the Borrower shall reimburse such L/C Disbursement in full on such date, the unpaid amount thereof shall bear interest for the account of the Issuing Bank, for each day from and including the date of such L/C Disbursement, to but excluding the earlier of the date of payment by the Borrower or the date on which interest shall commence to accrue thereon as provided in Section 2.02(f), at the rate per annum that would apply to such amount if such amount were an ABR Loan. (i) Resignation or Removal of the Issuing Bank. The Issuing Bank may resign at any time by giving 180 days' prior written notice to the Administrative Agent, the Lenders and the Borrower, and may be removed at any time by the Borrower by notice to the Issuing Bank, the Administrative Agent and the Lenders. Subject to the next succeeding paragraph, upon the acceptance of any appointment as the Issuing Bank hereunder by a Lender that shall agree to serve as successor Issuing Bank, such successor shall succeed to and become vested with all the interests, rights and obligations of the retiring Issuing Bank and the retiring Issuing Bank shall be discharged from its obligations to issue additional Letters of Credit hereunder, without affecting its rights and obligations with respect to Letters of Credit previously issued by it. At the time such removal or resignation shall become 50 45 effective, the Borrower shall pay all accrued and unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of any appointment as the Issuing Bank hereunder by a successor Lender shall be evidenced by an agreement entered into by such successor, in a form satisfactory to the Borrower and the Administrative Agent, and, from and after the effective date of such agreement, (i) such successor Lender shall have all the rights and obligations of the previous Issuing Bank under this Agreement and the other Loan Documents and (ii) references herein and in the other Loan Documents to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the resignation or removal of the Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation or removal, but shall not be required to issue additional Letters of Credit. (j) Cash Collateralization. If any Event of Default shall occur and be continuing, the Borrower shall, on the Business Day it receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Credit Lenders holding participations in outstanding Letters of Credit representing greater than 50% of the aggregate undrawn amount of all outstanding Letters of Credit) thereof and of the amount to be deposited, deposit in an account with the Collateral Agent, for the benefit of the Revolving Credit Lenders, an amount in cash equal to the L/C Exposure as of such date. Such deposit shall be held by the Collateral Agent as collateral for the payment and performance of the Obligations. The Collateral Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits in Permitted Investments, which investments shall be made at the option and sole discretion of the Collateral Agent, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall (i) automatically be applied by the Administrative Agent to reimburse the Issuing Bank for L/C Disbursements for which it has not been reimbursed, (ii) be held for the satisfaction of the reimbursement obligations of the Borrower for the L/C Exposure at such time and (iii) if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Credit Lenders holding participations in outstanding Letters of Credit representing greater than 50% of the aggregate undrawn amount of all outstanding Letters of Credit), be applied to satisfy the Obligations. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived. ARTICLE III Representations and Warranties Each of Holdings and the Borrower represents and warrants to the Administrative Agent, the Collateral Agent, the Issuing Bank and each of the Lenders that: SECTION 3.01. Organization; Powers. Each of Holdings, the Borrower and each of the Subsidiaries (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted, (c) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, 51 46 except where the failure so to qualify could not reasonably be expected to result in a Material Adverse Effect, and (d) has the corporate power and authority to execute, deliver and perform its obligations under each of the Loan Documents and each other agreement or instrument contemplated hereby to which it is or will be a party and, in the case of the Borrower, to borrow hereunder. SECTION 3.02. Authorization. The execution, delivery and performance by each Loan Party of each of the Loan Documents and the borrowings hereunder, the consummation of the Acquisition and the other transactions contemplated hereby and by the Stock Purchase Agreement (collectively, the "Transactions") (a) have been duly authorized by all requisite corporate and, if required, stockholder action and (b) will not (i) violate (A) any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents or by-laws of Holdings, the Borrower or any Subsidiary, (B) any order of any Governmental Authority or (C) any provision of any material indenture, agreement or other instrument to which Holdings, the Borrower or any Subsidiary is a party or by which any of them or any of their property is or may be bound, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under, or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under any such indenture, agreement or other instrument or (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by Holdings, the Borrower or any Subsidiary (other than any Lien created hereunder or under the Security Documents). SECTION 3.03. Enforceability. This Agreement has been duly executed and delivered by Holdings and the Borrower and constitutes, and each other Loan Document when executed and delivered by the each Loan Party that is party thereto will constitute, a legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with its terms, subject to the effects of applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors' rights generally and equitable principles of general applicability (regardless of whether such enforceability is considered in a proceeding at law or in equity). SECTION 3.04. Governmental Approvals. No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the Transactions, except for (a) the filing of Uniform Commercial Code financing statements and filings with the United States Patent and Trademark Office and the United States Copyright Office, (b) recordation of the Mortgages and (c) such as have been made or obtained and are in full force and effect. SECTION 3.05. Financial Statements. (a) The Borrower has heretofore furnished to the Lenders (i) its consolidated balance sheet and related statements of income and cash flows as of and for the fiscal year ended September 30, 1997, audited by and accompanied by the opinion of Ernst & Young LLP, independent public accountants, (ii) its unaudited consolidated balance sheets and related statements of income and cash flows as of and for the fiscal quarter and the portion of the fiscal year ended June 30, 1998, (iii) the consolidated balance sheet and related statements of income, stockholder's equity and cash flows of Dalton as of and for the fiscal years ended December 30, 1995, December 28, 1996 and January 3, 1998, audited by and accompanied by the opinion of Price Waterhouse LLP, independent public accountants, (iv) the unaudited consolidated balance sheet and related statements of income, stockholder's equity and cash flows of Dalton as of and for the portion of the fiscal year ended July 4, 1998 and (v) the consolidated balance sheet and related statements of income, stockholders' equity and cash flows of ACP as of and for the fiscal years ended September 30, 1995, 1996 and 1997, audited by and accompanied by the opinion of Arthur Andersen LLP, 52 47 independent public accountants. Such financial statements present fairly the financial condition and results of operations and cash flows of the Borrower, Dalton and ACP and their respective consolidated Subsidiaries as of such dates and for such periods. Such balance sheets and the notes thereto disclose all material liabilities, direct or contingent, of the Borrower, Dalton and ACP and their respective consolidated Subsidiaries as of the dates thereof. Such financial statements were prepared in accordance with GAAP applied on a consistent basis. (b) The Borrower has heretofore delivered to the Lenders its unaudited pro forma consolidated balance sheet as of June 30, 1998, adjusted to give effect to the Transactions as if they had occurred on such date. Such pro forma balance sheet has been prepared in good faith by the Borrower, based on the assumptions used to prepare the pro forma financial information contained in the Confidential Information Memorandum (which assumptions are believed by the Borrower on the date hereof and on the Restatement Closing Date to be reasonable), is based on the best information available to the Borrower as of the date of delivery thereof, accurately reflects all adjustments required to be made to give effect to the Transactions and presents fairly on a pro forma basis the estimated consolidated financial position of the Borrower and its consolidated Subsidiaries as of such date, assuming that the Transactions had actually occurred at such date. SECTION 3.06. No Material Adverse Change. There has been no material adverse change in the business, assets, operations, prospects, condition, financial or otherwise, or material agreements of the Borrower and the Subsidiaries, taken as a whole, since September 30, 1997, or of Dalton and its subsidiaries, taken as a whole, since December 31, 1997. SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each of Holdings, the Borrower and the Subsidiaries has good and marketable title to, or valid leasehold interests in, all its material properties and assets (including all Mortgaged Property), except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes. All such material properties and assets are free and clear of Liens, other than Liens expressly permitted by Section 6.02. (b) Each of Holdings, the Borrower and the Subsidiaries has complied with all obligations under all material leases to which it is a party and all such leases are in full force and effect. Each of Holdings, the Borrower and the Subsidiaries enjoys peaceful and undisturbed possession under all such material leases. (c) Neither Holdings nor the Borrower has received any notice of, nor has any knowledge of, any pending or contemplated condemnation proceeding materially and adversely affecting the Mortgaged Properties or any sale or disposition thereof in lieu of condemnation. (d) Except as set forth on Schedule 3.07(d), none of Holdings, the Borrower or any of the Subsidiaries is obligated under any right of first refusal, option or other contractual right to sell, assign or otherwise dispose of any Mortgaged Property or any interest therein. 53 48 SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Restatement Closing Date a list of all Subsidiaries and the percentage ownership interest of the Borrower therein. The shares of capital stock or other ownership interests so indicated on Schedule 3.08 are fully paid and non-assessable and are owned by the Borrower, directly or indirectly, free and clear of all Liens (other than Liens in favor of the Collateral Agent, created under the Security Documents). Holdings owns 100% of the issued and outstanding capital stock of the Borrower, free and clear of all Liens (other than Liens in favor of the Collateral Agent, created under the Security Documents). SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set forth on Schedule 3.09(a), there are not any actions, suits or proceedings at law or in equity or by or before any Governmental Authority now pending or, to the knowledge of Holdings or the Borrower, threatened against or affecting Holdings or the Borrower or any Subsidiary or any business, property or rights of any such Person (i) that involve any Loan Document or the Transactions or (ii) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. (b) None of Holdings, the Borrower or any of the Subsidiaries or any of their respective material properties or assets is in violation of, nor will the continued operation of their material properties and assets as currently conducted violate, any law, rule or regulation (including any zoning, building, Environmental Law, ordinance, code or approval or any building permits) or any restrictions of record or agreements affecting the Mortgaged Property, or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority, where such violation or default could reasonably be expected to result in a Material Adverse Effect. (c) Except as set forth on Schedule 3.09(c), certificates of occupancy and permits to the extent required by law are in effect for each Mortgaged Property as currently constructed, and true and complete copies of such certificates of occupancy have been delivered to the Collateral Agent as mortgagee with respect to each Mortgaged Property. SECTION 3.10. Agreements. (a) Except as set forth on Schedule 3.10, none of Holdings, the Borrower or any of the Subsidiaries is a party to any agreement or instrument or subject to any corporate restriction that has resulted or could reasonably be expected to result in a Material Adverse Effect. (b) None of Holdings, the Borrower or any of the Subsidiaries is in default in any manner under any provision of any indenture or other agreement or instrument evidencing Indebtedness, or any other material agreement or instrument to which it is a party or by which it or any of its properties or assets are or may be bound, where such default could reasonably be expected to result in a Material Adverse Effect. SECTION 3.11. Federal Reserve Regulations. (a) None of Holdings, the Borrower or any of the Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock. (b) No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including Regulation U or X. 54 49 SECTION 3.12. Investment Company Act; Public Utility Holding Company Act. None of Holdings, the Borrower or any Subsidiary is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. SECTION 3.13. Use of Proceeds. The Borrower will use the proceeds of the Loans and will request the issuance of Letters of Credit only for the purposes specified in the preamble to this Agreement. SECTION 3.14. Tax Returns. Each of the Holdings, the Borrower and the Subsidiaries has filed or caused to be filed all Federal, material state, material local and material foreign tax returns or materials required to have been filed by it and has paid or caused to be paid all taxes shown on such returns to be due and payable by it and all assessments received by it, except taxes that are being contested in good faith by appropriate proceedings and for which Holdings, the Borrower or such Subsidiary, as applicable, shall have set aside on its books adequate reserves. SECTION 3.15. No Material Misstatements. None of (a) the Confidential Information Memorandum or (b) any other information, report, financial statement, exhibit or schedule furnished by or on behalf of Holdings or the Borrower to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto contained, contains or will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not misleading; provided that to the extent any such information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection, each of Holdings and the Borrower represents only that it acted in good faith and utilized reasonable assumptions and due care in the preparation of such information, report, financial statement, exhibit or schedule. SECTION 3.16. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under all Plans in the aggregate (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $2,000,000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $4,000,000 the fair market value of the assets of all such underfunded Plans. SECTION 3.17. Environmental Matters. Except as set forth in Schedule 3.17: (a) The properties owned or operated by Holdings, the Borrower and the Subsidiaries (the "Properties") do not contain any Hazardous Materials in amounts or concentrations which (i) constitute, or constituted a violation of, (ii) require Remedial Action under, or (iii) could give rise to liability under, Environmental Laws, which violations, Remedial Actions and liabilities, in the aggregate, could reasonably be expected to result in a Material Adverse Effect; 55 50 (b) The Properties and all operations of the Borrower and the Subsidiaries are in compliance, and in the last seven years have been in compliance, with all Environmental Laws and all necessary Environmental Permits have been obtained and are in effect, except to the extent that such non-compliance or failure to obtain any necessary permits, in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; (c) There have been no Releases or threatened Releases at, from, under or proximate to the Properties or otherwise in connection with the operations of the Borrower or the Subsidiaries, which Releases or threatened Releases, in the aggregate, could reasonably be expected to result in a Material Adverse Effect; (d) None of Holdings, the Borrower or any of the Subsidiaries has received any notice of an Environmental Claim in connection with the Properties or the operations of the Borrower or the Subsidiaries or with regard to any Person whose liabilities for environmental matters Holdings, the Borrower or the Subsidiaries has retained or assumed, in whole or in part, contractually, by operation of law or otherwise, which, in the aggregate, could reasonably be expected to result in a Material Adverse Effect, nor do Holdings, the Borrower or the Subsidiaries have reason to believe that any such notice will be received or is being threatened; and (e) Hazardous Materials have not been transported from the Properties, nor have Hazardous Materials been generated, treated, stored or disposed of at, on or under any of the Properties in a manner that could reasonably be expected to give rise to liability under any Environmental Law, nor have the Borrower or the Subsidiaries retained or assumed any liability, contractually, by operation of law or otherwise, with respect to the generation, treatment, storage or disposal of Hazardous Materials, which transportation, generation, treatment, storage or disposal, or retained or assumed liabilities, in the aggregate, could reasonably be expected to result in a Material Adverse Effect. SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and correct description of all insurance maintained by the Borrower or by the Borrower for its Subsidiaries as of the Restatement Closing Date. As of such date, such insurance is in full force and effect and all premiums have been duly paid. The Borrower and its Subsidiaries have insurance in such amounts and covering such risks and liabilities as are in accordance with normal industry practice. SECTION 3.19. Security Documents. (a) The Pledge Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Pledge Agreement) and, when the Collateral is delivered to the Collateral Agent and for so long as the Collateral Agent continues to hold such Collateral, the Pledge Agreement shall constitute a fully perfected first priority Lien on, and security interest in, all right, title and interest of the pledgors thereunder in such Collateral, in each case prior and superior in right to any other Person. (b) The Security Agreement is effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the Security Agreement) and, when financing statements in appropriate form are filed in the offices specified on Schedule 6 to the Perfection Certificate, the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral (other than the Intellectual Property, as defined in the Security 56 51 Agreement), in each case prior and superior in right to any other Person, other than with respect to Liens expressly permitted by Section 6.02. (c) Assuming the Security Agreement has been filed in the United States Patent and Trademark Office and the United States Copyright Office, the Security Agreement constitutes a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in the Intellectual Property (as defined in the Security Agreement), in each case prior and superior in right to any other Person (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a lien on registered trademarks, trademark applications and copyrights acquired by the grantors after the date hereof). (d) The Mortgages are effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on all of the Loan Parties' right, title and interest in and to the Mortgaged Property thereunder and the proceeds thereof, and when the Mortgages are filed in the offices specified on Schedule 3.19(d), the Mortgages shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Mortgaged Property and the proceeds thereof, in each case prior and superior in right to any other Person, other than with respect to the rights of Persons pursuant to Liens expressly permitted by Section 6.02. SECTION 3.20. Location of Real Property and Leased Premises. (a) Schedule 3.20(a) lists completely and correctly as of the Restatement Closing Date all real property owned by the Borrower and the Subsidiaries and the addresses thereof. The Borrower and the Subsidiaries own in fee all the real property set forth on Schedule 3.20(a). (b) Schedule 3.20(b) lists completely and correctly as of the Restatement Closing Date all real property leased by the Borrower and the Subsidiaries and the addresses thereof. The Borrower and such Subsidiaries have valid leasehold interests in all the real property set forth on Schedule 3.20(b) SECTION 3.21. Labor Matters. As of the Restatement Closing Date, there are no strikes, lockouts or slowdowns against Holdings, the Borrower or any Subsidiary pending or, to the knowledge of Holdings or the Borrower, threatened. The hours worked by and payments made to employees of Holdings, the Borrower and the Subsidiaries have not been in material violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters. All payments due from Holdings, the Borrower or any Subsidiary, or for which any claim may be made against Holdings, the Borrower or any Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of Holdings, the Borrower or such Subsidiary. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which Holdings, the Borrower or any Subsidiary is bound. SECTION 3.22. Solvency. (a) Immediately after the consummation of the Transactions to occur on the Restatement Closing Date and immediately following the making of each Loan made on the Restatement Closing Date and after giving effect to the application of the proceeds of such Loans, (i) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (ii) the present fair saleable value of the property 57 52 of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) each Loan Party will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted following the Restatement Closing Date. SECTION 3.23. Year 2000 Compliance. To the best of Holdings' and the Borrower's knowledge, any reprogramming required to permit the proper functioning, in and following the year 2000, of (a) the computer systems of Holdings, the Borrower and any of the Subsidiaries and (b) equipment containing embedded microchips and the testing of all such systems and equipment, as so reprogrammed, will be completed in all material respects by June 30, 1999. To the best of Holdings' and the Borrower's knowledge, the cost to Holdings, the Borrower and any of the Subsidiaries of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to Holdings, the Borrower and any of the Subsidiaries (including reprogramming errors and the failure of others' systems or equipment used directly by the Borrower or the Subsidiaries in their respective operations) would not reasonably be expected to result in an Event of Default or a Material Adverse Effect. ARTICLE IV Conditions of Lending The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder are subject to the satisfaction of the following conditions: SECTION 4.01. All Credit Events. On the date of each Borrowing, including on the date of each issuance, amendment, extension or renewal of a Letter of Credit (each such event being called a "Credit Event"), but excluding any conversion or continuation of a Borrowing in accordance with Section 2.10: (a) The Administrative Agent shall have received a notice of such Borrowing as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.03) or, in the case of the issuance, amendment, extension or renewal of a Letter of Credit, the Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance, amendment, extension or renewal of such Letter of Credit as required by Section 2.22(b). (b) The representations and warranties set forth in Article III hereof shall be true and correct in all material respects on and as of the date of such Credit Event with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date. (c) No Event of Default or Default shall have occurred and be continuing. 58 53 Each Credit Event shall be deemed to constitute a representation and warranty by the Borrower and Holdings on the date of such Credit Event as to the matters specified in paragraphs (b) and (c) of this Section 4.01. SECTION 4.02. First Credit Event. On the Restatement Closing Date: (a) The Administrative Agent shall have received, on behalf of itself, the Lenders and the Issuing Bank, a favorable written opinion of (i) Kirkland & Ellis, counsel for Holdings and the Borrower, substantially to the effect set forth in Exhibit J-1 and (ii) each local counsel listed on Schedule 4.02(a) substantially to the effect set forth in Exhibit J-2, in each case (A) dated the Restatement Closing Date, (B) addressed to the Issuing Bank, the Administrative Agent and the Lenders, and (C) covering such other matters relating to the Loan Documents and the Transactions as the Administrative Agent shall reasonably request, and Holdings and the Borrower hereby request such counsel to deliver such opinions. (b) All legal matters incident to this Agreement, the Borrowings and extensions of credit hereunder and the other Loan Documents shall be satisfactory to the Lenders, to the Issuing Bank and to Cravath, Swaine & Moore, counsel for the Administrative Agent. (c) The Administrative Agent shall have received (i) a copy of the certificate or articles of incorporation, including all amendments thereto, of each Loan Party, certified as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing of each Loan Party as of a recent date, from such Secretary of State (or, in lieu of such certificate as to good standing for each Loan Party incorporated in the State of Wisconsin, a certificate of status from the Wisconsin Department of Financial Institutions as to such Loan Party's existence); (ii) a certificate of the Secretary or Assistant Secretary of each Loan Party dated the Restatement Closing Date and certifying (A) that attached thereto is a true and complete copy of the by-laws of such Loan Party as in effect on the Restatement Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to be entered into on the Restatement Closing Date to which such Person is a party and, in the case of the Borrower, the borrowings hereunder to be made on the Restatement Closing Date, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation of such Loan Party have not been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (i) above, and (D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party; (iii) a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to (ii) above; and (iv) such other documents as the Lenders, the Issuing Bank or Cravath, Swaine & Moore, counsel for the Administrative Agent, may reasonably request. (d) The Administrative Agent shall have received a certificate, dated the Restatement Closing Date and signed by a Financial Officer of the Borrower, confirming compliance with the conditions precedent set forth in paragraphs (b) and (c) of Section 4.01. 59 54 (e) The Administrative Agent shall have received all Fees and other amounts due and payable on or prior to the Restatement Closing Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder or under any other Loan Document. (f) The Pledge Agreement, as amended and restated on the Restatement Closing Date, shall have been duly executed by the parties thereto and delivered to the Collateral Agent and shall be in full force and effect, and all the outstanding Capital Stock of the Borrower and the Subsidiaries (other than FSC) shall have been duly and validly pledged thereunder to the Collateral Agent for the ratable benefit of the Secured Parties and certificates representing such shares, accompanied by instruments of transfer and stock powers endorsed in blank, shall be in the actual possession of the Collateral Agent; provided that, to the extent to do so would cause adverse tax consequence to the Borrower, (i) neither the Borrower nor any Domestic Subsidiary shall be required to pledge more than 65% of the Voting Stock of any Foreign Subsidiary and (ii) no Foreign Subsidiary shall be required to pledge the Capital Stock of any of its Foreign Subsidiaries. (g) The Security Agreement, as amended and restated as of the Restatement Closing Date, shall have been duly executed by the Loan Parties party thereto and shall have been delivered to the Collateral Agent and shall be in full force and effect on such date and each document (including each Uniform Commercial Code financing statement) required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Collateral Agent for the benefit of the Secured Parties a valid, legal and perfected first-priority security interest in and lien on the Collateral (subject to any Lien expressly permitted by Section 6.02) described in such agreement shall have been delivered to the Collateral Agent. (h) The Collateral Agent shall have received the results of a search of the Uniform Commercial Code (or equivalent filings) filings made with respect to the Loan Parties acquired pursuant to the Acquisition in the states (or other jurisdictions) in which the chief executive office of each such Person is located, any offices of such Persons in which records have been kept relating to Accounts and the other jurisdictions in which Uniform Commercial Code filings (or equivalent filings) are to be made pursuant to the preceding paragraph, together with copies of the financing statements (or similar documents) disclosed by such search, and accompanied by evidence satisfactory to the Collateral Agent that the Liens indicated in any such financing statement (or similar document) would be permitted under Section 6.02 or have been released. (i) The Collateral Agent shall have received a Perfection Certificate with respect to the Loan Parties acquired pursuant to the Acquisition dated the Restatement Closing Date and duly executed by a Responsible Officer of the Borrower. (j) (i) Each of the Security Documents, as amended and restated as of the Restatement Closing Date, in form and substance satisfactory to the Lenders, relating to each of the Mortgaged Properties shall have been duly executed by the parties thereto and delivered to the Collateral Agent and shall be in full force and effect, (ii) each of such Mortgaged Properties shall not be subject to any Lien other than those permitted under Section 6.02, (iii) each of such Security Documents shall have been filed and recorded in the recording office as specified on Schedule 3.19(d) (or a lender's marked and redated title 60 55 commitment for title insurance, in form and substance acceptable to the Collateral Agent, insuring such Security Document as a first lien on such Mortgaged Property (subject to any Lien permitted by Section 6.02) shall have been received by the Collateral Agent) and, in connection therewith, the Collateral Agent shall have received evidence satisfactory to it of the title company's agreement to record or file such Security Documents, as applicable, and (iv) the Collateral Agent shall have received such other documents, including a policy or policies of title insurance issued by a nationally recognized title insurance company, together with such endorsements, coinsurance and reinsurance as may be requested by the Collateral Agent and the Lenders, insuring the Mortgages as valid first liens on the Mortgaged Properties, free of Liens other than those permitted under Section 6.02, together with such surveys, abstracts, appraisals and legal opinions required to be furnished pursuant to the terms of the Mortgages or as reasonably requested by the Collateral Agent or the Lenders. (k) Each of the Parent Guarantee Agreement, the Subsidiary Guarantee Agreement and the Indemnity, Subrogation and Contribution Agreement, as amended and restated as of the Restatement Closing Date, shall have been duly executed by the parties thereto, shall have been delivered to the Collateral Agent and shall be in full force and effect. (l) (i) The Acquisition shall have been consummated, or shall be consummated simultaneously with the initial Credit Event, in accordance with applicable law and the Stock Purchase Agreement and (ii) the Lenders shall (A) be reasonably satisfied that the capitalization, structure and equity ownership of the Borrower and its Subsidiaries shall not have changed from that previously disclosed to the Lenders, (B) be reasonably satisfied with the material terms of the Stock Purchase Agreement and the documentation related thereto, (C) be reasonably satisfied with all legal, tax and accounting matters relating to the Transactions and (D) be reasonably satisfied that the aggregate level of fees and expenses to be paid in connection with the Transactions, the financing therefor and the other transactions contemplated hereby shall not exceed $2,500,000. (m) After giving effect to the Acquisition and the other transactions contemplated hereby to be consummated on the Restatement Closing Date, the Borrower and its Subsidiaries shall have outstanding no Indebtedness or preferred stock other than (i) the extensions of credit under this Agreement, (ii) the Senior Subordinated Notes, (iii) the Seller Note and (iv) the Indebtedness listed on Schedule 6.01. (n) The Lenders shall have received (i) the financial statements described in Sections 3.05(a) and (b) and (ii) the financial and operating projections of the Borrower and its Subsidiaries, covering a period of five years following the Restatement Closing Date, in each case which shall be reasonably satisfactory to the Lenders and shall not be materially inconsistent with the forecasts previously provided to the Lenders. (o) The Lenders shall have received a letter from a Financial Officer of the Borrower, in form and substance reasonably satisfactory to the Lenders, as to the solvency of the Borrower and its Subsidiaries on a consolidated basis after giving effect to the Acquisition, the initial Credit Event and the consummation of the other Transactions to be consummated on the Restatement Closing Date. (p) All requisite material Governmental Authorities and third parties shall have approved or consented to the Acquisition and the other transactions contemplated hereby to 61 56 be consummated on the Restatement Closing Date to the extent required, all applicable appeal periods shall have expired and there shall be no governmental or judicial action, actual or threatened, that has or could have a reasonable likelihood of restraining, preventing or imposing burdensome conditions on the Acquisition or the other transactions contemplated hereby to be consummated on the Restatement Closing Date. (q) The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.02 and the applicable provisions of the Security Documents, in each case with respect to the Loan Parties acquired pursuant to the Acquisition, each of which shall be endorsed or otherwise amended to include a "standard" or "New York" lender's loss payable endorsement and to name the Collateral Agent as additional insured, in form and substance satisfactory to the Administrative Agent. (r) The Lenders shall be reasonably satisfied as to the amount and nature of any environmental and employee health and safety exposures to which Dalton and its Subsidiaries may be subject and the plans of the Borrower and Dalton with respect thereto, after giving effect to the Transactions and the consummation of the other transactions contemplated hereby. ARTICLE V Affirmative Covenants Each of Holdings and the Borrower covenants and agrees with each Lender that until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document (other than wholly contingent indemnification obligations) shall have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full or cash collateralized to the satisfaction of the Administrative Agent and the Issuing Bank, unless the Required Lenders shall otherwise consent in writing, each of Holdings and the Borrower will, and will cause each of the Subsidiaries to: SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, except as otherwise expressly permitted under Section 6.05. (b) Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect in all material respects the rights, licenses, permits, franchises, authorizations, patents, copyrights, trademarks and trade names material to the conduct of its business; maintain and operate such business in substantially the manner in which it is presently conducted and operated; comply in all material respects with all applicable laws, rules, regulations (including any zoning, building, Environmental Law, ordinance, code or approval or any building permits or any restrictions of record or agreements affecting the Mortgaged Properties) and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted, except where such non-compliance could not reasonably be expected to result in a Material Adverse Effect; and, except in the case of sales of assets permitted pursuant to Section 6.05, at all times maintain and preserve all property material to the conduct of such business and keep, in all material respects, such property in good repair, working order and condition, normal wear and tear excepted, and from time to time 62 57 make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times. SECTION 5.02. Insurance. In the case of the Borrower and each Subsidiary: (a) Keep its insurable properties adequately insured at all times by financially sound and reputable insurers; and maintain such other insurance, to such extent and against such risks, including fire and other risks insured against by extended coverage, in each case as is customary with companies in the same or similar businesses operating in the same or similar locations, including public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it; and maintain such other insurance as may be required by law. (b) Cause all such policies to be endorsed or otherwise amended to include a "standard" or "New York" lender's loss payable endorsement, in form and substance satisfactory to the Administrative Agent and the Collateral Agent, which endorsement shall provide that, from and after the Restatement Closing Date, if the insurance carrier shall have received written notice from the Administrative Agent or the Collateral Agent of the occurrence of an Event of Default, the insurance carrier shall, during the continuance of such Event of Default, pay all proceeds otherwise payable to the Borrower or the Loan Parties under such policies directly to the Collateral Agent; cause all such policies to provide that neither the Borrower, the Administrative Agent, the Collateral Agent nor any other party shall be a coinsurer thereunder and to contain a "Replacement Cost Endorsement", without any deduction for depreciation, and such other provisions as the Administrative Agent or the Collateral Agent may reasonably require from time to time to protect their interests; deliver original or certified copies of all such policies to the Collateral Agent; cause each such policy to provide that it shall not be canceled, modified or not renewed (i) by reason of nonpayment of premium upon not less than 10 days' prior written notice thereof by the insurer to the Administrative Agent and the Collateral Agent (giving the Administrative Agent and the Collateral Agent the right to cure defaults in the payment of premiums) or (ii) for any other reason upon not less than 30 days' prior written notice thereof by the insurer to the Administrative Agent and the Collateral Agent; deliver to the Administrative Agent and the Collateral Agent, prior to the cancelation, modification or nonrenewal of any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy previously delivered to the Administrative Agent and the Collateral Agent) together with evidence satisfactory to the Administrative Agent and the Collateral Agent of payment of the premium therefor. (c) If at any time the area in which the Premises (as defined in the Mortgages) are located is designated (i) a "flood hazard area" in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), obtain flood insurance in such total amount as the Administrative Agent, the Collateral Agent or the Required Lenders may from time to time require, and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as it may be amended from time to time, or (ii) a "Zone 1" area, obtain earthquake insurance in such total amount as the Administrative Agent, the Collateral Agent or the Required Lenders may from time to time require. 63 58 (d) With respect to any Mortgaged Property, carry and maintain comprehensive general liability insurance including the "broad form CGL endorsement" and coverage on an occurrence basis against claims made for personal injury (including bodily injury, death and property damage) and umbrella liability insurance against any and all claims, in no event for a combined single limit of less than $25,000,000, naming the Collateral Agent as an additional insured, on forms satisfactory to the Collateral Agent. (e) Notify the Administrative Agent and the Collateral Agent immediately whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 5.02 is taken out by the Borrower; and promptly deliver to the Administrative Agent and the Collateral Agent a duplicate original copy of such policy or policies. SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other obligations promptly and in accordance with their terms and pay and discharge promptly when due all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims for labor, materials and supplies or otherwise that, if unpaid, might give rise to a Lien upon such properties or any part thereof; provided, however, that such payment and discharge shall not be required with respect to any such tax, assessment, charge, levy or claim so long as the validity or amount thereof shall be contested in good faith by appropriate proceedings and the Borrower shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP and such contest operates to suspend collection of the contested obligation, tax, assessment or charge and enforcement of a Lien and, in the case of a Mortgaged Property, there is no risk of forfeiture of such property. SECTION 5.04. Financial Statements, Reports, etc. In the case of the Borrower, furnish to the Administrative Agent and each Lender: (a) within 90 days after the end of each fiscal year, its consolidated balance sheet and related statements of operations, stockholders' equity and cash flows showing the financial condition of the Borrower and its consolidated Subsidiaries as of the close of such fiscal year and the results of its operations and the operations of such Subsidiaries during such year, all audited by Ernst & Young LLP or other independent public accountants of recognized national standing acceptable to the Required Lenders and accompanied by an opinion of such accountants (which shall not be qualified in any material respect) to the effect that such consolidated financial statements fairly present the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied; (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, its consolidated balance sheet and related statements of operations, stockholders' equity and cash flows showing the financial condition of the Borrower and its consolidated Subsidiaries as of the close of such fiscal quarter and the results of its operations and the operations of such Subsidiaries during such fiscal quarter and the then elapsed portion of the fiscal year, all certified by one of its Financial Officers as fairly presenting in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments; 64 59 (c) concurrently with any delivery of financial statements under sub-paragraph (a) or (b) above, a letter of the accounting firm or certificate of the Financial Officer reporting on or certifying such statements (which letter, when furnished by an accounting firm, may be limited to accounting matters and disclaim responsibility for legal interpretations) reporting that they are unaware that any Event of Default has occurred, in the case of the accounting firm, or certifying that no Event of Default or Default has occurred, in the case of the Financial Officer, or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto; (d) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed to its shareholders, as the case may be; and (e) prior to the beginning of each fiscal year, a copy of the budget for its consolidated balance sheet and related statements of income and cash flows for each quarter of such fiscal year; and (f) promptly, from time to time, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender may reasonably request. SECTION 5.05. Litigation and Other Notices. Furnish to the Administrative Agent, the Issuing Bank and each Lender prompt written notice of the following: (a) the occurrence of any Event of Default or Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto; (b) the filing or commencement of, or any threat or notice of intention of any Person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority, against the Borrower or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect; and (c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $1,000,000; and (d) any development that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect. SECTION 5.06. Maintaining Records; Access to Properties and Inspections. Keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all requirements of law are made of all dealings and transactions in relation to its business and activities. Each Loan Party will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender to visit and inspect the financial records and the 65 60 properties of Holdings, the Borrower or any Subsidiary at reasonable times and upon reasonable notice and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any representatives designated by the Administrative Agent or any Lender to discuss the affairs, finances and condition of Holdings, the Borrower or any Subsidiary with the officers thereof and independent accountants therefor; provided, however, that, unless a Default or Event of Default shall have occurred and be continuing, in no event shall the Administrative Agent or any Lender or any of their respective designees contact any customer or supplier of the Borrower or any Subsidiary regarding this Agreement and the Indebtedness hereunder without the prior consent of the Borrower. SECTION 5.07. Use of Proceeds. Use the proceeds of the Loans and request the issuance of Letters of Credit only for the purposes set forth in the preamble to this Agreement. SECTION 5.08. Compliance with Environmental Laws. Except for any non-compliance that could not reasonably be expected to result in a Material Adverse Effect, comply, and cause all lessees and other Persons occupying its Properties to comply, with all Environmental Laws and Environmental Permits applicable to its operations and Properties; obtain and renew all Environmental Permits necessary for its operations and Properties; and conduct any Remedial Action in accordance with Environmental Laws; provided, however, that none of Holdings, the Borrower or any of the Subsidiaries shall be required to undertake any Remedial Action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances. SECTION 5.09. Preparation of Environmental Reports. If a Default caused by reason of a breach of Section 3.17 or 5.08 shall have occurred and be continuing, at the request of the Required Lenders through the Administrative Agent, provide to the Lenders within 45 days after such request, at the expense of the Borrower, an environmental site assessment report for the Properties which are the subject of such default prepared by an environmental consulting firm acceptable to the Administrative Agent and indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance or Remedial Action in connection with such Properties. SECTION 5.10. [Intentionally Omitted.] SECTION 5.11. Further Assurances. Execute any and all further documents, financing statements, agreements and instruments, and take all further action (including filing Uniform Commercial Code and other financing statements, mortgages and deeds of trust) that may be required under applicable law, or that the Required Lenders, the Administrative Agent or the Collateral Agent may reasonably request, in order to effectuate the transactions contemplated by the Loan Documents and in order to grant, preserve, protect and perfect the validity and first priority of the security interests created or intended to be created by the Security Documents. The Borrower will cause any subsequently acquired or organized Domestic Subsidiary to execute a Subsidiary Guarantee Agreement, Indemnity Subrogation and Contribution Agreement and each applicable Security Document in favor of the Collateral Agent. In addition, from time to time, the Borrower will, at its cost and expense, promptly secure the Obligations by pledging or creating, or causing to be pledged or created, perfected security interests with respect to such of its assets and properties as the Administrative Agent or the Required Lenders shall designate (it being understood that it is the intent of the parties that the Obligations shall be secured by, among other things, substantially all the assets of the Borrower (including real and other properties acquired subsequent to the Restatement Closing 66 61 Date)). Such security interests and Liens will be created under the Security Documents and other security agreements, mortgages, deeds of trust and other instruments and documents in form and substance satisfactory to the Collateral Agent, and the Borrower shall deliver or cause to be delivered to the Lenders all such instruments and documents (including legal opinions, title insurance policies and lien searches) as the Collateral Agent shall reasonably request to evidence compliance with this Section. The Borrower agrees to provide such evidence as the Collateral Agent shall reasonably request as to the perfection and priority status of each such security interest and Lien. ARTICLE VI Negative Covenants Each of Holdings and the Borrower covenants and agrees with each Lender that, until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document (other than wholly contingent indemnification obligations) have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full or cash collateralized to the satisfaction of the Administrative Agent and the Issuing Bank, unless the Required Lenders shall otherwise consent in writing, neither Holdings nor the Borrower will, nor will they cause or permit any of the Subsidiaries to: SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist any Indebtedness, except: (a) Indebtedness for borrowed money existing on the Restatement Closing Date and set forth in Schedule 6.01; (b) Indebtedness created hereunder and under the other Loan Documents; (c) the Senior Subordinated Notes (or the notes exchanged therefor pursuant to and in accordance with Section 6.09(c)); (d) (i) Earn-Out Obligations in an aggregate principal amount at any time outstanding not exceeding $25,000,000 and (ii) the Ashland Earn-Out Obligation in an aggregate principal amount at any time outstanding not exceeding $7,000,000; (e) Indebtedness consisting of purchase money Indebtedness or Capital Lease Obligations incurred in the ordinary course of business after the Original Closing Date to finance Consolidated Capital Expenditures; provided that (i) a description of the assets financed thereby shall have been furnished to the Administrative Agent for any assets for which the purchase price is greater than $1,000,000 and (ii) the aggregate principal amount of any Indebtedness or Capital Lease Obligations incurred pursuant to this paragraph (d) outstanding at any time shall not exceed $25,000,000; (f) intercompany loans and advances permitted by Section 6.04(c); (g) Indebtedness of the Borrower or any Subsidiary to Holdings; provided that such Indebtedness (i) is subordinated to the prior payment in full of the Obligations on terms 67 62 satisfactory to the Administrative Agent and (ii) is evidenced by an intercompany note pledged by Holdings to the Collateral Agent pursuant to the Pledge Agreement for the benefit of the Secured Parties; (h) ordinary course Interest Rate Protection Agreements and ordinary course, non-speculative foreign exchange and commodity protection agreements; (i) Indebtedness arising out of judgments or awards (other than any judgment that is described in clause (i) of Article VII and constitutes a Default or Event of Default thereunder) in respect of which the Borrower shall in good faith be prosecuting an appeal or proceedings for review and in respect of which it shall have secured a subsisting stay of execution pending such appeal or proceedings for review, provided the Borrower shall have set aside on its books adequate reserves, in accordance with GAAP, with respect to such judgment or award; (j) Indebtedness under performance bonds in an aggregate principal amount at any time outstanding not exceeding $2,000,000; (k) Qualified Subordinated Debt in an aggregate principal amount not exceeding $150,000,000; (l) the Subordinated Promissory Notes; and (m) additional unsecured Indebtedness in an aggregate amount at any time outstanding not exceeding $20,000,000. SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien on any property or assets (including stock or other securities of any Person, including any Subsidiary) now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except: (a) Liens on property or assets of the Borrower and its Subsidiaries existing on the Restatement Closing Date and set forth in Schedule 6.02; provided that such Liens shall secure only those obligations which they secure on the Restatement Closing Date; (b) any Lien created under the Loan Documents; (c) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition (except as permitted pursuant to Section 6.02(i)), (ii) such Lien does not apply to any other property or assets of the Borrower or any Subsidiary and (iii) such Lien does not (A) materially interfere with the use, occupancy and operation of any Mortgaged Property, (B) materially reduce the fair market value of such Mortgaged Property but for such Lien or (C) result in any material increase in the cost of operating, occupying or owning or leasing such Mortgaged Property; (d) Liens for taxes not yet due or which are being contested in compliance with Section 5.03; 68 63 (e) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising, in the case of such other like Liens, in the ordinary course of business and securing obligations that are not due and payable or which are being contested in compliance with Section 5.03; (f) pledges and deposits made in the ordinary course of business in compliance with workmen's compensation, unemployment insurance and other social security laws or regulations; (g) deposits to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capital Lease Obligations), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (h) zoning restrictions, easements, rights-of-way, restrictions on use of real property and other similar encumbrances incurred, in the case of such other similar encumbrances, in the ordinary course of business which, in the aggregate, are not substantial in amount and do not materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries; (i) purchase money security interests in real property, improvements thereto or equipment hereafter acquired (or, in the case of improvements, constructed) by the Borrower or any Subsidiary; provided that (i) such security interests secure Indebtedness permitted by Section 6.01(e), (ii) such security interests are incurred, and the Indebtedness secured thereby is created, within 90 days after such acquisition (or construction), (iii) the Indebtedness secured thereby does not exceed 85% of the lesser of the cost or the fair market value of such real property, improvements or equipment at the time of such acquisition (or construction) (or if such Indebtedness exceeds such 85% limit, such Indebtedness is non-recourse to Holdings, the Borrower and the Subsidiaries) and (iv) such security interests do not apply to any other property or assets of the Borrower or any Subsidiary; (j) any Lien on any Mortgaged Property disclosed on the marked and redated title insurance commitment with respect to such Mortgaged Property delivered to the Collateral Agent on or prior to the Restatement Closing Date; (k) Liens arising out of judgments or awards (other than any judgment that is described in clause (i) of Article VII and constitutes a Default or Event of Default thereunder) in respect of which the Borrower shall in good faith be prosecuting an appeal or proceedings for review and in respect of which it shall have secured a subsisting stay of execution pending such appeal or proceedings for review, provided the Borrower shall have set aside on its books adequate reserves, in accordance with GAAP, with respect to such judgment or award; and (l) additional Liens on property or assets securing obligations (other than Indebtedness for borrowed money) not exceeding $500,000 at any time, provided that, to the extent any such Lien applies to any Collateral (as defined in any such Security Document), such Lien does not have priority over the Liens created under the Security Documents. 69 64 SECTION 6.03. Sale and Lease-Back Transactions. Enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred. SECTION 6.04. Investments, Loans and Advances. Purchase, hold or acquire any capital stock, evidences of indebtedness or other securities of, make or permit to exist any loans or advances to, or make or permit to exist any investment or any other interest in, any other Person, except: (a) investments by the Borrower existing on the Restatement Closing Date in the capital stock of the Subsidiaries and additional investments by Holdings in the Capital Stock of the Borrower or by the Borrower in the Capital Stock of the Subsidiary Guarantors (other than Ashland); (b) Permitted Investments; (c) investments, loans or advances made by any Loan Party to the Borrower or any Subsidiary, provided that any such loans or advances are evidenced by an intercompany note pledged to the Collateral Agent pursuant to the Pledge Agreement for the benefit of the Secured Parties; (d) investments consisting of non-cash consideration received in connection with a sale of assets permitted by Section 6.05(b); (e) loans and advances to employees and officers of the Borrower or any of the Subsidiaries for travel, entertainment and relocation expenses in the ordinary course of business in an aggregate principal amount outstanding at any one time not to exceed $500,000; (f) loans and advances in an aggregate principal amount outstanding at any one time not to exceed $2,000,000 to management and other employees of the Borrower or the Subsidiaries, the proceeds of which are used in their entirety to purchase capital stock of Holdings, ACP Holdings or ACP Products or any successor thereto and other investments pursuant to retirement savings programs or to pay fees and expenses (including taxes) incurred in connection therewith; (g) the Borrower may make any Permitted Acquisition; provided that (i) the aggregate purchase price of all such Permitted Acquisitions consummated after the Restatement Closing Date does not exceed $80,000,000, (ii) the aggregate principal amount of all Revolving Loans and Letters of Credit at any one time outstanding used to finance the cash consideration and fees and expenses paid in connection with all Permitted Acquisitions consummated after the Restatement Closing Date shall not exceed $30,000,000 and (iii) the Borrower shall have delivered to the Administrative Agent a certificate certifying that at the time of and immediately after giving effect to such Permitted Acquisition, (A) no Event of Default or Default shall have occurred and be continuing, (B) the Borrower shall be in compliance on a pro forma basis (including as adjusted to reduce or exclude any identified costs that will be reduced or will cease to be incurred after such Permitted Acquisition) with the covenants set forth in Sections 6.11, 6.12 and 6.13 in each case as of the last day of the 70 65 most recent fiscal quarter adjusted to give effect (as if such event had occurred on the first day of the four fiscal quarter period ended on such last day) to such Permitted Acquisition and the financing therefor, and the adjustments and calculations set forth in such certificate shall be based on assumptions and otherwise in form and substance satisfactory to the Administrative Agent and (C) the Senior Debt Leverage Ratio as of the most recent fiscal quarter of the Borrower preceding such Permitted Acquisition for which financial statements are available shall not exceed 2.50 to 1.00; (h) Consolidated Capital Expenditures permitted pursuant to Section 6.10; (i) Accounts; (j) ordinary course Interest Rate Protection Agreements and ordinary course, non-speculative foreign exchange and commodity protection agreements; and (k) investments by the borrower existing on the restatement closing date in design technologies. SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions. (a) Merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or any substantial part of its assets (whether now owned or hereafter acquired) or any capital stock of any Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a series of transactions) all or any substantial part of the assets of any other Person, except that (i) the Borrower and any Subsidiary may purchase and sell inventory and scrap, obsolete, excess and worn out assets in the ordinary course of business, (ii) if at the time thereof and immediately after giving effect thereto no Event of Default or Default shall have occurred and be continuing (v) the ACP Contribution may be made, (w) any wholly owned Subsidiary may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (x) any wholly owned Subsidiary may merge into or consolidate with any other wholly owned Domestic Subsidiary in a transaction in which the surviving entity is a wholly owned Domestic Subsidiary and no Person other than the Borrower or a wholly owned Domestic Subsidiary receives any consideration, (y) Holdings may merge into ACP Holdings or the Borrower in a transaction in which the Borrower is the surviving corporation (in the case of any such merger of Holdings into the Borrower) so long as concurrently with any merger of Holdings with and into the Borrower, or any merger of Holdings with and into ACP Holdings in which Holdings is not the surviving corporation, ACP Holdings assumes all the obligations of Holdings under this Agreement and the other Loan Documents (including entering into a supplement to the Pledge Agreement to pledge 100% of the Capital Stock of the Borrower to the Collateral Agent for the benefit of the Secured Parties) and (z) following any merger described in clause (y), ACP Holdings may merge into ACP Products or the Borrower in a transaction in which the Borrower is the surviving corporation (in the case of any such merger of ACP Holdings into the Borrower) so long as concurrently with any merger of ACP Holdings with and into the Borrower, or any merger of ACP Holdings with and into ACP Products in which ACP Holdings is not the surviving corporation, ACP Products assumes all the obligations of ACP Holdings under this Agreement and the other Loan Documents (including entering into a supplement to the Pledge Agreement to pledge 100% of the Capital Stock of the Borrower to the Collateral Agent for the benefit of the Secured Parties), (iii) the Borrower and any Subsidiary may make Permitted Acquisitions permitted by Section 6.04(g), (iv) the Borrower and any Subsidiary may make 71 66 Consolidated Capital Expenditures permitted by Section 6.10, (v) the Borrower and any Subsidiary may engage in any Asset Sale of Capital Stock or other assets acquired pursuant to a Permitted Acquisition permitted pursuant to Section 6.04(g), (vi) the Borrower may sell all or any part of the Plant No.1 complex for a purchase price of less than fair market value and (vii) the Borrower may sell all the capital stock of Ashland, or Ashland may sell all or substantially all its assets. (b) Neither the Borrower nor any Subsidiary shall engage in any Asset Sale otherwise permitted under paragraph (a) above unless (i) such Asset Sale is for consideration at least 85% of which is cash, (ii) except in the case of clause (a)(vi) above, such consideration is at least equal to the fair market value (as determined in good faith by the Borrower's board of directors) of the assets being sold, transferred, leased or disposed of and (iii) the fair market value (as determined in good faith by the Borrower's board of directors) of all assets sold, transferred, leased or disposed of pursuant to this paragraph (b) (except for assets sold, transferred, leased or disposed of pursuant to Section 6.05(a)(v)) shall not exceed (i) $10,000,000 in any fiscal year or (ii) $20,000,000 in the aggregate. SECTION 6.06. Dividends and Distributions; Restrictions on Ability of Subsidiaries to Pay Dividends. (a) Declare or pay, directly or indirectly, any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any shares of its Capital Stock or directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any Subsidiary to purchase or acquire) any shares of any class of its Capital Stock or set aside any amount for any such purpose; provided, however, that (i) any Subsidiary may declare and pay dividends or make other distributions to the Borrower; (ii) the Borrower may declare and pay dividends or make other distributions to Holdings (A) to pay the Borrower Tax Amount required to be paid by Holdings and (B) to fund payments to be made by Holdings as permitted by clause (iv) below in an aggregate amount not to exceed the amounts of such payments; (iii) so long as no Default or Event of Default shall have occurred and be continuing, the Borrower may declare and pay dividends or make other distributions to Holdings to pay the actual operating costs of Holdings and ACP Holdings in an aggregate amount not exceeding $250,000 in any fiscal year of the Borrower; (iv) Holdings may, or Holdings may declare and pay dividends or make other distributions to ACP Holdings to permit ACP Holdings or ACP Products to, purchase, redeem, retire or otherwise acquire (A) shares of its Capital Stock, or options or warrants to purchase shares of its Capital Stock, held by officers, directors or employees of Holdings, the Borrower or any Subsidiary pursuant to a compensation plan or arrangement in connection with the death, disability or termination of employment of any such officer, director or employee or (B) shares of its capital stock owned by any officer, director or employee of Holdings, the Borrower or any Subsidiary pursuant to the exercise of options or warrants to purchase such Capital Stock by such officer, director or employee or to pay taxes incurred in connection with such exercise of options or warrants in an aggregate amount for all such transactions described in clauses (A) and (B) not exceeding the sum of (x) $2,000,000 plus (y) the proceeds of any substantially concurrent issuance of Capital 72 67 Stock of ACP Products, ACP Holdings or Holdings to any officer, director or employee of Holdings, the Borrower or any Subsidiary; (v) Holdings may declare and pay dividends or make other distributions to ACP Holdings to pay the Borrower Tax Amount required to be paid by ACP Holdings; and (vi) so long as no Default or Event of Default shall have occurred and be continuing, Holdings may declare and pay dividends or make other distributions to ACP Holdings, out of the proceeds of dividends or distributions received by Holdings pursuant to clause (iii) above, to pay ACP Holdings' actual operating costs. (b) Permit its subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such subsidiary to (i) pay any dividends or make any other distributions on its capital stock or any other interest or (ii) make or repay any loans or advances to the Borrower or the parent of such subsidiary. SECTION 6.07. Transactions with Affiliates. Except as set forth on Schedule 6.07, sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except that the Borrower or any Subsidiary may engage in (a) any of the foregoing transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, (b) the transactions permitted pursuant to Sections 6.05 and 6.06, (c) the Transactions and (d) following the pledge of 65% of the Voting Stock of FSC to the Collateral Agent pursuant to the Pledge Agreement, arrangements pursuant to which the Borrower or any Subsidiary shall pay commissions or other fees to FSC in an aggregate amount not exceeding $2,000,000 in any fiscal year of the Borrower. SECTION 6.08. Business of Borrower and Subsidiaries. Engage at any time in any business or business activity other than Related Businesses. SECTION 6.09. Other Indebtedness and Agreements. (a) Permit any waiver, supplement, modification, amendment, termination or release of (i) the Stock Purchase Agreement or the Merger Agreement or (ii) any indenture, instrument or agreement pursuant to which any Indebtedness or preferred stock of Holdings, the Borrower or any Subsidiary is outstanding in an aggregate outstanding principal amount in excess of $1,000,000, or modify its charter or by-laws, in each case to the extent that any such waiver, supplement, modification, amendment, termination or release would be adverse to the Lenders in any material respect. (b) (i) make any distribution, whether in cash, property, securities or a combination thereof, other than regular scheduled payments of principal and interest as and when due (to the extent not prohibited by applicable subordination provisions), in respect of, or pay, or offer or commit to pay, or directly or indirectly redeem, repurchase, retire or otherwise acquire for consideration, or set apart any sum for the aforesaid purposes, any Indebtedness for borrowed money of Holdings, the Borrower or any Subsidiary in an outstanding principal amount exceeding $1,000,000 or (ii) pay in cash any amount in respect of such Indebtedness that may at the obligor's option be paid in kind or in other securities. (c) Notwithstanding anything contained in this Section 6.09 to the contrary, the Borrower shall be permitted to exchange the Senior Subordinated Notes or Qualified Subordinated Debt for 73 68 substantially identical notes in accordance with the Exchange and Registration Rights Agreements with respect thereto. SECTION 6.10. Capital Expenditures. Permit the aggregate amount of Consolidated Capital Expenditures (other than Consolidated Capital Expenditures for patterns and Permitted Acquisitions permitted by Section 6.04(g)) made by the Borrower and the Subsidiaries, taken as a whole, in any fiscal year to exceed the sum of (a) $40,000,000, (b) the net cash proceeds of any issuance of equity securities by, without duplication, Holdings, ACP Holdings or ACP Products made during such fiscal year and substantially concurrently used to fund Consolidated Capital Expenditures, and (c) 100% of Excess Cash Flow for the preceding fiscal year that was not required to be used to make prepayments of the outstanding Term Loans pursuant to Section 2.13; provided, however, that the amount of Consolidated Capital Expenditures in any fiscal year of the Borrower permitted to be incurred pursuant to clause (a) above shall be increased by an amount equal to the amount of unused Consolidated Capital Expenditures permitted to be incurred pursuant to clause (a) above for the immediately preceding fiscal year of the Borrower (without giving effect to this proviso). SECTION 6.11. Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as of the end of any fiscal quarter falling in any period set forth below to be in excess of the ratio set forth below for such period.
Period Ratio January 1, 1998 through September 30, 1999 6.00 to 1.00 October 1, 1999 through September 30, 2000 5.75 to 1.00 Thereafter 5.50 to 1.00
SECTION 6.12. Consolidated Net Worth. Permit Consolidated Net Worth (a) on the Original Closing Date, to be less than $35,000,000 or (b) on the last day of any fiscal quarter thereafter, to be less than the sum of (i) $35,000,000 plus (ii) 50% of the cumulative amount of positive Consolidated Net Income for each fiscal year ending after the Original Closing Date. SECTION 6.13. Consolidated Interest Coverage Ratio. Permit the Consolidated Interest Coverage Ratio as of the end of any fiscal quarter to be less than 1.50 to 1.00. SECTION 6.14. Fiscal Year. Permit the fiscal year of the Borrower to end on a day other than September 30. ARTICLE VII Events of Default In case of the happening of any of the following events ("Events of Default"): (a) any representation or warranty made or deemed made in or in connection with any Loan Document or the borrowings or issuances of Letters of Credit hereunder, or any representation, warranty, statement or information contained in any report, certificate, 74 69 financial statement or other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished; (b) default shall be made in the payment of any principal of any Loan or the reimbursement with respect to any L/C Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise; (c) default shall be made in the payment of any interest on any Loan or any Fee or L/C Disbursement or any other amount (other than an amount referred to in (b) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of five Business Days; (d) default shall be made in the due observance or performance by Holdings, the Borrower or any Subsidiary of any covenant, condition or agreement contained in Section 5.01(a), 5.05 or 5.07 or in Article VI; (e) default shall be made in the due observance or performance by Holdings, the Borrower or any Subsidiary of any covenant, condition or agreement contained in any Loan Document (other than those specified in (b), (c) or (d) above) and such default shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent or any Lender to the Borrower; (f) Holdings, the Borrower or any Subsidiary shall (i) fail to pay any principal or interest, regardless of amount, due in respect of any Indebtedness in a principal amount in excess of $1,750,000, when and as the same shall become due and payable, or (ii) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Indebtedness if the effect of any failure referred to in this clause (ii) is to cause, or to permit the holder or holders of such Indebtedness or a trustee on its or their behalf (with or without the giving of notice, the lapse of time or both) to cause, such Indebtedness to become due prior to its stated maturity; (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of Holdings, the Borrower or any Subsidiary, or of a substantial part of the property or assets of Holdings, the Borrower or a Subsidiary, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, seques- trator, conservator or similar official for Holdings, the Borrower or any Subsidiary or for a substantial part of the property or assets of Holdings, the Borrower or a Subsidiary or (iii) the winding-up or liquidation of Holdings, the Borrower or any Subsidiary; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (h) Holdings, the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in 75 70 a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Holdings, the Borrower or any Subsidiary or for a substantial part of the property or assets of Holdings, the Borrower or any Subsidiary, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any action for the purpose of effecting any of the foregoing; (i) one or more judgments for the payment of money in an aggregate amount in excess of $1,750,000, which amount is not covered by insurance (provided that in the event such a judgment is covered by insurance, the Administrative Agent is provided with satisfactory evidence that the insurance provider will provide the coverage relating thereto) shall be rendered against Holdings, the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of Holdings, the Borrower or any Subsidiary to enforce any such judgment; (j) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding (i) $1,000,000 in any year or (ii) $5,000,000 for all periods; or (k) any security interest purported to be created by any Security Document shall cease to be, or shall be asserted by the Borrower or any other Loan Party not to be, a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in the securities, assets or properties covered thereby, except to the extent that any such loss of perfection or priority results from the failure of the Collateral Agent to maintain possession of certificates representing securities pledged under the Pledge Agreement or to continue previously filed financing statements prior to the expiration thereof and except to the extent that such loss is covered by a lender's title insurance policy and the related insurer promptly after such loss shall have acknowledged in writing that such loss is covered by such title insurance policy; or (l) there shall have occurred a Change in Control; then, and in every such event (other than an event with respect to the Borrower described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans then outstanding, if any, to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in any event with respect to the Borrower described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans 76 71 then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to the contrary notwithstanding. ARTICLE VIII The Administrative Agent and the Collateral Agent In order to expedite the transactions contemplated by this Agreement, The Chase Manhattan Bank is hereby appointed to act as Administrative Agent and Collateral Agent on behalf of the Lenders and the Issuing Bank (for purposes of this Article VIII, the Administrative Agent and the Collateral Agent are referred to collectively as the "Agents"). Each of the Lenders and each assignee of any such Lender, hereby irrevocably authorizes the Agents to take such actions on behalf of such Lender or assignee or the Issuing Bank and to exercise such powers as are specifically delegated to the Agents by the terms and provisions hereof and of the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. The Administrative Agent is hereby expressly authorized by the Lenders and the Issuing Bank, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders and the Issuing Bank all payments of principal of and interest on the Loans, all payments in respect of L/C Disbursements and all other amounts due to the Lenders hereunder, and promptly to distribute to each Lender or the Issuing Bank its proper share of each payment so received; (b) to give notice on behalf of each of the Lenders to the Borrower of any Event of Default specified in this Agreement of which the Administrative Agent has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Lender copies of all notices, financial statements and other materials delivered by the Borrower or any other Loan Party pursuant to this Agreement or the other Loan Documents as received by the Administrative Agent. Without limiting the generality of the foregoing, the Agents are hereby expressly authorized to execute any and all documents (including releases) with respect to the Collateral and the rights of the Secured Parties with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Security Documents. Neither the Agents nor any of their respective directors, officers, employees or agents shall be liable as such for any action taken or omitted by any of them except for its or his own gross negligence or wilful misconduct, or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith, or be required to ascertain or to make any inquiry concerning the performance or observance by the Borrower or any other Loan Party of any of the terms, conditions, covenants or agreements contained in any Loan Document. The Agents shall not be responsible to the Lenders for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or any other Loan Documents, instruments or agreements. The Agents shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Lenders and, except as otherwise specifically provided herein, such instructions and any action or inaction pursuant thereto shall be binding on all the Lenders. Each Agent shall, in the absence of knowledge to the contrary, be entitled to rely on any instrument or document believed by it in good faith to be genuine and correct and to have been signed or sent by the proper Person or Persons. Neither the Agents nor any of their respective directors, officers, employees or agents shall have any responsibility in their capacity as such to the Borrower or any other Loan Party on account of the failure of or delay in performance 77 72 or breach by any Lender or the Issuing Bank of any of its obligations hereunder or to any Lender or the Issuing Bank on account of the failure of or delay in performance or breach by any other Lender or the Issuing Bank or the Borrower or any other Loan Party of any of their respective obligations hereunder or under any other Loan Document or in connection herewith or therewith. Each of the Agents may execute any and all duties hereunder by or through agents or employees and shall be entitled to rely upon the advice of legal counsel selected by it with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel. The Lenders hereby acknowledge that neither Agent shall be under any duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement unless it shall be requested in writing to do so by the Required Lenders. Subject to the appointment and acceptance of a successor Agent as provided below, either Agent may resign at any time by notifying the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor, subject to the Borrower's approval, not to be unreasonably withheld, so long as no Default or Event of Default shall have occurred and be continuing. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance of any appointment as Agent hereunder by a successor bank, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations hereunder. After the Agent's resignation hereunder, the provisions of this Article and Section 9.05 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent. With respect to the Loans made by it hereunder, each Agent in its individual capacity and not as Agent shall have the same rights and powers as any other Lender and may exercise the same as though it were not an Agent, and the Agents and their Affiliates may accept deposits from, lend money to and generally engage in any kind of business with Holdings, the Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent. Each Lender agrees (a) to reimburse the Agents, on demand, in the amount of its pro rata share (based on its Commitments or Loans hereunder, as applicable) of any expenses incurred for the benefit of the Lenders by the Agents, including counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders, that shall not have been reimbursed by the Borrower and (b) to indemnify and hold harmless each Agent and any of its directors, officers, employees or agents, on demand, in the amount of such pro rata share, from and against any and all liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by or asserted against it in its capacity as Agent, or any of them in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by it or any of them under this Agreement or any other Loan Document, to the extent the same shall not have been reimbursed by the Borrower or any other Loan Party, provided that no Lender shall be liable to an Agent or any such other indemnified Person for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross 78 73 negligence or wilful misconduct of such Agent or any of its directors, officers, employees or agents. Each Revolving Credit Lender agrees to reimburse and indemnify the Issuing Bank to the same extent and subject to the same limitations as provided for the Agents in the preceding sentence. Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other Loan Document, any related agreement or any document furnished hereunder or thereunder. ARTICLE IX Miscellaneous SECTION 9.01. Notices. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, or sent by telecopy, as follows: (a) if to the Borrower or Holdings, to it at 2121 Brooks Avenue, Neenah, WI 54956, Attention of President or Chief Financial Officer (Telecopy No. (414) 729-3633) with copies to (which shall not constitute notice to the Borrower) Citicorp Venture Capital, Ltd., 399 Park Avenue, 14th Floor, Zone 4, New York, NY 10043, Attention of Mr. David F. Thomas and Mr. John D. Weber (Telecopy No. (212) 888-2940) and Kirkland & Ellis, Citicorp Center, 153 East 53rd Street, New York, NY 10022, Attention of Kirk A. Radke, Esq. (Telecopy No. (212) 446-4900); (b) if to the Administrative Agent, to The Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Janet Belden (Telecopy No. (212) 552-5658), with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, Attention of Peter S. Predun (Telecopy No. (212) 270-8963); and (c) if to a Lender, to it at its address (or telecopy number) set forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender shall have become a party hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01. SECTION 9.02. Survival of Agreement. All covenants, agreements, representations and warranties made by the Borrower or Holdings herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document 79 74 shall be considered to have been relied upon by the Lenders and the Issuing Bank and shall survive the making by the Lenders of the Loans and the issuance of Letters of Credit by the Issuing Bank, regardless of any investigation made by the Lenders or the Issuing Bank or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount then due and payable under this Agreement or any other Loan Document is outstanding and unpaid (other than wholly-contingent indemnification obligations) or any Letter of Credit is outstanding and so long as the Commitments have not been terminated. The provisions of Sections 2.14, 2.16, 2.20 and 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank. SECTION 9.03. Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower, Holdings and the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of (a) the Required Lenders, (b) each Additional Lender, (c) Lenders holding a majority in aggregate principal amount of the Tranche A Term Loans and (d) Lenders holding a majority in aggregate principal amount of the Tranche B Term Loans, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrower, Holdings, the Administrative Agent, the Issuing Bank or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns. (b) Each Lender may assign to one or more assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided, however, that (i) except in the case of an assignment to a Lender or an Affiliate of, or an Approved Fund with respect to, such Lender, (x) the Borrower and the Administrative Agent (and, in the case of any assignment of a Revolving Credit Commitment, the Issuing Bank) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed) and (y) the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 (or, if less, the entire remaining amount of such Lender's Commitment), (ii) the parties to each such assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 and (iii) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire. Upon acceptance and recording pursuant to paragraph (e) of this Section 9.04, from and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining 80 75 portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees accrued for its account and not yet paid). (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that its Commitments, and the outstanding balances of its Loans, in each case without giving effect to assignments thereof which have not become effective, are as set forth in such Assignment and Acceptance, (ii) except as set forth in (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto, or the financial condition of the Borrower or any Subsidiary or the performance or observance by the Borrower or any Subsidiary of any of its obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Collateral Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent and the Collateral Agent, respectively, by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (d) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive and the Borrower, the Administrative Agent, the Issuing Bank, the Collateral Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Bank, the Collateral Agent and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) above and, if required, the written consent of the Borrower, the 81 76 Issuing Bank and the Administrative Agent to such assignment, the Administrative Agent shall (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Lenders and the Issuing Bank. No assignment shall be effective unless it has been recorded in the Register as provided in this paragraph (e). (f) Each Lender may without the consent of the Borrower, the Issuing Bank or the Administrative Agent sell participations to one or more banks or other entities in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other entities shall be entitled to the benefit of the cost protection provisions contained in Sections 2.14, 2.16 and 2.20 to the same extent as if they were Lenders and (iv) the Borrower, the Administrative Agent, the Issuing Bank and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to the Loans or L/C Disbursements and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable hereunder or the amount of principal of or the rate at which interest is payable on the Loans, extending any scheduled principal payment date or date fixed for the payment of interest on the Loans or increasing or extending the Commitments). (g) Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.04, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure of information designated by the Borrower as confidential, each such assignee or participant or proposed assignee or participant shall execute an agreement whereby such assignee or participant shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 9.16. (h) Any Lender may at any time assign all or any portion of its rights under this Agreement to a Federal Reserve Bank to secure extensions of credit by such Federal Reserve Bank to such Lender; provided that no such assignment shall release a Lender from any of its obligations hereunder or substitute any such Bank for such Lender as a party hereto. In order to facilitate such an assignment to a Federal Reserve Bank, the Borrower shall, at the request of the assigning Lender, duly execute and deliver to the assigning Lender a promissory note or notes evidencing the Loans made to the Borrower by the assigning Lender hereunder. (i) Neither Holdings nor the Borrower shall assign or delegate any of its rights or duties hereunder without the prior written consent of the Administrative Agent, the Issuing Bank and each Lender, and any attempted assignment without such consent shall be null and void. (j) In the event that Standard & Poor's Ratings Group, Moody's Investors Service, Inc., and Thompson's BankWatch (or InsuranceWatch Ratings Service, in the case of Lenders that are insurance companies (or Best's Insurance Reports, if such insurance company is not rated by InsuranceWatch Ratings Service)) shall, after the date that any Lender becomes a Revolving Credit Lender, downgrade the long-term certificate deposit ratings of such Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in the case of a Lender that is an insurance company (or B, in the case of an insurance company not rated by InsuranceWatch 82 77 Ratings Service)), then the Issuing Bank shall have the right, but not the obligation, at its own expense, upon notice to such Lender and the Administrative Agent, to replace (or to request the Borrower to use its reasonable efforts to replace) such Lender with an assignee (in accordance with and subject to the restrictions contained in paragraph (b) above), and such Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in paragraph (b) above) all its interests, rights and obligations in respect of its Revolving Credit Commitment to such assignee; provided, however, that (i) no such assignment shall conflict with any law, rule and regulation or order of any Governmental Authority and (ii) the Issuing Bank or such assignee, as the case may be, shall pay to such Lender in immediately available funds on the date of such assignment the principal of and interest accrued to the date of payment on the Loans made by such Lender hereunder and all other amounts accrued for such Lender's account or owed to it hereunder. SECTION 9.05. Expenses; Indemnity. (a) The Borrower and Holdings agree, jointly and severally, to pay all out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent and the Issuing Bank in connection with the syndication of the credit facilities provided for herein and the preparation and administration of this Agreement and the other Loan Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall be consummated) or incurred by the Administrative Agent, the Collateral Agent or any Lender in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents or in connection with the Loans made or Letters of Credit issued hereunder, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent and the Collateral Agent, and, in connection with any such enforcement or protection, the reasonable fees, charges and disbursements of any other counsel for the Administrative Agent, the Collateral Agent or any Lender. (b) The Borrower and Holdings agree, jointly and severally, to indemnify the Administrative Agent, the Collateral Agent, each Lender and the Issuing Bank, each Affiliate of any of the foregoing Persons and each of their respective directors, officers, employees and agents (each such Person being called an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby, (ii) the use of the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged presence or Release of Hazardous Materials on any property owned or operated by the Borrower or any of the Subsidiaries, or any Environmental Claim related in any way to the Borrower or the Subsidiaries; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of any Indemnitee. (c) The provisions of this Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions 83 78 contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank. All amounts due under this Section 9.05 shall be payable on written demand therefor. SECTION 9.06. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, except to the extent prohibited by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender to or for the credit or the account of the Borrower or Holdings against any of and all the obligations of the Borrower or Holdings now or hereafter existing under this Agreement and other Loan Documents held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or such other Loan Document and although such obligations may be unmatured. The rights of each Lender under this Section 9.06 are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK. SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrower or any other Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Borrower or Holdings in any case shall entitle the Borrower or Holdings to any other or further notice or demand in similar or other circumstances. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower, Holdings and the Required Lenders; provided, however, that no such agreement shall (i) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or date for the payment of any interest on any Loan or any date for reimbursement of an L/C Disbursement, or waive or excuse any such payment or any part thereof, or decrease the rate of 84 79 interest on any Loan or L/C Disbursement, without the prior written consent of each Lender affected thereby, (ii) change or extend the Commitment or decrease or extend the date for payment of the Commitment Fees of any Lender without the prior written consent of such Lender, (iii) amend or modify the provisions of Section 2.17 or 9.04(i), the provisions of this Section, the definition of the term "Required Lenders" or release any Guarantor or all or any substantial part of the Collateral, without the prior written consent of each Lender, (iv) change the allocation between Tranche A Term Loans and Tranche B Term Loans of any prepayment pursuant to Section 2.12 or 2.13 without the prior written consent of (A) Lenders holding Tranche A Term Loans representing more than 50% of the aggregate outstanding principal amount of the Tranche A Term Loans and (B) Lenders holding Tranche B Term Loans representing more than 50% of the aggregate outstanding principal amount of the Tranche B Term Loans, (v) decrease the principal amount of, or extend the date for payment of, any prepayment of (A) Tranche A Term Loans or (B) Tranche B Term Loans, in each case required pursuant to Section 2.13 without the prior written consent of (x) Lenders holding Tranche A Term Loans representing more than 50% of the aggregate outstanding principal amount of the Tranche A Term Loans or (y) Lenders holding Tranche B Term Loans representing more than 50% of the aggregate outstanding principal amount of the Tranche B Term Loans, respectively, or (vi) amend Section 2.13(i) without the prior written consent of Lenders holding Tranche B Term Loans representing more than 50% of the aggregate outstanding principal amount of the Tranche B Term Loans; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent or the Issuing Bank hereunder or under any other Loan Document without the prior written consent of the Administrative Agent, the Collateral Agent or the Issuing Bank. (c) In addition, no waiver, amendment or modification of this Agreement shall (i) change the allocation of any prepayment pursuant to Section 2.12 or 2.13 without the prior written consent of (A) Lenders holding Additional Tranche B Term Loans representing more than 50% of the aggregate outstanding principal amount of the Additional Tranche B Term Loans and (B) Acquisition Loan Lenders having Acquisition Loans and unused Acquisition Loan Commitments representing more than 50% of the sum of the aggregate outstanding principal amount of the Acquisition Loans and unused Acquisition Loan Commitments, (ii) decrease the principal amount of, or extend the date for payment of, any prepayment of (A) Additional Tranche B Term Loans or (B) Acquisition Loans, in each case required pursuant to Section 2.13 without the prior written consent of (A) Lenders holding Additional Tranche B Term Loans representing more than 50% of the aggregate outstanding principal amount of the Additional Tranche B Term Loans or (B) Acquisition Loan Lenders having Acquisition Loans and unused Acquisition Loan Commitments representing more than 50% of the sum of the aggregate outstanding principal amount of the Acquisition Loans and unused Acquisition Loan Commitments, respectively, or (iii) amend Section 2.13(i) without the prior written consent of Lenders holding Additional Tranche B Term Loans representing more than 50% of the aggregate outstanding principal amount of the Additional Tranche B Term Loans. SECTION 9.09. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan or participation in any L/C Disbursement, together with all fees, charges and other amounts which are treated as interest on such Loan or participation in such L/C Disbursement under applicable law (collectively the "Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan or participation in accordance with applicable law, the rate of interest payable in respect of such Loan or participation hereunder, together with all 85 80 Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan or participation but were not payable as a result of the operation of this Section 9.09 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or participations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender. SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and the other Loan Documents constitute the entire contract between the parties relative to the subject matter hereof. Any other previous agreement among the parties with respect to the subject matter hereof (including, following the Restatement Closing Date, the Commitment Letter dated March 16, 1998 among the Administrative Agent, Chase Securities Inc. and the Borrower) is superseded by this Agreement and the other Loan Documents and shall be terminated on the Restatement Closing Date. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents. SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11. SECTION 9.12. Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 9.13. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 9.03. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement. SECTION 9.14. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. 86 81 SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Each of Holdings and the Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against the Borrower, Holdings or their respective properties in the courts of any jurisdiction. (b) Each of Holdings and the Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 9.16. Confidentiality. The Administrative Agent, the Collateral Agent, the Issuing Bank and each of the Lenders agrees to keep confidential (and to use its best efforts to cause its respective agents and representatives to keep confidential) the Information (as defined below) and all copies thereof, extracts therefrom and analyses or other materials based thereon, except that the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender shall be permitted to disclose Information (a) to such of its respective officers, directors, employees, agents, affiliates and representatives as need to know such Information, (b) to the extent requested by any regulatory authority, (c) to the extent otherwise required by applicable laws and regulations or by any subpoena or similar legal process, (d) in connection with any suit, action or proceeding relating to the enforcement of its rights hereunder or under the other Loan Documents or (e) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section 9.16 or (ii) becomes available to the Administrative Agent, the Issuing Bank, any Lender or the Collateral Agent on a nonconfidential basis from a source other than the Borrower or Holdings. For the purposes of this Section, "Information" shall mean all financial statements, certificates, reports, agreements and information (including all analyses, compilations and studies prepared by the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender based on any of the foregoing) heretofore or hereafter received from the Borrower or Holdings or any of their respective Affiliates and related to the Borrower or Holdings, any shareholder or Affiliate of the Borrower or Holdings or any employee, customer or supplier of the Borrower or Holdings, other than any of the foregoing that were available to the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to its disclosure thereto by the Borrower or Holdings, and which are in the case of Information provided after the date hereof, clearly identified at the time 87 82 of delivery as confidential. The provisions of this Section 9.16 shall remain operative and in full force and effect regardless of the expiration and term of this Agreement. SECTION 9.17. Termination. Subject to the last sentence of Section 9.02, this Agreement and the other Loan Documents shall terminate when all the Obligations have been indefeasibly paid in full, the Lenders have no further commitment to lend, the L/C Exposure has been reduced to zero and the Issuing Bank has no further commitment to issue Letters of Credit under this Agreement, at which time the Collateral Agent shall execute and deliver to the Borrower, Holdings and the Subsidiary Guarantors all Uniform Commercial Code termination statements and similar documents which the Borrower, Holdings and the Subsidiary Guarantors shall reasonably request to evidence such termination. 88 83 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. NEENAH FOUNDRY COMPANY, by /s/ James K. Hildebrand ------------------------------ Name: James K. Hildebrand Title: Chief Executive Officer NFC CASTINGS, INC., by /s/ James K. Hildebrand ------------------------------ Name: James K. Hildebrand Title: President THE CHASE MANHATTAN BANK, individually and as Administrative Agent, Collateral Agent and IssuingBank, by /s/ Peter S. Predun ------------------------------ Name: Peter S. Predun Title: Vice President AMARA-1 FINANCE, LTD., by /s/ Andrew Ian Wignall ------------------------------ Name: Andrew Ian Wignall Title: Director AMARA-2 FINANCE, LTD., by /s/ Andrew Ian Wignall ------------------------------ Name: Andrew Ian Wignall Title: Director 89 84 BALANCED HIGH-YIELD FUND I LTD., by BHF-Bank Aktiengesellschaft, acting through its New York branch as attorney-in-fact, by /s/ John Sykes ----------------------------- Name: John Sykes Title: Vice President by /s/ Tony Heyman ------------------------------ Name: Tony Heyman Title: Assistant Vice President THE BANK OF NOVA SCOTIA, by /s/ F.C.H. Ashby ----------------------------- Name: F.C.H. Ashby Title: Senior Manager Loan Operations BANK ONE, WISCONSIN, by /s/ Mark P. Bruss ------------------------------ Name: Mark P. Bruss Title: Vice President BHF-BANK AKTIENGESELLSCHAFT, by /s/ John Sykes ------------------------------ Name: John Sykes Title: Vice President by /s/ Tony Heyman ------------------------------ Name: Tony Heyman Title: Assistant Vice President CAPTIVA II FINANCE LTD., by /s/ David Egglishaw ------------------------------ Name: David Egglishaw Title: Director 90 85 CYPRESSTREE INSTITUTIONAL FUND, LLC, by CypressTree Investment Management Company, Inc., its Managing Member by /s/ Timothy M. Barns ----------------------------- Name: Timothy M. Barns Title: Managing Director CYPRESTREE INVESTMENT FUND, LLC, by CypressTree Investment Management Company, Inc., its Managing Member, by /s/ Timothy M. Barns ------------------------------ Name: Timothy M. Barns Title: Managing Director CYPRESSTREE SENIOR FLOATING RATE FUND, by CypressTree Investment Management Company, Inc., as Portfolio Manager by /s/ Timothy M. Barns ------------------------------ Name: Timothy M. Barns Title: Managing Director THE FIRST NATIONAL BANK OF CHICAGO, by /s/ Kevin Christensen ------------------------------ Name: Kevin Christensen Title: Vice President FIRST SOURCE FINANCIAL LLP, by First Source Financial, Inc., its Agent/Manager, by /s/ David C. Wagner ------------------------------ Name: David C. Wagner Title: Vice President 91 86 HELLER FINANCIAL, INC., by /s/ Linda W. Wolf ------------------------------ Name: Linda W. Wolf Title: Senior Vice President KZH III LLC, by /s/ Virginia Conway ------------------------------ Name: Virginia Conway Title: Authorized Agent KZH IV LLC, by /s/ Virginia Conway ------------------------------ Name: Virginia Conway Title: Authorized Agent KZH CYPRESSTREE-1 LLC, by /s/ Virginia Conway ------------------------------ Name: Virginia Conway Title: Authorized Agent MERRILL LYNCH SENIOR FLOATING RATE FUND, INC., by /s/ Gilles Marchand ------------------------------ Name: Gilles Marchand, CPA Title: Authorized Signatory NATIONAL CITY BANK, by /s/ Andrew J. Walshaw ------------------------------ Name: Andrew J. Walshaw Title: Assistant Vice President 92 87 NORTH AMERICAN SENIOR FLOATING RATE FUND, by CypressTree Investment Management Company, Inc., as Portfolio Manager, by /s/ Timothy M. Barns ------------------------------ Name: Timothy M. Barns Title: Managing Director PACIFICA PARTNERS FUND, by Imperial Credit Asset Management, Inc., as Investment Advisors, by /s/ Stephen A. Bruce ------------------------------ Name: Stephen A. Bruce Title: Managing Director PNC BANK, NATIONAL ASSOCIATION, by /s/ Lynn Konez ------------------------------ Name: Lynn Konez Title: Vice President SENIOR DEBT PORTFOLIO, by Boston Management and Research, as Investment Advisor, by /s/ Payson F. Swaffield ------------------------------ Name: Payson F. Swaffield Title: Vice President VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST, by /s/ Jeffrey W. Maillet ------------------------------ Name: Jeffrey W. Maillet Title: Senior Vice President and Director -----END PRIVACY-ENHANCED MESSAGE-----